The 'four pillars' that helped Mercedes commit to F1

Mercedes may have faced season-long speculation that it could pull the plug on Formula 1, but there is no doubt it is ending 2020 more committed than ever

The 'four pillars' that helped Mercedes commit to F1

Its recent tie-up with INEOS, which has resulted in a shareholding reshuffle, has created what team boss Toto Wolff has called a 'joint powerhouse' to continue its progress in F1.

Yet the complications in sorting out the INEOS buy-in and a neat three-way ownership split of the team, allied to sorting out a fresh team principal contract for Wolff, explains why it took so long to go public with the plans.

But what is clear speaking to Mercedes chiefs now is that, rather than there being any intense debate this year about if F1 fitted well with the road car company's future amid changing times for automotive manufacturers, the sport actually easily ticked all the boxes it needed to for the German car maker.

For Mercedes chairman Ola Kallenius, when it came to discussions about whether or not to commit to F1 for the new Concorde Agreement period from 2021, it was important that the decision was based on rational reasons - and not just on the emotions of enjoying the racing.

And, as Kallenius explains, there were in the end four key 'pillars' that the sport had to fulfil for Mercedes to be completely convinced that F1 was the right place to be.

"I know there was some speculation in the press, but we never seriously considered pulling out because it's such a strong part of our heritage," explained Kallenius, when asked by Autosport about the company's future in F1.

"We have a brand that was literally born on the racetrack. But we did ask ourselves in the board, what are the pillars that make up Formula 1, beyond the emotional connection to the sport? How do you look at this from a rational point of view? We came up with four pillars that you need to answer in our view with a yes."

Those four key areas were the show, the environment, the finances and future profitability.

Here Kallenius explains why they were each so important for Mercedes.

The show

While F1 does occasionally throw up some dull races, the 2020 F1 season has shown how the sport actually delivers more often than not a pretty exciting spectacle.

Liberty Media's push to increase social media exposure, and get behind Esports, has also played a part in boosting the younger audience - something Mercedes is especially happy with.

Kallenius explained: "The number one is: how is the show, is the show good? And what about the fan base?

"What we have particularly seen in the latest year, through social media, is really an explosion in the reach. And the best news is that the younger fans are coming, so the 15-to-30-year-olds through Esports, through social media, and through a great show.

"I don't know a motorsport spectacle that is better than Formula 1. That was question number one. It's answered with yes."

The environment

While F1's move to turbo hybrid engines was a step change for the sport in addressing the environmental needs of car manufacturers, it has ramped up its environmental efforts significantly in the past two years.

As well as F1 committing to become carbon neutral by 2030, the sport is looking towards a future where grand prix racing is a battleground for sustainable fuel technology.

And although the continued use of hybrids may not directly fall in line with manufacturers who are focusing on all-electric futures, Kallenius says F1 is doing the right thing.

"We have made a very clear commitment for Daimler and for Mercedes to go into a CO2 neutral future, with 'Ambition 2039' for passenger cars," he said, in reference to his company's CO2 neutral target.

"We want to achieve a CO2 neutral position in three product life cycles inside 20 years. There has to be a credible path towards sustainable motorsport as well.

"I've also spoken to Greg Maffei [Liberty president] about this at FOM, who very much agrees with it. And we put out a manifesto for the team earlier this year, on how we're going to take the Mercedes F1 team towards CO2 neutrality.

"Technology is an important part of that. It's a hybrid formula already today and I can see the electrical part of it increasing. I can see it being a testing ground for lower carbon or no carbon fuels, which will play some role in the world going carbon neutral eventually.

"So that second [pillar], can you credibly make the sport more sustainable? I believe yes. And we're certainly committed to it."

The finances

F1 costs have risen dramatically in recent years, with successful teams spending hundreds of millions of pounds each year in their efforts to win.

The rampant acceleration of expenditure was unsustainable and risked even successful car makers pulling out of F1 if they could no longer justify the spending to their company's boards.

F1's imposition of a budget cap from 2021, allied to changes in the way the sport is financed to make it more equitable for everybody, are factors that have made staying in F1 a no-brainer for Mercedes.

