Why the big teams stay at the top in Formula 1
Is it impossible for a small team to win?
It’s no secret that to do well in Formula 1 you need money - a lot of it.
The largest teams on the grid have budgets that dwarf those of the midfield and back markers and this causes a very problematic feedback loop which reinforces success for larger teams, and disappointments for the smaller ones. Whilst not impossible, it becomes very difficult for those smaller teams to break that circle and begin moving further up the field.
So, lets imagine you’re Mercedes AMG Petronas F1 team - lucky you! You’ve just finished in 1st place and won the Constructors Championship for the seventh time which means you’re about to come in to a heap of money. You would be the rightful receiver of the largest amount of prize money, but the income doesn’t stop there.
There’s lots of different ways that teams can earn more money by finishing higher up but for the sake of simplicity we’ll focus on two. Naturally, sponsors want to be seen backing the lead horse in a race. The top runners in any sport usually get more air time which means more visibility for their partner brands, and fans usually back the top competitors which again means more brand exposure. This means that finishing first will attract a larger amount of sponsors and the real estate for company logos on your car will come at a larger premium. Mercedes brings in over $100 million in sponsors with $75 million expected to come from Petronas alone. This might sound expensive but Mercedes enjoyed over 23% of the broadcast time in 2019 which resulted in over $4bn worth of exposure for the brands which then makes it a pretty cheap deal. Backing the 9th or 10th place team would mean a tiny percentage of exposure in comparison.
Then, as mentioned previously, whilst not an absolute guarantee, fans tend to support the teams who are doing well. F1 differs from sports such as football in the sense that teams, with the exception of those such as Ferrari, Williams and McLaren, tend to change ownership and name often. This means there’s a much weaker affiliation to teams than there would be with football clubs where you support one from the day you first watch football and often follow the choice of your closest friends or family members. Formula 1 fans tend to opt for favourite drivers rather than teams and naturally, the most popular drivers tend to be fairly successful – think Lewis Hamilton or Sebastian Vettel. Hamilton’s current Instagram following stands at over 21 million, whilst Sebastian’s FAN account I must stress, has over 1 million followers. However, those heritage teams such as Ferrari also boast a hugely loyal following in their tifosi.
Popular drivers and teams mean more merchandise sales. From my own experience at the Singapore GP, the overwhelming majority of fans were sporting Mercedes, Ferrari or Red Bull apparel. This provides an additional indirect income for our Mercedes team (yes, the one I asked you to imagine you were about 5 minutes ago.)
Right, so you now have prize money, sponsor money, and merchandise money. That puts you in good stead to carry out a tonne of car development over the winter break and throughout the year too. On top of this, because you’re rolling in it, you can afford to hire the best in the industry in terms of engineers, aerodynamicists and mechanics. We’ve all heard the rumours this year of Ferrari trying to poach Andy Cowell from Mercedes, and the recirculating rumour of Racing Point approaching Adrian Newey from Red Bull. Aside from being able to pay them more, the allure of working for a winning team is often a major factor in these talented individuals deciding where to work.
So, thanks to the car development and your top tier team of professionals, you have now built another amazing car. With your dominant car and previous success, the best drivers are now interested in joining the team. This means you have the pick of the bunch as I don’t believe too many people on the current grid would turn down a Mercedes drive. You pick the most talented driver, who brings you both the best results, and again more fans, more sponsors, more merch sales and more air time.
You select the best drivers, who end up securing you the constructors title yet again, and the circle repeats itself – great result for Mercedes.
To contrast, lets now imagine you’re a back marker like Williams. You finished 10th so you receive the smallest prize money of all, and you’re finding it difficult to find sponsors – Rokit and Rich Energy (Haas) spring to mind. However, all is not lost and you manage to bag yourself a talented pay driver by the name of Latifi and that brings your money up a little (or a lot.) Merch sales for Williams will be reasonable as they’re a heritage team, but for a team like Haas, I can’t imagine there’s a huge amount of non-American fans spending the cash.
They end up with less money, less resources and less of the people that can turn it around, and very few improvements are seen each season. Even when there is a big jump in performance, it is often not enough to offset the gains made by other teams so it doesn’t propel the team forward in terms of positions as much as hoped.
Now, it’s not a curse or a guarantee and the cycle can definitely be broken. Williams are definitely on the up and the continuity and stability from George over his 3 year contract will provide them with great feedback for development, and the new investors will provide the financial backing that they need. Likewise, top teams don’t always stay at the top and with the new regs coming in in 2022, its yet to be seen as to whether Mercedes will retain its current dominant position. Teams like McLaren have hit rock bottom in the mid 2010’s and are now on the up with P3 in Constructors’ in 2020, the introduction of a Mercedes engine and a great Aussie driver hoping to help bring the team even further forward and that’s just one example of a team who’s changed its fortune. It should be kept in consideration though, that the introduction of Zak Brown, the marketing genius, as CEO, has helped McLaren to brand itself much better, bring in more sponsorship money, and utilise this to produce on track results.
Another example is Racing Point who have often been hailed for their ability to maximise their small team and operation to yield impressive midfield results. They will now be dealing with a much larger budget with the conglomerate backing of billionaire Lawrence Stroll and supercar brand Aston Martin, but it would be expected that they continue to efficiently spend money and could become the next Mercedes-esque story. In comparison, Ferrari have an ever growing pot of money and have been unable to convert that into a title for over a decade and so the efficiency of the money spend is also a huge factor. Of course, it’s all relative in terms of what the team itself can do, and what it’s competitors manage to do that year.
To sum up, the feedback loop is a general trend rather than an absolute rule. Teams can and do break this and we’ve seen a few examples of that in 2020, and will hopefully see a lot more in 2022 with the new regulations.
I’d also highly recommend watching Chain Bear F1’s great video which sparked the idea for this article and goes into a lot more detail.