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How the new F1 entry fee will work
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Darren Heath
Posted By: James Allen  |  02 Nov 2012   |  11:13 pm GMT  |  53 comments

The much discussed entry fee hike for F1 teams was confirmed this week, as the 2013 Sporting Regulations were published by the FIA.

Under the new rules for 2013, the team that wins the constructors’ championship will pay a basic fee of US$500,000 and then $6000 US for every point scored. The other teams will pay the same basic fee plus US$5000 per point.

So, for example, if Red Bull continues scoring points in the three final races at the same rate as they have scored in the last three races then they will end up with around 520 points, which will equate to $3.1 million on top of the $500,000 basic fee, a total of $3.6 million.

This is because the FIA wants a greater share of the approximately $1.5 billion turnover the sport generates each season, as FIA president Jean Todt told the Financial Times,

“FIA is a non-profit organisation but we need to run our organisation,” he said. “We need to encourage development of the sport, we need to encourage development of action for road safety. We cannot be a federation without having any revenue. So, where do we find our revenues?”

The FIA sold its commercial rights to Bernie Ecclestone for 100 years starting in 2011, for a fee of around $350 million, which is all ring-fenced in the FIA Foundation and cannot be used for the running of the FIA. Ecclestone’s annual payment to the FIA is set to increase to around $20 million from a current level of around $7 million. So the FIA will have around $35 to 40 million annual income from F1 alone. Todt insists that he has not given up any of the FIA’s regulatory power in exchange for the cash.

The FIA Sporting Regulations, published this week, state that the basic fee must be paid at the time of entry and the balance is due on November 30th preceding the year the entry is for. Currently none of the teams is entered in the 2013 world championship, as the teams were waiting to know the terms. That is expected to change soon. Normally the entry should be made between 30 June and 15 July.

This year teams will share around $675 million of the commercial revenues between them, but the split is not even; Ferrari gets the most as the Longest Standing Team, with the other leading teams also earning a lot more than teams such as Caterham, Marussia and HRT. Winning the Constructors Championship is worth over $70 million.

Although there are some eye watering numbers being quoted, as Mercedes boss Ross Brawn said today, for most of the midfield teams scoring around 50 to 80 points a season, the costs will not be substantially greater than currently. “I think, for us, we would be delighted to pay it because we would be scoring a lot of points,” he said. “In fact, if you’re a mid-range team, and considering the fact that all the extra facilities that we pay for separately at the moment are rolled into that entrance fee, I think for a lot of teams it’s going to be very similar. It’s going to make more substantial difference for those teams who finish in the top three or four of the championship. I was being a bit flippant, but obviously I hope that we can have that problem next year.”

FIA president Jean Todt explained in the FT interview recently how he justifies the step up in entry fees,

“At the moment the way things are split is that the teams are paying one entry and then we charge them a service which is retail which is a different service which is supplied to them and those services are recharged to them,” he said.

“So, it’s not we just murder everybody. The biggest, with more income, will have to pay more. The smallest, with less income, will be able to pay less. The figure that I have been reading and all that are not accurate figures and the intention, rather than having now the entry fee which is 330 euros, something like that, plus the repartition of the cost, which are the result of the services which are supplied, which is about 400 per team, so 350 plus 400, that makes about 750, all that will be included on the item entry fee.”

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53 Comments
  1. Bradley Willis says:

    Sheer greed

    1. Sebee says:

      Inflation!

    2. W Johnson says:

      Heres’ an idea for FIA – Create a set of trumped up fines for a team costing $100million.

      Oh yes…they’ve already done that one..worked once but might pushing their luck trying that one again especially as other teams escaped the charge for doing the same!

      FIA has obviously been scratching around for funding raising ideas in there department of doh!ideas.

      GREED.

  2. Johnny Mol says:

    Hola,

    Any inside to the teams feedback on this? I don’t know the current entry fee’s but it seems like a sucker punch for the top teams. I guess it’s quite fair in that respect.

    Cheers

    Johnny

    1. Sebee says:

      They get more from Bernie, so they can afford to pay more.

      1. KRB says:

        Is that known for sure? A new Concorde hasn’t been signed yet, afaik.

        The difference in prize money between 1st and 2nd has to be big enough as to cover the extra 20% that the WCC champs will have to pay.

        I think also that 11th and 12th should get some prize money. Right now the bottom three teams are just hoping for a high-attrition race, so they can finish 12th in a race(Caterham) or 11th (HRT) and snag that 10th spot in the WCC.

        An even better idea would be to allow more testing by bigger teams, but that they would have to fork over big money (over and above their testing costs) to a pooled fund which would be re-directed back to the smaller teams, to allow them more testing time, etc.

