The Freak Show of Formula 1

Mercedes leaving F1: A thorough Analysis

For former active members of the F1 community, be it technicians, drivers or managers, the second career after actual involvement with a team usually keeps them in the environment of the sport. Mostly, the chime in with opinions, ignoring if they are asked or qualified. Guess what Eddie Jordan, once owner of a F1 team named after him, did today.

The Origin of Eddie Jordan, “the oracle of F1”

The opening paragraph might be a bit harsh on Eddie Jordan. After all, he did build his small Formula 3000 into a solid team within a decade, a team that even was somewhat of a championship contender with forgotten German upstarter Heinz-Harald Frentzen. After a sharp decline in the early 2000s and subsequent sale of the team which is now known as Force India, Eddie Jordan left the active side of F1 a rich man. His extroverted style of management and lifestyle in general made him uniquely qualified to comment on the sport as a whole, maybe only rivaled by legendary supermodel dating wily fox Flavio Briatore.


However, Eddie Jordan has gone further than just outrageous, entertaining comments: his predictions of future decisions earned him the reputation of being the “oracle of F1", with the basis basically being two right calls within three years.

First was the prediction of Michael Schumacher making a comeback in 2010. While being a brave prediction itself, it wasn’t a wild guess free of facts or previously observable signs. Schumacher’s decision of leaving Ferrari in 2006 was not free from pressure by then chairman Luca de Montezemolo; after leaving, the racing bug never quite left him, leading him to competition in the German Superbike championship; a fill-in role for injured Felipe Massa at his beloved Scuderia Ferrari was thwarted by a neck injury he suffered after a bike crash in the championship; and with Mercedes-Benz appearing on the F1 stage with a full blown works effort, no less by acquiring the then reigning F1 championship team, two very attractive seats were open for 2010.

Sure, Jordan overcame the doubts regarding a Schumacher return: why would a 7-time champion and arguably (and statistically) greatest-of-all-time racer make a comeback at the ripe age of 40, risking putting a stain on a legacy that only grew bigger with each season passing? All in all, it was a well-read educated guess and not an outlandish visionary telling, hardly oracle-level foresight.

The second prediction on which Jordan’s reputation is built would be Hamilton leaving McLaren in favor of Mercedes-Benz. Again, doubts were present: at McLaren, Hamilton had the pleasure of driving a top-notch, constantly race winning car every year from 2007 to 2012, except for the first half of 2009. That’s a very favorable quote of hits versus misses. Of the four years with real championship chances (2007, 2008, 2010, 2012), he only ended up victorious once, but Mercedes meanwhile only scored one single breakout win between 2010 and 2012 and struggled with development compared to Red Bull or McLaren. And it was unclear if Mercedes would even have a free seat, with Rosberg set due to his performance and Schumacher as the marketable legend alongside him.


Competitive alternatives to McLaren at the time were as follows: Red Bull had a stable driver pairing and a bunch of rookies lined up to jump in if given the chance. Lotus was financially unstable and unforeseeable, Ferrari a no-go with nemesis Alonso as the undisputed Nr.1 driver. Why not stay at McLaren?

Well, turns out that Hamilton was convinced by Mercedes finally raising the budgets to competitor levels, an upcoming heavy change of regulations towards which Mercedes was already preparing and promised freedom regarding personality development that included a hefty bump in salary. The latter especially was just unique selling point to lure him away from the strict regiment that was Ron Dennis’ McLaren (if you wonder how strict: to this day, McLaren employees are not allowed to eat a sandwich at their office desks).
As such, this Jordan guess was indeed oracle-like, but once again it was logically sound and understandable if thought through. Hamilton really, really wanted to leave and there was one viable alternative.


His current oeuvre: Mercedes leaving F1

This lengthy explanation is necessary to understand why Jordan’s newest glimpse into the future gained traction in motorsport media. In essence, he claims that Mercedes is preparing to leave F1 at the end of 2018 and will only retain a role as supplier of engines and gearboxes, which they are tremendous at.


The following reasons are given to explain the theory: Mercedes has dominated F1 in the least three years and will at least be a serious contender for the 2017 and 2018 titles, leaving little to gain from further involvement. On the marketing side, Daimler AG as the parent company is switching increasingly to electric and plug-in hybrid vehicles which do not go well with the high-profile racing team, resulting in the desire to cut back F1 cost, thus the board’s desire to sell-off parts of the F1 business.

