Horner: How F1 can sort its cost crisis

Anybody familiar with the FIA's Friday 'team principals' press conference at grands prix will know that Red Bull Racing team boss Christian Horner is totally anti any form of regimented cost control, be it via cost (or budget) caps, or imposed resource restrictions.

Cynics suggest it is easy to adopt that stance when your team owner is Dietrich Mateschitz - the Austrian former toiletries salesman who went on to turn an obscure Thai energy drink into a personal fortune estimated at £5billion - but Horner, a 40-year-old former racing driver-turned-team owner-turned-serial title-winning Formula 1 team boss has been consistent in his desire to reduce F1's costs.

He is, though, adamant that cost regimes are not the way forward, and that control should be achieved via intelligently framed, sustainable - primarily sporting - regulations.

"I've always been opposed to a budget cap - I don't believe it's the correct way to control costs," he reiterates during an exclusive interview, one he himself suggested to this column, in the F1 paddock.

"The biggest driver of costs is actually the sporting regulations. If you look at the biggest cost savings we've had over the past few years, it's the sporting regs that actually saved money, whether through the number of engines we're allowed to run, the amount of testing we're allowed to do or the amount of windtunnel we're allowed to utilise - they are the key areas."

In addition Horner believes technical rule stability is vital to F1's commercial health on the basis that "anything we change impacts on costs".

It was way back in 2007 when F1's 'green' engine rules were first mooted © XPB

"The engine regulation change we've had for this year has had the biggest single impact on costs in probably the past 15 years," he says. "It's not just the cost of the engine, it's all the ancillaries, the weight and the design that obviously has to surround those engines as well. There's nothing cheap about 2014."

He concedes that technically the sport, until last year powered by technology rooted in the last century, had to change, but equally believes "the time of the change probably wasn't ideal in the circumstances and climate, especially when you've got teams at the other end of the grid struggling to make ends meet, and then have the burden of very expensive power units. The timing wasn't great".

True, it wasn't. To be fair, though, when the regulations were mooted (in 2007) by the FIA, the global economic crisis wasn't even on the White House's radar, while delays and last-minute architectural changes (from inline-four to V6) added substantially to development costs, which need to be recovered. However, it's undeniable that teams at the "other end" remain at a disadvantage given F1's inequitable revenue structure, as exclusively disclosed here and here.

"I think the problem with [independents] is that they believe if they all had another £100m, they'd be winning," he says. "The bottom line is that if you gave everybody another £100m, everybody would be in the same position, because a team would always try to spend more than what it has.

"It's the nature of competition, it's the nature of this sport, and I think if we were to genuinely try to help those little teams, the burden of their costs is primarily in research and development, in design and development costs.

"Take crash tests, for example, and the amount of design and work that goes into creating those components. If we were to open up - not customer cars, but allow teams to buy more components from each other - it would save the necessity for little teams to invest in huge R&D departments. I think it would have merit for them. If you look at it objectively, for sure they could be focused more on being race teams and reduce costs."

Is that not already the case with some outfits? After all, Red Bull and sister team Toro Rosso, effectively the lifestyle drinks company's development team, largely share electronics and hydraulics systems and other non-listed parts - those to which teams need not hold the intellectual property - while Force India, one of F1's 'disenfranchised teams', basically bolts the entire Mercedes GP back end to its own chassis design, and is keeping mighty McLaren honest.

Force India is beating bigger teams this year © LAT

It's no secret that Red Bull and McLaren are not exactly aligned - having recently exchanged legal unpleasantries over staff recruitment - while Force India has long been a critic of Red Bull's opposition to budget caps, so it is fascinating to see how Horner bats this ball, for Force India's current performance goes some way towards justifying his comment.

"It's important to have stability as well so that the field bunches up," he says. "Force India are doing a great job with what they've got, but that's more down to McLaren underperforming than Force India overperforming..."

Williams, then? Although Sir Frank's team receives a 'heritage' premium, its budget is nowhere near Red Bull or Ferrari levels, yet this year it consistently outdoes the latter, and, but for pitlane fumbling, seemed set to claim the (fortuitous rather than fought-for) victory scored by Daniel Riccardo's Red Bull in Canada. It then became the first team to deny Mercedes a pole this year in Austria.

Yet, even if Williams beats the entire top four, its slice F1's revenues remains a relative pittance.

"It's all down to individual deals the teams cut with the commercial rights holder," argues Horner.

"It's not for me to judge the deals others have done. My job is to do the best I can for my shareholders and for Red Bull Racing. I'm sure Frank and Claire [Williams] have done the best for their team, but it's not for me to judge other people's financial situation.

Red Bull turned Jaguar's unsuccessful F1 attempt into a dominant form © LAT

"There have always been discrepancies between the front and the rear. That's part of the challenge. We came in, having bought Jaguar, an underperforming team, and within five years we managed to turn it into a championship-winning team. With what Red Bull has brought and contributed to Formula 1, it demonstrates that we're a serious player that's committed to the future.

"Other teams have the opportunity to do that, and it's great to see the example you've picked out, because Williams, after a couple of really lean and difficult years, have shown they're coming back."

Yes, but RBR enjoyed massive upfront cash injections, followed by intensive personnel recruitment sprees, during which star designer Adrian Newey was contracted...