  3. briggykins says:

    Just so I’m understanding this right…let’s say a team completely dominates and wraps up the constructor’s before season’s end. Does this rule not then provide an incentive to intentionally lose any remaining races, seeing as any further points scored would add to their fee?

    1. James Allen says:

      I see what you mean but they still earn far more than they pay out

      1. Sam K says:

        But don’t you win more money per point than the $6000 you pay for it? I think teams will still be just as motivated to score as many points as they can.

    2. alam says:

      Worth more in commercial sponsor revenue later on, it like saying x team has won 120 races and y team has won 155.
      I think Ron Dennis is the person who uses this the most, he always says ‘Mclaren have won 1 in every 4 races it has participated in’.

    3. Arion says:

      But not so attractive to the sponsors who hold the purse strings.

    4. Des Murray says:

      But surely there’s a financial incentive to earn points that outweighs the ‘entry fee’ or else no one would race at all?
      We’ve heard of teams jostling for 6th or 7th in the last couple of races in a season because the difference of one place in the standings is very significant for the following year’s budget.

    5. Felipe, everybody else is faster than you… can you confirm you understand that message

  4. Phill says:

    As a Ferrari fan, not great news considering they will get many a point, but I’m sure they can afford it. But as a Formula 1 fan, if what is said is true, then we should see the rear of the field move closer to the mid pack, making much more exciting races.
    Whatever happens, I hope for another season as brilliant as this one!

    1. Sebee says:

      Don’t worry, I’m sure Ferrari is exempt somehow. Most likely Bernie/FOM will cover Ferrari’s bills so they can invest all they have into making a fast car like they always do.

    2. Optimaximal says:

      Don’t forget the ‘Bernie Bung’ Ferrari receieve. It will no doubt take the sting out of any fees the Scuderia accrue.

    3. SteveH says:

      This is a brilliant season? I think it’s turned into a snooze fest. The cars are boring with all the little trick aero parts, the engines are boring with no development and hugely restrictive rules, the races are mostly processional with stupid tire rules and DRS not helping. The season is too long; here it is early November and we still have three races to go, ending November 25th!!!! No, not brilliant, and 2013 will be just the same. I’ve followed F1 for more years than I like to recall and am losing interest.

      1. Pranav says:

        You should watch youtube videos of Mario Kart instead of Formula 1. I don’t understand the whingeing. Nobody’s tied you to a chair in front of a TV showing live F1.

      2. DonSimón says:

        +1

      3. SteveH says:

        You’re missing my point. F1 has become technically and Tilke boring. This sport used to have amazing technical innovation, such as ground effect, wings, turbos, gearboxes, materials, suspensions, etc. etc. Now we have essentially identical cars and engines, because the rules limit what the designer can do. For example, engine center of gravity, RPM, cylinder angle, materials, and so on is strictly regulated with homologated engine specs. The chassis are totally defined, with even front/rear weight balance being regulated. The teams have to use both tires during the race, not the fastest combination. We are seeing all these races on stupid, boring Tilke tracks that have no soul. So, I don’t think it’s brilliant I think it’s almost a spec car series. I know there are differences between the cars, of course, and I have always been keenly interested in the technical side of things but when I look through my racing annuals all I’m seeing for the last years is essentially the same cars with minor tweeks such as double diffusers, blow wings, tricky exhaust, engine mapping, etc. None of these things are themselves great technical leaps. They are a response to restrictive rules that force the teams to find very minor advantages with major cost. The drivers are good, but the machinery and the tracks are making this a boring series. I would love it if not everyone could take Eau Rouge flat. By the way, I don’t play racing video games; I used to race Formula Atlantic.

      4. KRB says:

        It’s definitely become far more predictable than my liking, the last few races. The one-stopper in India was bad. It maybe possible in Abu Dhabi as well, we’ll see. I like three-stop races the best, but they’d be even better if Pirelli gave the teams one more set of each tire then.

        I would love it if teams were allowed to choose between three compounds in any race weekend, and that they had to use at least two different compounds in the race. Especially if Pirelli get their way and construct 8 different compounds in all.

    4. W Johnson says:

      You kidding are n’t you?? Worrying about Ferrari…that is laughable!

      So try thinking about the financial viability of the smaller teams especially when Ferrari is one of the richest teams in F1…..AND is subsidised to participate in this sport!

      Now that is wrong!

  5. Sam Hurst says:

    It’s all well and good Ross Brawn saying this is A Good Thing, but realistically his team has underachieved this year compared to budget. It’d be interesting to compare what proportion of income Mercedes will be paying next year compared to, say, Sauber.

  6. Trickle says:

    Forgive me if im being really obtuse and missing something here but surely this could cause the following situation:

    A team (take obvious candidate Red Bull) has sown up the WDC and Constructors with races to spare e.g. 2011 season. What is to stop them from then ‘not trying’ in the remaining races in order to save money from the point at which their primary goals are achieved?