The first argument does carry some weight. Mass-manufacturer have come and gone in F1, and leaving often concluded with either championships or financial shakeups at the parent companies. However, Mercedes learnt the hard way why having a legacy in F1 is so important. It, simply put, attracts sponsors that can heavily offset the cost, gives you might at the negotiations table and guarantees additional significant bonus payments from F1’s commercial rights holders. It took the involvement of Niki Lauda and longwinded discussions with Ecclestone to secure the then new Mercedes team conditions similar to the other big teams, and sponsorship has been on a constant rise since the championship winning streak. Ditching F1 would mean giving up all that earned reward.
The Mercedes F1 program has endured a lot of criticism from the notoriously conservative Daimler board. Before the budget increase of 2013, mentioned as a Hamilton convincing factor, a withdrawal was considered. However, the criticism pretty much died at the precise moment they began winning. From what can be gather so far, the endeavor is rather well received given its current state. And while there will probably be no period of domination even close to what Hamilton and Rosberg achieved in the last three years, race wins and championship fights still generate valuable headlines, probably worth more than whatever the bottom line of F1 racing is.


The second argument’s closest indicator of validity is a management decision made by Mercedes Grand Prix in late 2016. Back then, Toto Wolff announced that they acquired the rights to participate in Formula E, the exponentially growing all-electric formula racing series, from 2018/19 onwards. Linking an involvement in that series directly to an F1 exit would be shortsighted. First of all, Mercedes is not yet committed to Formula E. What they have is, simply put, an option to participate – or not, depending on their evaluation of the series. Secondly, a full Formula E operation can be successfully executed with a budget that, compared to what is spent in F1, is miniscule. Think one tenth of the cost. Doing both could be very much accomplished from the F1 factory, or the Formula E development outsourced to the company that builds Mercedes GT3 and DTM cars: HWA in Germany.

A lacking link between the road cars Mercedes will sell in the near future and the race cars could prove more fatal. It is hard to promote similarities between the petrol-powered race car driven by an elite athlete who is payed millions for his services and the hybrid/electric, semi-autonomous cars customers are told to buy. In the end, the marketing benefit would be solely for the brand and not for specific products, but that argument can already be made today: despite a new branding exercise in which both the F1 race car and the new hybrid road cars are labeled “EQ Power+”, a customer is unlikely to buy that car due to the performance of Hamilton and Bottas on a race track. The time when F1 was an actual laboratory for road car development is long gone, and at least since the 1990s it has been an exercise in prestige building.


Compared to the predictions discussed before, the argumentative justification is thin. Of further note is the suggest of Eddie Jordan for Mercedes to return to only supplying racing engines: Honda and Renault have proven how unrewarding the experience can be, both in case of success and failure. And even with three to four customer teams, a competitive operation worthy of Mercedes-Benz would not be cost neutral. At that point, there really is nothing to gain for Mercedes apart from maintaining ties to the business in case of a return. Then again, a return after leaving F1 and spending so much time and effort on getting where you are would be incredibly inefficient.

The future of F1 and why leaving at this moment would be foolish

Formula 1 was just sold to new, American owners, and after years of Ecclestone dictatorship things are about to change under Liberty Media’s ownership. Whatever the results, expect F1 to be very different come 2021. Chase Carey, new chairman of F1, just confirmed that Netflix-style over-the-table-content is perfect for a data-heavy and visualization-driven sport such as F1. New engine rules are currently discussed, set to fix the sound problem of the current generation V6 while also lowering costs and ensuring competitiveness. New chassis regulations are possible, and even the mystical budget cap is talked about again.


All of that points towards the chance of being part of a growing business if you are a F1 team. It could even mean that participating results in actual profits, if costs are cut as promised and spectatorship (and its monetization) rises. In the end, a manufacturer like Mercedes who does not require massive investments for the sake of competitiveness could end up with the same headlines and make money doing so. To bet on this chance, you’d have to stick with F1, and the bet is not a moon-shot. Doesn’t sound like leaving prospects to me.

If we disregard the rosy future talk, Mercedes leaving, however unlikely it might be, tears a giant hole in the paddock. F1 would be missing out on a true mass premium manufacturer and on the team that pays the salaries of four drivers, two of which are young talented racers that could shape F1’s future once Alonso, Vettel and Hamilton are retired: Ocon and Wehrlein. That’s a heavy deficit with no manufacturers lined up to replace the three-pointed star.


I will end this little essay with some calculated optimism. Even if Mercedes decides to pack it up, other racing series showed this year that the sport itself might actually benefit. VW left WRC and enabled four manufacturers to finally have a more or less leveled fight for the championship after a tiring dominance. Citroen left WTCC after ridiculing the other participating brands, and now there’s a proper back-and-forth racing between Volvo, Honda and some private Citroens. Sure, they all lost big spenders, but the sport survives. And so will F1.

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