Setting up a Formula1 team

Formula1 is experiencing a sudden surge of interest by organisations, particularly motor manufacturers, to participate directly in the World Championship.

Formula1 is experiencing a sudden surge of interest by organisations, particularly motor manufacturers, to participate directly in the World Championship. With BAT having bought out Tyrrell and set up their own team, BAR, to enter in 1999, Honda about to commit for 2000, and Toyota and Jaguar (Ford) feeding the rumour mill, there has never been more high-level activity. However, of these only BAT has taken the plunge and they have a particular reason for doing so - the impending bans on tobacco advertising - while the other hopefuls have yet to commit. One factor that maybe holding them back is the cost of setting up and running a top level Formula1 team. Presenting a proposal to the Board that has a US$ figure with 8 zero's in the Total figure, and telling them that it may be three to five years - if ever - before achieving success is not the best way to gain a go-ahead from hard headed business men.

What does it take and what does it cost?

The first problem is to gain an entry onto the Formula1 grid at all. The maximum number of 2-car teams is 12, and there are currently 11 slots filled, with Honda earmarked for the 12th in 2000. Back in the 1980's and early 1990's, some new teams entered Formula1, struggled and disappeared in a blaze of bad publicity. To counter such unrealistic aspirations, a new team had to deposit a bond, which was repaid during succeeding years, as a condition of their entry being accepted. Effectively, a new team had to find sponsorship and prove that they had it secured by depositing it. How much and for how long was never officially stated, though a figure of $5m was quoted widely; as a deterrent it worked. Whether this condition applied to blue-chip companies such as Honda is not stated either. For anyone other than a major manufacturer to enter Formula1 meant purchasing an existing team. For anyone planning to enter after Honda, they too must purchase a team as there are no more vacancies.

Purchasing an existing team has other benefits. If that team has been competing for some time they will have earned a substantial share of the TV income and travel benefit pots. These together maybe worth $10 - 15m per year. Even if the team is falling behind competitively and has little in the way of worthwhile assets, the purchase price will be of the order of $50m. That is just the entry fee to the "Club", though it will be repaid through benefits in around 3 years.

Next on the shopping list are a factory, facilities and equipment, and staff. Just how big a factory, what equipment and how many staff will depend on the approach. Virtually all the processes involved in making a Formula1 car can be purchased from the network of sub-contractors that have built up to form the motorsport industry. In this way, Jordan initially took the approach of designing and racing their cars in-house and having them manufactured outside. However, eventually they found out that this approach imposed a limitation on their competitive progress and they too have had to facilitate and recruit to bring the whole operation in-house. To achieve the desired quality and speed of reaction necessary in Formula1, it is essential to put all the work into the hands of dedicated, motivated members of the team, and to control the whole process via senior managers and directors.

First there must be an organisation. No two teams will be the same; individual organisational structures will depend substantially on the strengths and personalities of the people involved, and the whim of the Principals (owners). The following includes the majority of the functions performed by a top team (or aspiring top team), but the actual organisation is not representative of any particular one.

The numbers in brackets represent the approximate staffing level in each department, giving a total of 250 staff in the company. With so many teams trying to improve their game and with BAR and Honda recruiting in the same market for engineers and technicians, salaries are climbing fast in Formula1. The 250 members of our "British Standard Formula1 Team" will cost at least $15m per year in salaries and benefits, and is likely to climb to nearer 300 staff and a $20m salary bill before the team achieves consistent success.

Financial and Marketing departments are not too costly to facilitate. Computer systems, linked to the company network, DTP systems and a hospitality unit or two for looking after sponsors at races, are the main requirements. The factory is another matter. Although all the manufacturing and racing departments will report to the Managing Director, they will link for technical input to the Technical Director who will be particularly involved in specifying their facilities, which will include:

Race Team:

Race shop - initial build, assembly and overhaul of race and test cars

2+ semi-trailer trucks fitted out as workshops

2+ medium trucks

1+ motor home

2+ crew buses

2-3 refuelling rigs

8-10 sets tyre blankets

5+ generator sets for overseas races e.g. Brazil

Compressors

Pit equipment (jacks, wheel guns, work benches etc)

Garage interior decoration

Pit wall stations inc. TV system

Tools and workshop equipment

Data computers and associated systems

Satellite data link to factory and engine manufacturer

Radios

Test team:

1+ semi-trailer trucks fitted out as workshops

1+ medium trucks

1+ motor home

2+ crew buses

5+ sets tyre blankets

1+ generator sets

Compressor

Pit and garage equipment (jacks, wheel guns, work benches etc)

Tools and workshop equipment

Data computers and associated systems

Satellite data link to factory and engine manufacturer

Radios

Machine shop and tool room:

CNC 5-axis miller - suitable for machining whole car master pattern

CNC 5-axis miller - wind tunnel models and small parts

CNC milling and turning machine tools

CNC grinders

(The level and number of machine tools will depend on the in-house manufacturing requirement.)

