Formula 1's billion-dollar problem

After a year of grace while it found its feet, Formula 1's new owner is about to find out just how tough it can be to square circles in modern grand prix racing. Social media strategies, 'fan engagement' and experimental grid ceremonies are all well and good to start with, but now it's time for the serious stuff.

Few would disagree with appointing Ross Brawn to a senior position and asking him to map out F1's future technical direction. By all accounts, Brawn knows his onions - the technical ones and the political ones too.

But once you start peeling off the layers, onions tend to produce a strong smell and occasionally provoke people to crying. And the way things are headed, Brawn and co's attempts to define F1's post-2020 engine rules are already causing a stink among its current stakeholders, and could well end in tears too.

The aims are laudable. F1 needs cheaper, louder and simpler engines. The current V6 hybrids have proved an extraordinarily expensive turn-off for fans and potential entrants. They've created a lopsided playing field where one manufacturer has a distinct and seemingly entrenched advantage over the rest.

And why on Earth would anyone else want to even think about joining this game when Honda - one of the world's largest and richest carmakers - has so publicly and catastrophically failed to attain anything approaching competitiveness after three years of trying?

It's high time for a rethink - to make F1 more accessible and more competitive. Liberty Media and the FIA propose increasing the rev limit, removing the MGU-H and standardising the turbochargers. Basically, louder V6s with KERS. It's a clever play - return to the V8 era without actually returning V8 engines to Formula 1.

Brawn says F1 has "carefully listened to what the fans think about the current power unit, and what they would like to see in the near future, with the objective to define a set of regulations that will provide a powertrain that is simpler, cheaper and noisier, and will create the conditions to facilitate new manufacturers to enter Formula 1 as powertrain suppliers, and to reach a more levelled field in the sport".

So far so good. But it's all very well deciding your bathwater has become a bit stale and tepid, and that you need to drain some of it away and top the bath up with something fresh and hot. The problem is, there are three very big and important babies are sitting in that water. They've been stewing in it for ages in fact. And they're not too happy about the prospect of changing the water simply because the parents have decided bathtime isn't as fun as it used to be and could do with a few more babies joining in.

You can see them all aligning around a similar theme. Renault's Cyril Abiteboul warns F1 is "going to open an arms race again" because of the need for manufacturers to build a new engine, suggesting instead that current units should stay but with the present limits on fuel and revs removed.

"Maurizio Arrivabene was very honest, and said to the FIA: 'We've paid a billion-dollar entry ticket, and now you don't like the show you can't sell tickets at 10% face value'" Cosworth's Bruce Wood

Mercedes boss Toto Wolff suggests F1 needs to get its priorities straight: "F1 needs to stay attractive for the current engine suppliers and then F1 should be attractive for new entrants. This is the order of priority".

Ferrari president Sergio Marchionne says he "would not countenance" Formula 1's proposed direction, threatening to pull the Scuderia out of grand prix racing entirely if F1 doesn't change course.

Therein lies the rub for Brawn, Liberty and the FIA. Do they risk throwing the old babies out with the bathwater by not listening intently to the cries of those who have remained loyal to the cause throughout the V6 era, or do they call the collective bluff and bank on these old babies actually being happy to play with the new ones once F1's new cheaper and hotter bath is run?

There's no way to know for sure until you pull the plug and run the taps again, but it's interesting to learn that even those who would stand to benefit from F1 heading in a new direction can see a legitimate reason for its existing players to feel concerned.

Cosworth used to be one of those players, before the original hybrid V6 rules came in. It has naturally backed F1's proposal to simplify the regulations for 2021 and beyond, but the company's head of powertrains, Bruce Wood (pictured below), says Cosworth would feel the same as Ferrari, Mercedes and Renault if it had committed their levels of investment into the original V6 rules.

"I went to the last Paris meeting and Ross and Charlie Whiting presented to the group," Wood tells Autosport, before F1's strategy group prepares to reconvene to discuss the rules again. "I must admit I was amazed, because they delivered all the things we had discussed.

"The bit that's difficult, and I have huge sympathy for it, is if the situation was reversed. I think Maurizio Arrivabene put it really well. He was very honest, and said to the FIA: 'we've paid a billion-dollar entry ticket, and now you don't like the show you can't now sell tickets at 10% face value'.

"I completely understand that. If we were in their position, we would be saying exactly the same.

"The current incumbents have got to come to some sort of proper agreement. It's not realistic for the FIA and FOM [Formula One Management] to turn around and say 'this is what we're doing'.

"And they shouldn't. Those companies have been a mainstay and nothing will take away from what they've contributed. You can't just tell them this is how something is going to be. Absolutely you have to respect their view, while knowing that there has to be room for their views to change a little bit.

"There's a lot of due diligence to be done there - listening sensibly and open-mindedly to the bits they don't like about the new regulations, and which bits they could stomach. It is a big job. I don't think it was ever realistic to imagine that there'd just be a brand new set of regulations and everyone would be OK. It's a really difficult circle to square."

There's a lot of collective investment riding on the current V6 engines. If Abiteboul is correct, a great deal more will be needed in parallel to produce units to F1's proposed 2021 brief.

You'd expect Mercedes to be reticent, given it has largely dominated Formula 1 under the current rules and stands to lose the most competitively from any change. Setting Honda to one side, of the original V6 manufacturers, Renault arguably has most to gain from a reset. That it is not in favour as things stand shows how much it too has riding on this.

Many consider Ferrari's quit threats to be idle. That's fair enough when senior players in Maranello have cried wolf plenty of times before, but F1's commercial arrangements all must be renegotiated simultaneously for a post-2020 world too, so if ever there was a neat time to walk away it would fall at the end of the current cycle.

