How a million pound crash highlighted F1’s money squeeze

After a fraught Emilia Romagna GP for Mercedes, one of team boss Toto Wolff’s main frustrations was the potential consequences of the huge accident suffered by Valtteri Bottas.

It was not the lost points that he was worried about, for Bottas was enduring a difficult race prior to being harpooned by the Williams of George Russell that was attempting to overtake the Finn, but the possible impact on the future development programme for the W12 triggered by the cost of the damage. Having taken the wreck apart in Brackley, the team has estimated that the final bill will be around £1 million.

It’s an extraordinary notion that mighty Mercedes has to fret about paying for broken parts – engineering chief Andrew Shovlin even highlighted the front wing that was nudged into the tyres by Lewis Hamilton – but the episode highlights just how pressured the top teams are in this new era of FIA financial regulations.

The requirement to spend less than $145m in 2021 on developing, building and running their cars has led to major changes for Mercedes, Red Bull and Ferrari, the three biggest spenders. All had to trim staff, switch people to other projects, and have a major rethink about their operations. Spending too much will incur penalties, as for any other form of rule-breaking.

“We’ve had to go through the pain of redundancies over the winter,” says Red Bull’s Christian Horner. “We’ve had to re-size, re-package ourselves, and it’s really tough when you’re saying goodbye to members of the team, some of whom have been there for 25 years across its different formats.

“So it’s been really been a tough exercise and continues to be a significant challenge, particularly for the bigger teams. It drives efficiency into the business, because it quite simply has to.”

A big element of that cost saving is making and using fewer parts across the season. Where possible, components have been redesigned to last longer and complete more race weekends. Indeed, Mercedes quietly introduced more steel and thus less carbon into the suspension of the W12 purely for cost reasons - the change has added some weight, but it gives the parts a longer life.

Lewis Hamilton, Mercedes W12, changes his front wing

Photo by: Steven Tee / Motorsport Images

The team also repurposed its W11 chassis as W12s instead of building a run of new examples – for the record, Bottas's badly damaged car was chassis 05.

PLUS: Why Russell was right to be wrong about Bottas after Imola F1 clash

More than ever before, new aero parts have to really earn their place on the car in CFD and the windtunnel before they go to manufacturing, and there’s a greater focus on managing production. There’s no point in being left with half a dozen obsolete Bahrain-spec front wings, when a new version comes on stream a few races down the line. But if you lose a couple in one day, as Mercedes did at Imola, you may be forced to build unplanned extra versions of the current one to ensure there are enough spares in stock.

All of this reflects how smaller teams have always been run, because they simply didn’t have enough cashflow. Only three or four years ago, a struggling Force India - now under new ownership as Aston Martin - had to justify the cost of every nut and bolt. However it’s a new experience for teams that, within reason, could traditionally spend what they needed to spend.

It also explains why the negotiations over qualifying sprints between the teams, F1 and the FIA dragged on for so long before being firmed up earlier this month. Three extra races, with by definition a high risk of contact as drivers scramble to make the most of the new format, presented the prospect of extra expense.

“We are really struggling to just come in below the budget cap and we’re talking about tens of thousands of pounds and not hundreds of thousands,” Wolff said in Bahrain before an agreement on sprints was reached.

“Therefore we would really like to support Stefano [Domenicali] and Ross [Brawn] with the idea because I think it’s worth trying.

“But we simply haven’t got the margin to go for it and then find out that there is an extra half million pounds or more that we have to find within that budget cap, because that could mean looking at people again, and that’s not where I want to go any more, at all.”

Toto Wolff, Team Principal and CEO, Mercedes AMG

Photo by: Glenn Dunbar / Motorsport Images

Horner added: “We support this in the hope that if it works it generates future revenue, future interest, future benefit into the sport.

“If you divide $145m by 23 events you’re on a crude basis [seeing] what it takes to operate a Grand Prix car, and of course, adding in, effectively albeit a shortened race is just more cost that we’re naturally going to incur the usage of parts.

