NOVEMBER 4, 1996
Alesi and Benetton
The team is never going to admit it, but there have been budgetary problems this year. In the mid-season Benetton was threatened with legal action by a sponsor-hunter claiming that he had not been paid his commission for helping the team find its Mild Seven sponsorship deal in 1993. There have been production delays and several foreign tests have been switched to Silverstone in order to economize. Research & development projects for next year have also been hit. The team's plan to build a windtunnel at its base at Enstone is rumored to have been put on hold.
In September Benetton effectively confirmed that it is not pulling in as much money as it would like when it announced that sponsorship-hunting agency API will be helping out the Benetton marketing men in 1997.
But just how bad is the financial shortfall? Benetton's budget in 1996 was estimated to be around $45m with Japan Tobacco (Mild Seven) supplying around half of money. Prize money probably netted around $5m, while Kingfisher beer supplied $5m and Elf around $3m. This will have meant that Benetton Sports System - which tops up the F1 budget using such brands as United Colors of Benetton, Nordica, Rollerblade, Killer Loop and Prince - will have been asked to pay $10m. Extra money will also have come from another Benetton company GS Autogrill which appeared on the drivers' overalls at the end of the season.
Many of these figures were based on the successful 1995 season when Michael Schumacher won nine races and the World Championship. The fact that Schumacher left the team at the end of last year cannot have helped Benetton when it was negotiating a new deal with Mild Seven and without a win in 1996 the Japan Tobacco income may have dropped to $15m or even less. Elf is pulling out in 1997 and the lack of results will have knocked down the prize money considerably. All this could combine to reduce the team's income by as much as $10m in 1997 and that means that if the team wishes to remain competitive the Benetton Group of companies will need to come up with even more money.
The only option is to trim budgets in areas which will not compromise performance on the racing track. The obvious way to save money is to drop the driver salaries - and judging by recent comments by Luciano Benetton there is a great deal of disenchantment with what Jean Alesi and Gerhard Berger have achieved this season.
Both Benetton drivers are very well paid. Alesi was signed as the team's number one driver in August last year for a rumored $4.5m. The team later hired Gerhard Berger for an estimated $6m and had to renegotiate with Alesi to give Berger equal number one status. The suggestion at the time was that both men would be paid $6m. At the time Briatore joked that he had hired two drivers for the price of one - Schumacher had been getting around $12m in 1995.
It is fairly clear that both Gerhard and Jean have solid contracts for 1997 and both, it seems, have very large buy-out clauses. A proposed deal in September to transfer Alesi to Jordan and open the way for Damon Hill to join Benetton failed to get off the ground because buying out Alesi's contract was expected to cost $15m.
Benetton's only real course of action would therefore seem to be to force the drivers into renegotiating their contracts and hope that they would either accept different terms or leave. Both courses of action would save money. Last week came rumors that Alesi is being asked to accept a substantial cut in salary. This could cause Jean to cancel his Benetton contract and sign for Jordan, which will be happy to pay him $6m because it needs a topline driver. Benetton could then hire GiancarloÊFisichella for a fraction of Jean's salary and make a substantial budgetary saving.