A year of change: the 2014 team-by-team Formula One commercial preview

A new technical era of Formula One begins this weekend in Australia, with the largest set of rule changes in a generation likely to result in a major shake-up of the competitive order. Ahead of the first race of 2014, here's our team-by-team look at the commercial challenges facing the contenders this year.

A new technical era of Formula One begins this weekend in Australia, with the largest set of rule changes in a generation likely to result in a major shake-up of the competitive order – and, potentially, the end of Sebastian Vettel and Red Bull Racing’s domination of the sport.

2014, however, may also see seismic changes in the way the sport is run; despite a recent success in a civil case at London’s High Court, Formula One chief executive Bernie Ecclestone will stand trial in Germany in a few weeks, accused of bribing a former German banker during the period when Formula One was being sold to current majority owners CVC Capital Partners in 2006.

Ecclestone has stood down, temporarily he insists, from the boards of the myriad parent companies of Formula One and related activities, and regardless of the Munich trial there is increasing consternation inside and outside the sport at the apparent lack of succession planning by CVC. Ecclestone, although still healthy, sharp and active, is 82 years old.

Uncertainty at the top of the sport, however, has not stopped its continued expansion. Russia is scheduled to make its debut as a Grand Prix host this year – Ecclestone signed the deal for the Sochi race with Vladimir Putin directly in 2010 – while Red Bull’s investment in Formula One will grow again when it funds and stages a resurrected Austrian Grand Prix at the circuit it owns in Spielberg.

Over the past two years Ecclestone has also managed to secure agreements with each team, tying them to the sport until 2020, and with the FIA, world motorsport’s governing body. He will have greeted the recent inevitable decision to dissolve the Formula One Teams’ Association (FOTA) with a smile; FOTA was doomed the moment Red Bull Racing and then Ferrari left the group to seek their own lucrative financial deals with the commercial rights-holder in 2011 – divide and conquer has long been an Ecclestone mantra but the teams have lost another opportunity to act as one and attempt to collectively unlock the greater revenues and increased power they have sought for years.

The teams return to default this weekend: competition. Each of the 11 teams arriving in Melbourne for the 19 races between now and November has its own set of hurdles to jump; in some cases, there is an uncertain road ahead.

Here’s our team-by-team look at the commercial challenges facing the contenders as the 2014 season begins.

Like the team that has become its major rival at the back of the grid, Marussia, Caterham remains point-less, if not pointless, after four seasons in the sport. Team owner Tony Fernandes indicated in January that he will think twice about continuing to fund the team if a major improvement is not shown this year, but at the same time is pushing forward with his vision of wrapping the Caterham road car and composites enterprises around the Formula One team. At least the arrival of the popular and talented Kamui Kobayashi, who brings a little money rather than a lot, should help to halt the perception that the team is reliant on drivers with major sponsorship, as was the case in 2013.

The convoluted Formula One team revenue distribution model means that despite beating Caterham to 10th place in the world championship last year, Marussia does not qualify for the estimated US$30 million in additional prize money often quoted unless it finishes in the top ten again this season. Run on a comparative shoestring, but well run by a management team of Britons Graeme Lowden, Andy Webb and John Booth, the Anglo-Russian outfit will be looking to capitalise on the first Russian Grand Prix in October. Russian partner Infastorex, one of the few commercial partners the team has so far been able to attract, upgraded its deal over the winter, while former Ferrari communications chief Luca Colajanni was unveiled as director of partnerships at the start of the month.

Winter testing has gone so well for Williams, thanks in no small part to its switch from Renault to Mercedes power, that it would be a major shock if the British team did not improve substantially on last year’s ninth place in the championship. Indeed, testing analysis suggests it may be second only to Mercedes as the season begins. On the face of it, it has been a superb winter for the team, with the major changes driven by Sir Frank Williams, daughter Claire who is now deputy team principal and group chief executive Mike O’Driscoll. Several senior technical staff have been recruited, while the arrival of Felipe Massa from Ferrari, and February’s appointment of Felipe Nasr as reserve driver, has helped secure new Brazilian partners Petrobras and Banco do Brasil. Insurer Genworth is another new name on a car now painted in Martini’s famous colours. The Bacardi-owned brand unveiled a five-year, US$15 million per season deal last week.