    1. Trickle says:

      I see briggykins beat me to the point! I’m glad im not the only one who thought about this.

    2. Pete_from Nepal says:

      See Post 3 for james’ answers

  7. JCA says:

    Speaking of costs, here’s my budget cap salutation. Two thresholds, $75 mil, and $150 mil, you pay a tax of one to one on spending above 150 that is distributed among all teams under 75.

  8. Doohan says:

    The whole reason for the points system changes make sense now
    (Conspiracy theory FIA 795)

    1. Simon Lord says:

      And additional points systems changes in the future, maybe. ‘Let’s extend points down to the first 12 places, that would give the smaller teams a chance to pick up more points and establish themselves in the sponsorship pecking order. Of course, we’d have to increase points for the first 10 in order to create a gap.’

      Seriously, I assume that there is something in the proposal that prevents any tinkering with the points system for the duration of this agreement, James?

  9. Martin P says:

    Sounds like a clever way of achieving the same effect as an RRA to me.

    1. grat says:

      Not really. With Red Bull apparently spending over 300 million a year, 4 or 5 million isn’t really going to hurt them one way or another.

      No, it’s the mid-field team that had a successful year that’s going to get hammered– if I recall correctly, the money from the constructor’s championship lags behind a year, so a team that does unusually well (Sauber, for instance) in 2012 will have to pay more in 2013, but not reap the benefit of doing well until 2014.

      Between that, and the cost for the V6 turbo engines, and the increasingly draconian aero restrictions, and I suspect the grid will start shrinking soon.

  10. Denise says:

    Don’t the drivers have a similar sort of deal regarding their super licenses? X amount of money paid per point won? Just wondering if anyone knows how much that is and who gets the money. Is it the FIA?

    1. Angelina says:

      What?
      I had never heard of that. Drivers (even wdc) r paid by teams not fia then why shud they pay the fia for racing?

  11. Outgoings? says:

    What’s each point worth in revenue terms, though?

    If each point were worth $100K, then a fee of 6% on that doesn’t sound insane, and doesn’t work as a disincentive for overachievement.

    The implication in years past were that points were worth “a lot”, or is revenue distribution just based on standings now?

    1. Angelina says:

      Revenue distribution is just based on standings now as far as I know.
      James please correct me if I am wrong

    2. KRB says:

      There are prize funds per race as well.

  12. The Wildcat says:

    The FIA have 350 million that they aren’t allowed to touch ? Really!? How can the RRA work with such large price increases and the costs of the new weener engines. It is good that F1 has a green agenda but Id like to see a variety of engine configurations. Its all about the noise. 5 litres and reduce the wings I say.

    1. KRB says:

      I’m all for reducing the width of that front wing … I’ve seen too many rear tire punctures from swiping moves from a car behind. They can be innocent (some aren’t), but they always ruin someone’s race unnecessarily.

      A narrower front wing means a wider rear wing, and probably lower too. Where we were in 2008 then, but w/o all the winglets and fins sticking out from the car. I want to see the V6 turbo’s, but bring back bigger wheels to compensate for the power loss.

  13. Davexxx says:

    As someone else commented on this issue recently: it’s weird how they give out bonus money to each of the teams at the end of the season depending on points scored, then now increase this entry fee. Giving it with the one hand then taking it away with the other!
    I assume the money they win is still more than the fee they have to pay, else F1 racing simply wouldn’t be profitable (ignoring the sponsorship side of things). So why not simply reduce the money-for-points payments and avoid the new controversy?
    The only ‘advantage’ I can see is that new small lesser teams won’t dare (or can’t afford) to enter F1, so there might be fewer awkward getting-in-the-way teams to fill the grid in future. So then maybe Ferrari get their wish – to have three cars on the grid? (shudder…)

  14. Grabyrdy says:

    So the FIA wants more money, and of course Bernie’s flat broke, as is CVC, so all the extra has to come from the teams. Is that it ?

    1. James Allen says:

      No, if you read the story FIA gets an enhanced payment from BE too. But at what price?

      1. franed says:

        The price is the F1 strategy group which you described last week. This gives the teams and now Bernie equal direct representation in the formulation of the rules. Whereas previously Bernie had no direct or official input to the rules. (though of course plenty of unofficial influence, bent ears, favours vested interests)

        I believe that this new setup is very dangerous for F1. It essentially breaks part of the conditions imposed by the EU commission in allowing the commercial rights holder a part of the rule making.