"The third thing [for us] was financial sustainability," added Kallenius. "The cost cost cap helps. We were an advocate for it. It makes the economic proposition better, so I think we're ticking that box as well.

Future profitability

What the changes in F1's costs have also done is perhaps change the business model of teams completely.

Once, they were nothing more than money pits for owners, but now there is a chance to make the finances much more attractive - and even make a profit.

"The fourth one was, does it always have to be a cost centre, or can it be a sports franchise, like a football club or an American football club in the US?" continued Kallenius. "And we can see now that people are starting to look at this more like sports franchises.

"Getting a great and strong, professional partner, that knows professional sport, like INEOS, into the picture shows that. The fact that somebody like Jim [Ratcliffe, INEOS CEO] makes a decision to join forces with us, I think reinforces that fourth pillar.

"And with those four pillars, to me, the decision is clear. We're in."

shares
comments
Ferrari to set up 'Haas hub' F1 facility at Maranello base
Previous article

Ferrari to set up 'Haas hub' F1 facility at Maranello base

Next article

Ocon hails "very strong" progress through comeback F1 season

Ocon hails "very strong" progress through comeback F1 season
Load comments
What the FIA must do to restore F1’s credibility Plus

What the FIA must do to restore F1’s credibility

OPINION: The first stage of the 2022 Formula 1 pre-season is just over a month away, but the championship is still reeling from the controversial results of last year’s finale. The FIA acknowledges F1 has had its reputation dented as a result, so here’s how it could go about putting things right

The six F1 subplots to watch in 2022 as a new era begins Plus

The six F1 subplots to watch in 2022 as a new era begins

As Formula 1 prepares to begin a new era of technical regulations in 2022, Autosport picks out six other key elements to follow this season

Formula 1
Jan 24, 2022
Why newly-retired Raikkonen won't miss F1 Plus

Why newly-retired Raikkonen won't miss F1

After 349 grand prix starts, 46 fastest laps, 21 wins and one world championship, Kimi Raikkonen has finally called time on his F1 career. In an exclusive interview with Autosport on the eve of his final race, he explains his loathing of paddock politics and reflects on how motorsport has changed over the past two decades

Formula 1
Jan 23, 2022
Unpacking the technical changes behind F1 2022's rules shakeup Plus

Unpacking the technical changes behind F1 2022's rules shakeup

Formula 1 cars will look very different this year as the long-awaited fresh rules finally arrive with the stated aim of improving its quality of racing. Autosport breaks down what the return of 'ground effect' aerodynamics - and a flurry of other changes besides - means for the teams, and what fans can expect

Formula 1
Jan 21, 2022
Why new era F1 is still dogged by its old world problems Plus

Why new era F1 is still dogged by its old world problems

OPINION: The 2022 Formula 1 season is just weeks away from getting underway. But instead of focusing on what is to come, the attention still remains on what has been – not least the Abu Dhabi title decider controversy. That, plus other key talking points, must be resolved to allow the series to warmly welcome in its new era

Formula 1
Jan 20, 2022
The Schumacher trait that will give Haas hope in F1 2022 Plus

The Schumacher trait that will give Haas hope in F1 2022

Mick Schumacher’s knack of improving during his second season in a championship was a trademark of his junior formula career, so his progress during his rookie Formula 1 campaign with Haas was encouraging. His target now will be to turn that improvement into results as the team hopes to reap the rewards of sacrificing development in 2021

Formula 1
Jan 19, 2022
The “glorified taxi” driver central to F1’s continued safety push Plus

The “glorified taxi” driver central to F1’s continued safety push

As the driver of Formula 1’s medical car, Alan van der Merwe’s job is to wait – and hope his skills aren’t needed. JAMES NEWBOLD hears from F1’s lesser-known stalwarts

Formula 1
Jan 15, 2022
When BMW added F1 'rocket fuel' to ignite Brabham's 1983 title push Plus

When BMW added F1 'rocket fuel' to ignite Brabham's 1983 title push

There was an ace up the sleeve during the 1983 F1 title-winning season of Nelson Piquet and Brabham. It made a frontrunning car invincible for the last three races to see off Renault's Alain Prost and secure the combination's second world title in three years

Formula 1
Jan 13, 2022