Toro Rosso
Largely fuelled by Austrian energy drink dollars, Toro Rosso has switched from Ferrari to Renault power for 2014. The decision was announced in May and the logic is sound: at the beginning of a new technical era, with entirely new engines, it makes sense to be using the same package as its big brother, world champions Red Bull Racing. However, Renault’s well-publicised struggles in testing means the team is likely to be on the back foot, at least in the early part of the season. Commercially, a new partnership has been forged with Sapinda Holdings while the close ties with IPI, the Abu Dhabi government-owned investment fund, has seen renewals with the likes of Nova Chemicals and strong support from Cepsa, IPI companies both. 19-year old Russian Daniil Kyvaat is the latest graduate to Formula One from Red Bull’s ruthless but well-funded young driver programme.

The choppy waters appear to have calmed a touch as the Swiss team, Formula One’s fourth oldest current team, enters 2014. Well-publicised financial difficulties blighted its 2013 campaign and a vague, if initially morale-boosting, agreement with three Russian institutions appears to have come to naught. The decision to re-sign driver Esteban Gutierrez for a second season, however, simultaneously saw the team renew its deal with Carlos Slim’s Telmex and then, just a few weeks later, with its other Mexican partners – insurer Interproteccion, and Jose Cuervo tequila. A new one, financial services firm Unifin, was also secured, which should make 2014 at least slightly less stressful for team principal Monisha Kaltenborn, who has become well established as a voice of common sense in the paddock.

Sahara Force India
Silverstone-based, but Indian-owned, Sahara Force India’s two primary owners, Vijay Mallya and Sahara founder Subrata Roy, both face continuing difficulties at home – Roy is currently battling multi-billion dollar fraud charges, while Mallya’s domestic business empire is showing more than a few signs of wear. The team, however, appears unaffected, at least on the surface and has firmly established itself near the top of the midfield in recent seasons. While the major logos on the car remain a legacy of the team’s ownership – Mallya’s Kingfisher and 42.5 per cent owner Sahara – two new Mexican sponsors, oil company Roshfrans and Claro, have arrived, persuaded to join new recruit Sergio Perez. Perez and the returning Hulkenberg are amongst the most exciting pairings on the grid, while the decision to retain Mercedes power in 2014 appears an inspired one based on the early performance and reliability of the German manufacturer’s new power unit.

It is hard to believe that McLaren, one of the most well-resourced and most successful teams on the entry list, could struggle as much again in 2014 as it did in 2013, but this appears set to be another transitional year. Fifth place last year was not good enough for team principal Martin Whitmarsh, who has been usurped in the boardroom by Ron Dennis over the winter. McLaren confirmed Dennis’ return as group chief executive, a position held by Whitmarsh, in January and the appointment of Eric Boullier from Lotus as racing director swiftly followed. How hands-on Dennis will be remains to be seen, but McLaren is also looking to recruit a racing division chief executive to work above Boullier but below the man who moulded the McLaren Group into what it is today. Dennis, who has spent the last five years building McLaren’s road car division and as chairman, has already made his presence felt via a series of punchy remarks but amongst his priorities will be to find a title sponsor for the Formula One team following the departure of Vodafone at the end of last season and the failure to secure a replacement thus far. The team, which will field newcomer Kevin Magnussen alongside Jenson Button, will also have an eye on 2015, when Honda returns as a major technical supplier and, it is said, commercial partner. It is not hard to foresee a somewhat awkward final season with Mercedes, the team’s engine partner since 1995.

