While a discussion about the Formula One prize money distribution would have probably been better for the days when Bernie Ecclestone had power over the sport, the recent news about the European Union complaint regarding unfair prize money distribution being dropped had given me the urge to discuss what I think would be a fair way to share the prize money in Formula One.
To start, I’d just like to remind everyone that the current exact prize money formula is super top secret and is probably written on a piece of paper in invisible ink and locked in a safe that is stored in a high security base in the middle of the desert, guarded by a team of 56 highly trained armed security guards. Therefore, any figures that you see online related to prize money is just a guess. And the secrecy is part of the issue.
For my calculations, I’m going to assume that there is $950m available to share among the teams. Right off the line, I’m going to say that every team gets $20m just for taking part in the season. Of course, the $20m will be the total of $20m split across however many races are in the calendar. So, if the season has 20 races, then the team is earning $1m for taking part in the race. If a team misses a race, then they loss $1m from their $20m allocation for each race that they miss. This would be to stop teams from just appearing in the entry list, going to a race and then never showing up again and just walking away with the $20m.
With 10 teams on the grid, that’s $200m already spent, but there’s a lot more to give. This is where we get to the championship titles. I think that there should be a section of the prize money allocated for the World Drivers’ Championship and World Constructors’ Championship title winning team. I think that $10m for each championship is a fair amount. That’s another $20m from our $950m assumed prize money allocation.
Now this is where we get into the controversial part of this analysis: the bonus for long standing teams. While there are a lot of people that feel it’s unfair for teams like Ferrari to earn a big chunk of money just because they have been in Formula One since the beginning. I think of it a bit differently. There should be a bonus for being loyal to the sport and having raced in it for many years. However, I think that this bonus should be open to every team. So, I think that paying a team based on how many seasons that they have raced in the sport would be fair. I’d also like to include the current season in that total number of years. That way if you started your team in the 2016 season, then you would get a payout for having raced 1 season in Formula One, instead of not being eligible for the payout.
I was originally thinking that $1m per year in Formula One was a fair way to go but bringing the per season payout to $1.2m made it a bit more even for the lower ranking teams. However, there needs to be a cap on that payout so that teams like Ferrari aren’t eating up all the funds for the rest of the teams. I think that a fair cap now would be $50m maximum. Obviously, as the years go on, the teams will start to earn more and more money in this category, so that cap could be adjusted later, although you would hope that there would be a larger total prize money pot to take from in the future.
But there is another issue with this yearly loyalty payout. What happens for teams that are purchased or teams that take a big absence from Formula One? Certainly, Force India could argue that they have been in Formula One for longer under Midland and Jordan. Even Mercedes could argue the same with Brawn. And then there are teams like Renault, who would in Formula One many years ago, but then disappeared for many years. There would obviously have to be strict regulations in place to decide when a team’s loyalty bonus resets back to zero.
Now it’s time for the most important part: giving price money based on the team’s actual performance. This is important because it’s the whole reason that the teams race. For this, I think that evaluating based on points is a fairer way to do it since that is a far more accurate measure of the performance gaps between the teams rather than just pure championship finishing position.
To determine the payout per point, I just took the remaining prize money and divided it by the total number of point scored this season. When I used the 2017 statistics, there was roughly $490m remaining in the prize pool. Split among the teams, it adds up to roughly $245,000 per point scored.
When you add it all up, it looks something like this:
Sure, Mercedes and Ferrari are still massively overpaid compared to the other teams, but that’s going to happen. Ferrari and Mercedes are the two biggest and best performing teams right now. There’s no fair equation that you can come up with to change it so that Mercedes and Ferrari make the same a team like Williams or Force India.
What do you think about my prize money plan? Do you have a better plan? Comment down below.
The views and opinions expressed in this article are solely those of the author and do not necessarily reflect the official policy or position of any other agency, organization, employer or company. Assumptions made in any analysis contained within this article are not reflective of the position of any entity other than the author.
