Does F1 need the constructors' championship?

Although various affected parties in Barcelona sought to downplay the severe funding crisis faced by three independent teams, there is no doubt that Formula 1 risked coming catastrophically close to having but a dozen starters in Australia - by far the sparsest grid since that farcical US Grand Prix at Indianapolis a decade ago.

Suggestions of a 'Dirty Dozen' grid were contemptuously brushed aside, however disaster was narrowly averted only after various financial promises were (allegedly) made to Force India, Lotus and Sauber by commercial rights holder Formula One Management, to wit by way of an eventual payday loan brokered by F1 tsar and FOM CEO Bernie Ecclestone.

The uncomfortable truth is these loans bought no more than breathing space, with disaster looming unless the root causes - namely the sport's inequitable revenue distribution, its declining incomes caused by dwindling (live and TV) audiences, a lop-sided governance which disenfranchises half the grid and rampant costs - are properly addressed and brought under effective control.

The bottom line is that the trio - which stressed they were not 'striking' per se, but simply found themselves in dire straits - made it clear to FOM that they did not have the liquidity to fund the opening set of flyway races, and urgently required ex-gratia payments of at least $10 million each to do so. FOM's expedient solution of advancing their February/March payments simply deferred the issue to another day.

Jordan, now Force India, finished third and fourth in the disastrous, six-car 2005 US Grand Prix © LAT

Think Wonga, and you get the picture. And lest anyone argues that the controversial lender earns astronomical returns on its loans, it can be taken as read that FOM has (or will) extract its pound of flesh in due course...

The 'Bernie Money', as the teams' collective share is euphemistically referred to, is calculated on a complex basis, using constructors' championship standings over the past three years as base (Column 1) in addition to actual performance in the previous season (Column 2). Each 'Column' is made up of 50 per cent of the 'pot', with teams that finished in the top 10 at least twice in the past three years sharing Column 1's proceeds equally.

Column 2 rewards the top 10 on a sliding scale according to performance. For example, the reigning constructors' champion receives 19 per cent of Column 2's pot, the runner-up 16 per cent, the fifth-placed team 10 per cent and the final recipient four per cent.

This money is disbursed in 10 tranches. However, due to the complexities of F1's contracts - and (increasing) defaults in former race hosts such as India and Korea - FOM projects revenues for the year, then reconciles the final amount once all monies are received. A tenth of the projected amount is paid out equally in April through November of the following season, with the balance payment disbursed in March of the following year.

Thus, in 2015, Team A receives its balance payment carried over from 2013 in March, plus nine-tenths of its projected 2014 earnings, with 2014's balance payment accruing in March 2016. In addition, three CCB teams - Red Bull Racing, Ferrari and McLaren - plus Mercedes and Williams receive premiums in accordance with their individual covenants. Complex, yes, but that is Formula 1 under Ecclestone and CVC...

The beleaguered trio of independents were advanced the final carry-over from 2013 (actually due in March) in February, and are due to receive their first 2014 dividend as this is written. Do the respective advances add up to $10million each? No, more like $7million each on average, and thus the problem still exists.

Ironically F1 faces this situation despite being a billion-pound business, with gross profit percentages comfortably in the seventies. Even after expenses - the teams' collective share - FOM's parent company, the venture fund CVC Capital Partners, nets close to 30 per cent, or around $400million (£300million) per annum.

Around two-thirds of this flows straight out of F1 to banks in settlement of loans taken by CVC to fund upfront dividends to its consortium of lenders, and thus less than 10 per cent remains in FOM's coffers. Any surprise that CVC steadfastly refuses to increase its payments to teams; it is not a clear-cut matter of 'won't' but rather of 'can't'. So much for its management of the sport...

Lotus' former guise, Renault, claimed drivers' and constructors' titles in 2005 © LAT

Therefore three operations with F1 histories totalling 75 years and collectively boasting 55 grand prix wins - albeit some under different guises - are reduced to begging to make it to Melbourne. As outlined, CVC refuses to react proactively to a dilemma that plunged two teams into administration and threatens to engulf a further three, seemingly preferring to run the sport along ostrich lines.

The latest funding crisis was driven (predominantly) by F1's supplier network tightening up on payment terms - some demanding upfront settlement - and understandably so, for the administrations of Caterham and Marussia in November knocked both their bank balances and their commercial confidence in the sport.

Formula 1 as a whole is, though, equally culpable, for its major players, too, seem to have buried their heads. During last week's Strategy Group and Formula 1 Commission summits about the only agreed motion was a ban on multiple helmet liveries during a season. F1 fiddles as teams burn...

Virtually every cost-saving proposal, prepared by respected management consultancy McKinsey & Company after being commissioned by the FIA to provide a platform for cost-saving regulations and a compass for F1's future, was either rejected or delayed. According to sources it was an acrimonious meeting, with the conduct of certain delegates not in keeping with the occasion.

Effectively all change was blocked until 2017 (at the earliest) due to unwieldy governance procedures that demand; a) the select Strategy Group (comprising the commercial rights holder, governing body and just six teams) agree by majority vote to escalate any carried motions to the Formula 1 Commission, and b) that decisions be approved by March 1 or be deferred to the following year unless adopted unanimously.

