Features - Financial

JUNE 1, 2000

The future development of Formula 1 teams


In recent years the growth of Formula 1 teams has been dramatic.

In recent years the growth of Formula 1 teams has been dramatic.

That growth will probably continue as the battle for supremacy intensifies as the car manufacturers begin to run their own teams. One can imagine that there will come a day when a staff of 500 is normal. This may sound absurd but the pressure to win means that teams have to investigate every technical avenue which might make the cars go faster. Gone are the days when chief designers designed cars. They come up with a concept and then pass on the work to various departments which specialize in specific parts of a car. The chief designer coordinates, inspects and manages to make sure that everything is finished on time and that all the parts fit together.

In composite engineering there is still no such thing as mass-production. Building chassis is done around the clock and teams have all the necessary hardware they need to design and produce cars. The big teams have large-scale windtunnels, seven-post rigs, autoclaves and banks of multiple-axis cutting tools. To house this sort of equipment teams need larger and larger factories. McLaren will shortly move into a 32,500 sq m facility called the Paragon Technology Centre which the team hopes will be a world-class automotive research center. It will eventually include a museum featuring McLaren race cars. Having such impressive facilities is expensive but as Williams has proved these can be rented out while not being used by the team and can generate income from conferences and functions.

Formula 1 engineers always push everything to the limit.The big teams are already running aerodynamic programmes 24 hours a day and some are using more than one windtunnel at the same time. If one follows that trend it will only be a matter of time before someone solves the problems of computer modelling which will enable aerodynamicists to design virtual cars and test them on computers. This will involve an enormous amount of computing power and at the moment the teams are using the computers of car manufacturers or aerospace firms. This is expensive and it will eventually become cost-effective for teams to buy their own high-powered computers such as the Cray units used by the car companies and military. These cost about $4m each and need a vast amount of cooling capability when the processors are working.

There are already a lot of computer-controlled cutting and milling machines being used but to date no-one has created a machine that can lay-up carbonfiber composite. When that happens the production staffs of the teams will reduce dramatically.

The current F1 teams have around 35% of the staff involved in production, 25% doing design and R&D, 20% working on the race and test teams and only 10% involved in administration and 10% involved in marketing and these figures are likely to change.

The need for money and better organization means that the commercial and administrative departments are going to grow and while creating a competitive technical package remains vital for success. Growth is dictated by money and that means that new marketing techniques have to be developed. It is not just a case of trying to sign up big sponsors but also producing creative marketing ideas and developing commercial opportunities. And there are savings which can be made. A lot of teams already have in-house lawyers and accountants to cut costs and the same is likely to happen with graphic designers, travel agents and so on. All these areas are already beginning to develop and will mean that they need to be administered and so there will be more staff dedicated to human resources. At the same time the creation of new technologies means that some of them can be commercialized to help fund operations and so there will be a need for sales staff.

Another area where there will be huge growth is in merchandising and brand development. Last autumn Jordan became the first team to hire a top branding expert, Bill Sweeney joining the team from the Reebok company. Sweeney's job is to turn Jordan into "a lifestyle brand" and develop a multinational, multimillion dollar merchandising operation.

Actual marketing is also changing as car companies come into F1. They want to maximized the exposure for their companies and so do not want too much sponsorship on the cars. The TV money obviously helps but teams are now much more interested in selective sponsorships. Color has become important because it aids teams to be differentiated on television. This was behind the Becks deal with Jaguar and BMW Williams is now insisting that sponsors accept the team color scheme rather than the team accepting the sponsor logos. McLaren specifically designed the grey color scheme so that sponsors can come and go without taking the team's identity with them, as happened when Marlboro left.

Sponsors are thus having to accept restrictions but they are happy to do so because of the extraordinary coverage that the sport is generating. Money still needs to be found to build bigger factories and buy new machines and there is definitely potential for teams to ask local authorities for incentives when they decide to relocate their factories in the future.

The dangers of growth are that teams will fall victim to corporate thinking, pressure from shareholders or political in-fighting. Thus the men who will command big salaries in the years ahead will be those who understand how to make things happen. Managers such as Jordan's Trevor Foster, John Walton of Prost, Steve Nielsen of Arrows and Ross Brawn of Ferrari have the chance to make fortunes if they can retain the competitive atmosphere of a small team within a big organization. This is what the car companies are looking for. They like the publicity that F1 offers, they can use some of the technology but the most important thing is to teach the men in the automotive industry to adopt the problem-solving mentality that exists in F1.

"F1 breeds a nimble and innovative culture," says Ford's Neil Ressler, "and we will be able to transfer that to road car development programmes."