F1's top teams are throwing money away

Formula 1's increasingly prescriptive sporting and technical regulations have levelled the cost of actually contesting a world championship season.

Where once race team headcount levels were unrestricted and windtunnel hours uncontrolled, now curfews and limits on pit crews apply across the board - from Mercedes down to Manor - while aerodynamic activities have systematically been pegged back.

Supply and demand - and the fact that 90% of the teams are based within the United Kingdom's crescent-shaped 'F1 valley' - has provided an element of payroll parity (save for bonus structures and benefits), with migration within this close-knit labour force highlighting any anomalies. The equation is simple: he who pays least (or not at all, as the case may be), sits without personnel.

Controlled tyre options, bans on testing save for the occasional officially-sanctioned sessions and cost-capped, long-life powertrain components have narrowed the delta, while bans on spare cars, exotic materials and the imposition of flex tests have reduced component costs across the board.

Indeed, where once teams built up to 10 chassis each year, that number has, on average, been halved, while regulatory stability and concessions enable teams to run year-old kit on occasion.

So with input costs largely controlled, the actual budgets required to design, build and race and repair two F1 cars across the world are largely similar, whether for Ferrari or Force India, Red Bull Racing or sister team Toro Rosso.

What is this annual cost, and what does it in-/exclude? Estimates vary between £80million and £100million, with an average of the two providing a solid baseline.

That is roughly what Sauber and Manor spent during 2016 - with neither enjoying much development - and marginally less than the individual budgets of Force India and Toro Rosso, both of whom developed modestly (if effectively) during the season. Williams spent slightly more.

Included in the estimate are manufacturing and components costs for four cars including powertrains and tyres, race team freight costs, plus travel/subsistence/accommodation for prescribed staff, while excluded are variables such as executive/driver salaries (where applicable), staff bonuses (ditto), hospitality (save catering) and marketing activities.

Yet, as a perusal of last week's budget analysis outlines, Mercedes and Ferrari blew £265m and £225m during 2016 respectively (without engine costs), while Red Bull Racing spent £215m - in each case well over £100m more than the baseline, or an additional £2m per week. In fact, Mercedes burnt an additional £3m per week...

True, substantial executive bonuses and eye-watering stipends are included in those figures, as are marketing/hospitality costs - and the bigger the team and more generous its backers, the larger such bills. Still, an extra million (or three) quid per week is not to be sneezed at, making the effort of fourth-placed Force India all the more remarkable.

This, though, begs the billion-dollar question: What are the 'Big Three' blowing these bucks on?

Permitted development and simulations is the simple answer, but large portions of those costs are indirectly covered by commercial rights holder FOM via various non-performance related bonuses 'earned' by so-called Constructors' Championship Bonus teams. McLaren, too, is a CCB team - and spent well over £1m per week on development.

In the (highly-recommended) book Total Competition, co-written by Ross Brawn and Adam Parr, Brawn suggests that "at one time [the gain] was something like £100,000 per tenth of a second per lap. Proposals [from engineers] had to meet that ratio."

Yes, Formula 1 legend Brawn, whose record includes around 20 world titles with Jaguar's sportscar programme, Benetton, Ferrari and his eponymous team, plus the foundation of Mercedes' recent successes, clarifies that "the cost was tooling, manufacturing, everything" before adding the caveat that the cumulative improvement of £1m spend does not necessarily equal a full second. Still, his numbers provide for some intriguing implications.

Let us, though, assume an actual improvement of half that, i.e. a cost of £200,000 per tenth of a second, or a cumulative cost of £2m per second: Even by that (highly) conservative standard, the £56m bonus disbursed by F1 commercial rights holder Formula One Management to Mercedes would be worth 28 seconds clear - per lap - over Force India, a team running the same tyres and powertrain!

Ferrari's £80m should have provided an even more spectacular performance boost over Sauber, namely one of 40s, while Red Bull and Toro Rosso certainly weren't separated by the 28s the former's bonus implies - without even factoring the disadvantage faced by the junior team in running 2015 Ferrari power into the equation.

While the idea of teams outpacing each other by margins of 28s is obviously ludicrous, the question of exactly how much speed that extra spend is buying a major team is still valid.

Taking qualifying for last Spanish Grand Prix - used as example as all teams tested at that venue, and therefore know its nuances - Lewis Hamilton's pole time of 1m22.000s was just under four seconds quicker than Rio Haryanto's back-of-the-grid time of 1m25.939s - in a Manor running (ostensibly) the same specification power unit and similar transmission.

Now, with all due respect to Haryanto, three-time champion Hamilton is at least a second per lap quicker - and, if not, one wonders why one paid to drive while the other earns a stratospheric wage that facilitates his rock star lifestyle, complete with private jet. Factoring in the driver difference narrows the car performance gap.

Lest Mercedes (or Hamilton) apologists suggest that lap-time comparisons at Barcelona are skewed by testing knowledge, a similar analysis for Hockenheim provides largely the same result - and is, if anything, more relevant, for F1 had not raced there in 2015. For the record, Hamilton posted a Q3 time of 1m14.363s versus Haryanto's Q1 best of 1m16.977s for 20th.

This provides a delta of 2.6s for an annual budgetary difference of £150m, or over £50m per second (£5m per tenth).

Far from making a mockery of Brawn's theory, these calculations highlight the cost-ineffectiveness of the major teams, who, rather than crowing about their wins and title successes, should instead examine their internal inefficiencies - then join the chorus calling for annual cost caps of, say, £150m.

As Force India deputy team principal Bob Fernley asks: "Even with a cost cap of £150m per year, that's £1m a week spent on development - How much more do you need?"

However, his call is unlikely to be heeded, for such caps provide 'only' £1m per week over independents, and Mercedes needs thrice that to win championships.

The wonder of it all is that successful businessmen such as Dieter Zetsche (Mercedes), Sergio Marchionne (Fiat-Chrysler, Ferrari) and Dietrich Mateschitz (Red Bull) don't insist on the same levels of efficiency from their F1 teams as from their mainstream production facilities. Imagine car factories (or canning lines) 'wasting' £50m per annum with little tangible return, let alone double that.

An even bigger wonder is that FOM, having funded these excessive budgets for the majors, fails to grasp why independents are unable to fight at the sharp end.