A turbulent period for the team based in the British town of Enstone, which uses the Lotus name under license shows no sign of ending, as the 2014 championship starts. Team principal Eric Boullier left in January to join McLaren, following technical director James Allison and a host of senior technical personnel over recent months. Owners Genii Capital, most notably its founding partner Gerard Lopez who has temporarily taken over as team principal while a replacement for Boullier is found, spent much of last year searching for new investment at the cash-strapped team. June’s tie-up with a consortium of investors known as Quantum, which had been announced as a new shareholder, proved to be all talk but as 2014 began Lopez was able to confirm the parent of Russian mobile phone company YotaPhone had acquired what is believed to be a 10 per cent shareholding. Another minor shareholder, Andrew Ruhan is taking a much more active role in the team, and has been appointed by Genii as a partner, as the team tries to unsaddle itself from debts estimated to be as much as US$160 million. The arrival of Pastor Maldonado, who brings with him substantial sponsorship from Venezuelan state-owned oil firm PDVSA, should please the financial department in the meantime, as will new official business partner Saxo Bank. The indications from testing, however, are that Lotus will do well to repeat last year’s impressive fourth place in the championship – its Renault-powered new car completed the lowest mileage of the winter.

Every year that Ferrari fails to win titles the pressure on team principal Stefano Domenicali ratchets up a notch or two. It is now five years since the Scuderia won a championship of any sort and six since it won the drivers’ title. This year there are no excuses: James Allison is a key technical addition from Lotus, there has been major investment in new facilities at the company’s historic Maranello home, while Kimi Raikkonen joins Fernando Alonso in what is probably the best driver pairing on the grid. Commercially, the team and wider company is in good shape – Ferrari produced fewer cars in 2013 than in 2012 but revenues rose by five per cent to €2.3 billion. The company recorded net profits in excess of €246 million. The Formula One team continues to be backed by Marlboro, despite the total ban on tobacco advertising, and other heavyweight partners like Santander and Shell. UPS and Chinese heavy machinery manufacturer Weichai Power came aboard last year, at the same level as Brazilian energy drink TNT, watch manufacturer Hublot and anti-virus software manufacturer Kaspersky Lab.

Mercedes enters the 2014 season as favourites, following a superb winter of testing. Well-funded by its paymasters back in Stuttgart, the British-based team has been building up to this season of major regulatory change for some time, putting senior technical staff in place and adding resources in key areas. Critically, like Ferrari, Mercedes has the advantage of also manufacturing engines, which seems to have allowed for earlier, better integration with the new chassis. Petronas remains aboard for a fourth year as title partner, while last year’s second place in the world championship means the team gained a greater share of Formula One’s prize pot. At management level, however, the departure of Ross Brawn will undoubtedly have an impact. Mercedes, like McLaren, has come to the conclusion that the traditional single team principal role is an outdated concept and has split responsibilities between Toto Wolff, who will handle the commercial and political aspects of the job, and Paddy Lowe, who was recruited from McLaren last year and will head up the technical effort.

Red Bull Racing
Formula One’s benchmark team has had a troubled start to the 2014 season on-track, as Renault struggled with its new power unit, but there are few doubts that the team which has dominated the past four seasons will get its act together at some point during the year. Whether that will be too late to retain the titles remains to be seen, but any team boasting a triumvirate of leaders like world champion Sebastian Vettel, team principal Christian Horner and chief technical officer Adrian Newey should never be underestimated. Commercially, the team continues to benefit from the largest share of Formula One’s prize fund – although Ferrari does receive special perks on account of its history and importance to the sport – while Nissan-owned luxury brand Infiniti begins its second season as title sponsor. The reliance on parent company Red Bull, which has largely funded the team since its inception in 2005, gets smaller with every season of success as commercial partners and prize money increases.  This winter footwear brand Geox and Casio watches have renewed deals, keen to be part of what might still be another historic season.


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