"At the same time, I do feel they can't do nothing because F1 has sort of become a victim of its own success," Wood adds. "It's so successful that the prize of winning the championship has become so important that people are willing to spend that much to win it.

"Nobody but nobody, we believe, will ever come into that environment again. They have four people [manufacturers], and maybe those four stay forever, maybe they won't - but we certainly believe that no one new will come in while it costs a billion.

"If you look at Honda coming in, I suspect that's made it twice as hard. Honda are one of the most revered makers of Formula 1 engines ever. They have no limit of funds and no limit of determination, and one of the most glorious histories, and it's taken them three years just to get to this point. In our view, anybody even contemplating it will now be saying they don't even want to touch it.

"I think they [F1's bosses] recognise it can't carry on like this and one of them [the manufacturers] will leave sooner or later. You can never stop somebody spending what they want to, you can only give them diminishing returns on their investment. That's very much what we think these [proposed] rules do."

It seems Brawn and the FIA have been sensitive to both sides in drafting their proposals, but still don't have a definitive solution to the conundrum. The existing players rightly want to protect their investments. As Mercedes non-executive chairman Niki Lauda has said of concurrent proposals to introduce a budget cap in F1: "We have employees, so what do we do with them? Do we just cast them off and throw them on the road?".

Equally, it would be easier for the boards of such companies to sign off future F1 budgets if the overall spend is less, while Formula 1 would certainly benefit from lower barriers to entry and increased competition.

Cosworth said it would need to commit to an F1 engine project this year in order to be ready for 2021 - and now admits it would be difficult for any truly independent engine builder to be ready before 2022

The current levels of financial commitment and technical expertise are way beyond independent manufacturers such as Cosworth, which Wood says would need to spend "tens of millions" to develop "all sorts of cleverness" that goes into making even the 'old-fashioned' combustion elements of V6 hybrid engines work, never mind the hybrids, so costs need to be pitched significantly lower if F1 genuinely wants to increase competition.

"Up until this current set of regulations, truth be told, engine design was quite iterative," Wood says. "Now, the rumour mill says people doing the best no longer have seat inserts but have a complete steel [combustion] chamber - all sorts of cleverness that takes years to develop and costs tens of millions, so we said the two technical bits that need to be addressed are the heat energy recovery and to bring cylinder pressures down.

"The money follows that. If you can make the formula simpler, it costs less to develop and for us, if we were going to try and convince someone - say Samsung for example. If we were trying to convince Samsung they could have a Samsung-badged engine and it's going to cost $200million, they're not even going to contemplate it. If you're saying it's $20m, $30m, $40m - there might be a conversation to be had.

"I've tried to sell F1 quite a few times now, and in our experience, $2/3/400m, any company will have to go to the ultimate board and it has to be a big, big company. Not every company's board wants to get involved in something like that.

"$50million is still seen as incredible amounts of money, but lots of companies have $50million marketing budgets, and you don't have to go to the group board to persuade the marketing team. It's hard to put an actual figure on it, but somewhere around the $50million mark is where you have the most options."

Which is a long way from the sort of investment the likes of Ferrari have already made in V6 era F1. Perhaps the most likely compromise is to meet in the middle somewhere, allowing existing manufacturers to protect more of their investment, but still make it more realistic for the likes of Aston Martin, Cosworth and maybe Illmor to club together and use collective weight, expertise and financial clout to produce the sort of alternative V6 engine the FIA badly wants to see in F1.

"I think that is realistic in some way, shape or form," Wood agrees. "Obviously, Cosworth is completely independent and we need to be profitable - it isn't like when we were owned by Ford as a cost centre to put Jaguar on the F1 grid. Anything [we do] has to be profitable, and certainly that is easier if you're sharing those costs with someone else.

"We were chatting to Mario Illien about this, and we were both of the opinion that neither of us are in a position to go and invest our own money in designing and developing an engine on the idea that 'if you build it, they will come'. Really, those days are gone - you can't bet the farm on it anymore.

"As companies, we've all grown up competing with one another in many respects, but I think we all recognise it's probably in everyone's interests and probably no single individual is going to be able to do it on their own. I think we're all old enough now to see the bigger picture.

"We're having some discussions. Aston and Red Bull have a very strong relationship so there's definitely a desire to do something together there. We would like to work with that partnership. We've done a lot of work with Aston for many years. We're working very closely with Red Bull for the Valkyrie, so there's a certain logic to it and Aston have been very clear they want to be doing something more than just badging someone else's engine.

"They also don't aspire to designing it all themselves, so I think there's a natural fit there and certainly that's where some of those discussions are happening. But it's getting towards the point where it's hard to move anything forward now without quite knowing what it is we're moving to.

"It's very hard until the actual details are nailed down. At the moment, it seems like heat energy recovery is out and staying out, but it might suddenly come back in two months' time."

Cosworth originally said it would need to commit to an F1 engine project this year in order to be ready for 2021, and now admits it would be difficult for any truly independent engine builder to be ready before '22 with the rules still lacking firm definition.

There is much still to be discussed, as Liberty now faces down the kinds of big-picture problems that seem to torture F1 in perpetuity. Rules, cost caps and commercial rights are the biggest of the big fundamentals, guaranteed to produce a controversial fallout whichever way you swing.

They are always difficult circles to square. Can Liberty create the post-2020 utopia it envisions for F1, while persuading its current biggest players to continue to buy in? Well, that's the billion-dollar question.