        The fact that even if nobody attends or watches any races at all now, the FOM income is guaranteed for 8 years, will only very slowly be realised by team sponsors. Eventually however sponsors will see no reason to be involved in a sport that nobody apart from a few hardened devotees, watches.
        As Bernie removes European races in favour of empty stands in far flung locations financed by sovereign wealth, the audience falls, he has recently said he sees only 4 Euro races in future. It would all work too if the teams did not need sponsors.
        I give it 5 years, before either collapse or explosion/revolution and major restructuring, Bernie will be gone by then once again laughing on hi sway to the bank.
        Don’t get me wrong, the man is a genius and may be a hypnotist as well. But he has effectively “torn the arse out of F1″ financially.

  15. Alex W says:

    Translation for those that are unsure – this is just a money juggle, so the FIA can get some money, the teams will still make money for getting points, just a little less than they would have otherwise. How the FIA could sell the F1 rights to Bernie for $3m/year/100years in the first place is the real problem, Todt is just trying to recoup a little FIA dignity.

  16. Loti Irwin says:

    Since J.Todt and the FIA want more money for running the show and Bernie won’t give them any more, [after Max sold him the rights for peanuts] the FIA take the money from the teams in the form of entry fees and super licence fees and the teams then ask Bernie for more.
    There is no reason that Bernie should re-negotiate the commercial rights deal, I am sure it’s unbreakable but he can’t stop the FIA from asking more from the teams, and by the same token, the teams will ask for more from him. What goes around, comes around.

  17. Khan says:

    As a fan, I am not bothered at all how they juggle the money. The general interpretation is that too much money is going out of F1 via Bernie’s syndicate. Good that FIA is biting in now and as they are non-profit organization, I believe this money would be used in a very appropriate way.

  18. Richard D says:

    I hate all this! F1 has become just a financial toy for various parties to play with. It’s not proper competetive motorsport any more.

  19. Ed Bone says:

    Interesting article.

    Amazing that the FIA would sell its commercial rights for a paltry $3.5 million annual fee to CVC, ie Bernie.

    That’s a $1.5 dollar annual revenue opportunity sold for peanuts. It makes absolutely no commercial sense.

    I wonder if FIFA woud sell their commercial rights for a similar amount? Check out their annual revenues…

    The fact that Jean Todt is now trying to raise significantly more revenue from F1 indicates to me that this deal was never properly negotiated in the first place.

    The suggestion that the higher fee the FIA are charging to Ecclestones could be at the cost of FIA regulatory power is also worrying.

    The fee per point counterbalances the very high amounts top scoring teams get from the commercial revenue pot, and therefore seems fair.

  20. Elie says:

    Gosh why don’t people read the subject matter! Red Bull will pay approx 3.6m But they earn in excess of 70m for winning the constructors .you gotta be on it to win it..whilst its proportionately better for the other teams Im sure their not complaining.

  21. chris says:

    Can you let us know what the services “which” todt speaks about are? Is it the freight and so on? Although I thought that was bernie’s bag.

    And secondly do we know yet what the new deal for the teams is in terms of money from FOM? There’s been a lot of talk about FÍA money but not the team’s.

  22. Joe S says:

    People seem to think this is bad. The top teams may pay a few more million than the bottom but that’s fair and how it should be. It’s vastly unlikely that a team like HRT will ever need to worry about paying those extra few million so it shouldn’t be an issue for anyone.

  23. CanadaF1Fan says:

    To me, the only interesting thing in this article is the higher fees between BE and the FIA. Wish I had more faith, but Bernie isn’t coughing up the extra dough out of charity. What did Todt concede for the higher fees?

    The fees for the teams is immaterial – a rounding error. Oh sure, it will cost RBR some nominal amount more than it did last year, but it’s still not going to make a dent in the financial statements at the end of the year. My understanding is that the Concorde Agreement rewards teams for scoring points at a rate *far* higher than the marginal cost on the entry fee, so even this modest change isn’t going to have any bearing on spending/strategy/etc.

    Also worth being clear – FOM (i.e., Bernie) pays out to the teams (based on Concorde terms) , while the FIA collects the fees and uses it to administer the sport. Two different entities.

  24. Darren says:

    Don’t understand it and am not really interested in the economics of F1. What I do understand though is that the fans, drivers (majority of), teams and circuits all get shafted whilst Bernie makes a tidy profit for himself and his cronies.

  25. Old Timer says:

    Doesn’t anyone think that something is wrong when the FIA can charge teams to participate in F1 so that it can use the money for something else? If the sport operated ethically then the participants would have total control as a group of enthusiasts who came together to go racing. They would agree the rules among themselves and own the sport that they had invented. They would probably hire a third party to act as impartial arbiter for rules disputes and that could be the FIA but the third party would not make the rules or control the finances. They would receive a fee to cover their costs, of course, but that would be it.

    How we have ended up in a situation where the FIA actually owns F1 heaven only knows but it is a very questionable situation.

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