“There just has to be a sensible allowance that takes that into account, because as Toto says, we’re chasing £10,000, £20,000, £30,000 savings at the moment to ensure that we’re hitting the cap. And to suddenly have a variable like this is something that just needs to be accommodated. We’re keen to support it, but there needs to be an accommodation.”

That has now been reached, and the teams have been promised extra income from the sprint races. There is also something akin to an insurance policy that will help them pay for crash damage.

The cost of accidents at any other point in the season still has to be absorbed by the teams, for which there is a contingency built into the budget. But this in F1, and everything is taken to the very edge, so that the wiggle room is as tight as possible. Teams often finish a season having lost the odd wing, but without a crash of the scale of that suffered by Bottas last weekend, and which forces them to bin parts that were scheduled to do many more than two races.

“Our drivers have been incredibly good at getting through seasons without breaking much in recent years,” Shovlin said on Sunday night. “And certainly the bill in terms of carbon work and metal work will be very extensive from that.

“So we’ll go through and look at what we can actually salvage, and get the cars back together for Portimao. But it is quite a concern when you have these sort of incidents.

Marshals clear the damaged car of Valtteri Bottas, Mercedes W12, from the gravel trap

Photo by: Charles Coates / Motorsport Images

“If you have a series of these kind of large accidents that are doing significant damage, and this has been bad for us, because we’ve had a front wing with Lewis as well, then that will definitely exceed our allocation for what we have available to spend on the parts.

“In an ideal world, you run them to life, you don’t break them. Anything that you do break, hopefully it’s end of life or something that is about to be obsolete, but that is definitely not the case here. It is really a factor of the cost cap, and the money has got to come from somewhere. Ultimately if it becomes a big problem, it can start to hit your development budget. So we do need to be mindful of that moving forward.

“We are very stretched on cost cap. And what we always feared is a total write off of a car. Now this one is not going to be a total write-off, but almost, and that is not something we really wanted.”

The early indications from Mercedes' detailed examination are that the chassis can eventually return to action, while the power unit – not part of the cost cap but significant in terms of future grid penalties – has also survived. However much else has been binned, and parts that were earmarked for later use taken off the shelves in the stores.

At the moment there is no immediate need for Mercedes to change its development schedule. It’s a moving target anyway, as the team doesn’t know how the fight with Red Bull will unfold, and thus how long it will have to keep pushing on with bringing upgrades. The ongoing 2022 project will inevitably require more and more attention.

What the crash has done is eaten into the aforementioned contingency that was factored into the team’s planning. Another huge crash in the course of what is F1’s longest ever season could lead to a genuine squeeze late in the year.

A further complication is that the cap allows for a full season of 23 races. There’s a reasonable chance that some will fall by the wayside in the coming months due to the pandemic, and the cap will in turn be trimmed to reflect that – but only if events are cancelled with a reasonable warning, and teams haven’t already spent cash directly related to them. Lost races will also mean reduced income for F1, and hence the teams.

Max Verstappen, Red Bull Racing RB16B, Lewis Hamilton, Mercedes W12

Photo by: Andy Hone / Motorsport Images

The most painful prospect for the teams is that the cap drops to $140m next year, the first season with the new regulations, and then to $135m in 2023. By then, the likes of McLaren, Alpine and Aston Martin will all be pushing hard up against it.

Teams will thus become ever more nervous about the cost of crash damage. Whereas in the past a big shunt in qualifying would lead observers to speculate about gearbox grid penalties or a pitlane start after chassis swap, now there will be financial consequences too.

It’s worth considering too how cost considerations might affect future driver choices. Given the constraints, will a top team now take the risk of hiring a rookie, or even someone in their second season and still on a steep learning curve and trying hard to impress?

The cost cap has added an intriguing element to F1, and one that was entirely necessary – without it there was a good chance that we would not have 20 cars on the grid in years to come. And as Wolff’s frustration makes clear, it is already reining in the top teams and closing up the grids.

It also adds an extra edge to the relentless competitive battle between the teams. F1 used to be an outright spending war, but now it’s a question of who can use their money efficiently. And who is smart enough to submit to the FIA a final reckoning for 2021 as close as possible $144,999,999…