"Dietrich had the vision and belief," says Horner. "Yes, he's committed, not irresponsibly because we were winning races against teams like Toyota and BMW, who were spending way in excess of the budgets we had.

"We spent prudently and effectively, invested in people, and now F1 provides an enormous return for Red Bull. With the benefit of introducing commercial sponsorships and title partnerships, the burden of cost to the [Red Bull] group is lower than ever before."

Low enough for Red Bull Racing to eventually be revenue neutral?

"When retainers of personnel are under control!" he laughs, maybe only half jestingly, for a day after our interview rumours intensified that Newey was offered (and rejected) a five-year deal touching eight figures by Ferrari.

If Horner hopes to see a reduction in the cost of racing in F1 while remaining opposed to cost control, what does he believe is a realistic level given that informed analysis shows his team to be spending an estimated $300m (£1.7m) annually?

Horner admits that it should be possible to put two cars on the grid for less than top teams are currently spending © LAT

"I guess all the big teams are probably plus or minus that, yeah..." he shoots back once the currency is clarified. Maybe, but we're talking about Red Bull, not others - does he agree $300m to put two cars on 20 grids annually is slightly excessive?

"It's too much," he nods. "I think we're all agreed it's too much... I think ideally you should be turning around $200m. It would be a good figure, and why not? We shouldn't be afraid of making profits. Grand prix teams, even Eddie Jordan, used to make profits not so long ago.

"We shouldn't be afraid of that," he repeats before adding: "I think the problem is constantly changing rules. It puts the burden of cost onto the teams."

As revealed here, it costs about $100m (£58.8m) for an average F1 team to go racing, with the majors blowing anything up to $200m per year on development - most of which eventually is negated by regulation changes. How does Horner justify spending up to triple his actual racing budget on research by back-room boffins, many of whose ideas will never see the light of day?

"If you take away that, you take away the opportunity for competition," he explains. "For example, if the situation we have this year, where Mercedes came in with a very dominant car, was how it stays, how exciting is it for fans?

"They'd not see a team having the ability to catch up, to develop during the year, to hunt those leaders down. That's what F1 is: prototype cars that develop from the start of the year to the end of the year. And part of the excitement is, for example, can Red Bull catch Mercedes this year? Can anybody catch Mercedes this year? If we don't have the ability to develop, you might as well go to a fixed formula."

Back to Horner's hobbyhorse, cost saving via regulations: who should frame what would be incredibly complex rules, certainly during the early stages?

Will Horner one day do Ecclestone's job? © LAT

"The FIA should write those, together with [commercial rights holder Formula One Management], then the teams have the choice, when they enter the world championship, whether they enter or not," believes the man many believe is a shoo-in for Bernie Ecclestone's job as F1 tsar when the octogenarian departs the sport for whatever reason. "They sign up to those rules."

By implication, then, the regulations should be written without input from the contentious Strategy Group, which has as members the 'Big Four' (Red Bull, Mercedes, Ferrari and McLaren), plus Williams (heritage) and Lotus (pervious performance) - all with one vote - and the FIA/FOM with six votes each?

"In reality..." Horner replies. The words hang. Could that really work?

"Probably not. But in reality that's probably how it should be," he says after consideration.

For clarity, is he saying that FOM basically gets into bed with the FIA to decide the rules, and they say 'That's going to be it?'

"But you've got too many vested interests in there [if you include the teams]. You've got Ferrari, you've got their historical position [Maranello's negotiated veto over rule changes], McLaren, and you've got a different position for Red Bull or Mercedes. So you're never going to get everybody in line..."

But different positions always existed across the grid, as Horner's previous examples of Jordan/Toyota show.

Jordan pulled in big-name brands in its heyday © LAT

"When I came in there was a lot more commercial sponsorship in the sport. I look down the grid now, and I see lots of plain cars," says Horner. "Eddie got Benson & Hedges and Mastercard; his cars looked like patchwork quilts they were so full of sponsors.

"Formula 1 is the most covered sport outside of the World Cup and Olympic Games, yet some teams are doing poor jobs in terms of bringing revenue in. Yes, it's getting harder and it's a difficult climate out there, but we need to be focusing on revenue streams into the sport as well [not only the so-called FOM money]."

Despite TV audience ratings plummeting in a number of key markets, Horner remains bullish: "There's an awful lot of competition for those numbers. If you compare Formula 1 to other sports it stacks up incredibly well. The amount of global coverage that [Red Bull title sponsor] Infiniti receives worldwide is unbelievable. The return on investment that all these guys look for - 'ROI' is all you ever hear - is phenomenal.

"At the end of the day, Infiniti recognised that Formula 1 is a fantastic platform to advertise their product. That's why they're committed on long-term deals that increase year on year. We have long-term relationships with all our partners. We've had a very low turnover in partners the past three or four years, and we're attracting new partners."

What, then, is Horner's summary of the current situation?

"I think there are interesting times ahead for Formula 1," he says. "For sure there are challenges, and of course we sympathise with the challenges for the small teams, but they're just as challenging for the big teams. We have a responsibility to two sets of people: first and foremost to the fans, but, secondly, also to our employees.

"It's important that we protect them and look after them, because they're the people who have got mortgages to pay and responsibilities towards their families. The worst possible thing is when those individuals aren't being remunerated or paid. And that's what we have to absolutely protect against."