Fabrication:

Sheet metal working tools

Welding equipment

Titanium welding cabinet

Composites & Pattern Shop:

2+ autoclaves, at least one of which is large enough to take monocoque, undertray and body-top tools.

Oven - large enough to take monocoque, undertray and body-top.

Cold room for pre-preg. storage

Clean room for laying-up

Fettling booth

Digitising equipment

Paint booth and oven

Assembly:

Facilities, jigs and test rigs for initial build, assembly and overhaul:

Gearbox and drive-shaft assembly and test

Hydraulic system assembly and test

Suspension, upright and brake assembly

Damper assembly and test

Engine dressing

Cooling system assembly and test

Steering wheel assembly and test

Electronics:

Clean room

Facilities, jigs and test rigs for initial build, assembly, overhaul and test:

PCB's

Looms

Sensors

Electronics assemblies

Electronics packaging

Dash board displays

Off-car systems - telemetry receivers, beacons etc.

Radios

Computer systems:

Networked systems for:

Finance

Design

Purchasing

Manufacturing

Data

Secretarial

Model shop:

Rapid prototyping equipment

Machine tools including:

5-axis mill

Laser mill

Spark and wire eroding machines

Paint shop:

Spray booth

Oven

Drawing Office:

30+CAD/CAE work stations

Licensed CAD/CAE software

R&D:

50%-scale wind tunnel

7-post rig

Suspension kinematics and compliance test rig

Material test laboratory

Structural test laboratory (FIA structural, torsion, proof, fatigue testing)

Impact test laboratory (FIA tests)

Gear box test rigs

Damper development rigs

Hydraulic test rigs

Control system test rigs

Quality Control:

Dimensional inspection equipment

Digitising equipment

Surface finish measurement equipment

Hardness measurement equipment

Weighing

Composite inspection:

Resin/fibre ratio

Voids and inter-laminar damage

Coupon testing

Transport:

5+ vans and light trucks

10+ pool cars

VIP transport

(Company aircraft??)

Canteen:

Kitchen and dining room for 200+

Maintenance:

Factory cleaning

Facilities and factory maintenance equipment

Facilities that are unlikely to be set up in-house include:

Heat treatment

Plating and surface finishes

Casting

Forging

Gear cutting

PCB manufacture

Decal printing and laser cutting

Pre-preg. Manufacture

Also rarely found in-house are some highly specialist machining operations, such as the manufacture of CV joints and half-shafts, which will be carried out by aerospace companies, many of whom have looked to the motorsport market as aerospace contracts. However, even these specialist processes may be carried out in the factory, and so require specialist facilities.

It is virtually impossible to determine what it would cost to equip a factory in this way, as the cost of equipment depends on the detail specifications, the delivery requirements and the sponsorship deals that are possible. For instance: a team using a works engine would not expect to have to pay for trucks, vans and cars manufactured by the engine supplier. Complete computer systems and CAD/CAE software is often supplied free, or at a greatly reduced price, to successful teams. 50% wind tunnels cost $10-15m, but if, like Benetton's new tunnel, the specification includes the ability to pressurise it to 1bar (for full scale Reynold's Number equivalency), the cost is likely to be another $3-5m. The cost of building a brand new factory will depend on the site (cost of land), how fancy the factory is, and any special deals available for sighting such a prestige unit in that locality. The factory is going to cost around $10+m and facilities in the range $70-100m. This figure does not include aircraft.

So, to enter Formula1 involves the following start-up costs:

Purchase existing team $ 50m

Factory $ 10m

Facilities $ 85m

TOTAL $145m

This is just for the chassis. An engine facility would not be so expensive, but would still be over $50m.

Ferrari is reputed to spend over $100m per year to design, develop, build and race the whole car. They have been spending this sort of money for a number of years now, and have built up a data bank of experience that enables them to compete at the front, but not to win the World Championship. Any major manufacturer entering Formula1 is going to want to be in a position to take the Championship within 3 years of start-up. To catch up and overtake Ferrari and McLaren-Mercedes means spending at a greater rate than either of them are spending at the moment - say $150-200m per year, or $500+m over those three years. The total bill before a new team can realistically hope to win is around $700m. That is a lot of money and needs a large number of extra road car sales, generated by the Formula1 marketing effort, to fund it. Maybe this is why some Boards are hesitating.