Sauber scored points in six races during its maiden campaign in 1993, but went without in 2014 © LAT

So, as the independents last week prayed for salvation they saw their hopes utterly dashed by vested interests intent on protecting their own entrenched positions, and walked out of the Geneva meeting knowing that crucial decisions that affected their immediate futures had been delayed for another year, at least.

The reasons invariably advanced by the anti factions proposals are tabled - in their latest guise these range from outright bans on windtunnels through to third cars and single-specification chassis to 'core cars' and full customer teams - that these are 'not in keeping with F1's DNA' and/or do not address nor satisfy the complexities of the all-important constructors' championship table used for revenue distribution.

This reasoning is, though, utterly disingenuous, sparking the question: how to define the sport's double helix given its transformation over six decades from motley pastime practiced by enthusiastic mechanics to world-class spectacle?

Further, since when was grand prix racing contested by pure constructors only? Indeed, this category was introduced in 1958, eight years after the drivers' equivalent and not used as base for revenue distribution until the eighties. Indeed, over the years, proprietary chassis, customer teams and odd-balls have competed in F1. Some, crucially, even winning races and titles.

Williams started (twice) as a customer operation, while Ferrari's Juan Manuel Fangio claimed the 1956 title in - whisper it - a rebadged Lancia D50 after the Scuderia's own cars bombed. Ferrari claimed the first four places in the 1961 Belgian Grand Prix with a fifth 'Sharknose' 156 retiring. McLaren regularly ran third cars in separate liveries from its brace of Marlboro cars in the early seventies.

Sir Jackie Stewart's first world championship came in a Matra, run by Tyrrell © LAT

Tyrrell, the team that begat the current all-conquering Mercedes operation, entered F1 with a Matra powered by Ford's DFV rather than the V12 envisaged by its French maker - in the process winning the 1969 drivers' title with Jackie Stewart - then contested the 1970 season with a March before building its own designs. In fact, Tyrrell scored March's first grand prix victory, and arguably the marque's only win on merit...

Renault entered F1 in 1977 with a single car, as did Toleman, the precursor to Benetton, Renault F1 and now Lotus. The original Lotus, too, played the numbers game, entering up to three cars on occasion and one on others. Where does DNA feature in all this?

Indeed, since when was hiving off F1's commercial rights for exploitation (operative term) by a venture fund in F1's so-called DNA? Since Ecclestone found a buyer willing to part with over a billion dollars to acquire its riches, is the answer. These factors are conveniently overlooked as the anti-brigade bangs on about F1's sport's alleged genetics.

All of which begs the question: what exactly is F1's definitive 'DNA' if constructors have not always been part and parcel of F1's make-up? Here's betting not a single team principal could answer that question in words of one syllable, yet most bandy the term about liberally when up against change. Yet, ironically, they overlook that progress is part of F1's DNA.

Vanwall won the very first constructors' championship in 1958 © LAT

Nor is the constructors' championship critical to F1's financial structure, or even crucial to its existence, as the years 1950-58 and a variety of customer teams prove. Indeed, solid arguments could be advanced that the championship jeopardises F1's sporting elements, for teams are understandably more concerned with earnings than outright on-track duels.

In fact, payment by constructor standings is a relatively recent introduction, with teams earlier surviving on a mix of starting and prize monies. During the seventies the purse was distributed via complex formulae of grid positions, fastest laps, mid-race positions and final results, along with mid-season and final championship standings. That, too, is in F1's 'DNA'...

Basing revenue distribution on constructors' championship standings requires a definition of the term, which was refined only after Ecclestone acquired the commercial rights in the late nineties - ahead of selling them to CVC via complex transactions - and introduced a constructors' franchise which eliminated ragtag team owners, and forced newcomers to pay multi-million dollar bonds ahead of entering.

In broad-brush terms a constructor is an entity that owns the intellectual property to a (diminishing) range of components, including monocoque, certain structures and items such as fuel cells and pedal boxes. That said, teams can - and do - outsource design and manufacture of said parts, which, if anything, makes a mockery of the clause in the first place.

By any measure, the essence of being a 'constructor' has varied over the years, and is clearly an impediment to progress, and thus the sport's survival - and, equally, that of various teams. Do 90 per cent of fans ever recall which teams wore the crown over the last decade? Of 15 constructors to win the title since its inception, just three survive to the present day, less than the number (four) currently facing extinction.

Most sports have team championships, yet one that considers itself the most glamorous and progressive of all sticks doggedly to an archaic term and structure, for no reason other than to resist change. Many, such as cricket adopted new formats (One Day International and Twenty20) and rugby's World Cup Sevens, while those that failed to adapt (such as water polo, croquet and wrestling) lost Olympic status a century ago.

Clearly the constructors' championship long ago outlived its original purpose, and should either be dropped or adapted to suit the sport's prevailing needs, just as it was adapted in the nineties when it suited certain parties to close ranks and milk the sport.

A teams' world championship, anyone?