Fifth is Fine

Formula One is in a mess right now. One team, Mercedes, currently dominates the sport with Ferrari perennially playing catch-up. Red Bull Racing are searching for an engine supplier that can at least put them on par with these two teams, but their efforts haven’t borne fruit yet and the drinks giant is on the verge of pulling out of the sport next year. Renault have had an acrimonious split with Red Bull, and are keen to buy out Lotus, who in turn are in serious debt. McLaren are struggling to cope, as their new engine association with Honda hasn’t yielded any worthwhile results. Meanwhile, the new engine- electric power formula introduced at the start of 2014 is not charming fans in any part of the world.

Amidst all this, one team, against some odds, seems to be doing not too badly as the F1 circus now moves to Russia to race at Sochi on 11 October. With five races remaining in the season, Sahara Force India look good to finish fifth in the standings for a second consecutive season. “2015 has been a year of ups and downs,” said Nico Hulkenberg, the team’s German driver. “We had a tough winter and the new car was a bit late. We had a good start in Melbourne [at the Australian Grand Prix], surprisingly. But afterwards it was a bit of a dry period as the car wasn’t competitive and we couldn’t develop it too much. Since the B-spec car was introduced in Silverstone [at the British Grand Prix], there is a lot of positivity in the team and we have turned around our results.”

“As a team we are quite satisfied being fifth in the constructors’ championship at the moment. And it is our target to retain that for the rest of the season,” he added, ahead of September’s night-race, the Singapore Grand Prix.

The question to ask is this. In the world of racing, where winning is all that matters, why is fifth place in the F1 championship so important?

Formula One is a complex sport, run by different shareholders. The Formula One Management, headed by Bernie Ecclestone, takes care of its commercial aspects. It includes everything ranging from TV rights to advertisement, to sponsorships, to distributing prize money, to charging fees from race circuits for hosting annual races, to deciding the race calendar, and so on.

The racing itself is governed by the Federation Internationale de l’Automobile (FIA) and the World Motor Sports Council (WMSC). The FIA lays down the guidelines for these rules while the WMSC deals with any disputes arising out of them. The rules are discussed, decided and agreed upon by a strategy group of six teams: Ferrari, Mercedes, Williams, McLaren, Red Bull and Force India. In 2014, Force India used Mercedes engines and hauled themselves to finish fifth, their highest finish in the team’s history. It brought them a fair chunk of prize money distributed at the end of the season along with a seat on the strategy group.

For a team bred mostly on Vijay Mallya’s personal resources and a bit of sponsorship revenue, this increase in prize money was invaluable. Force India garnered only 21 points in the first seven races this year, finishing below the top ten in three of those races. But since the Austrian Grand Prix, they have pulled it together and consistently raked in points, missing out only once (Hungarian Grand Prix) in the subsequent seven races. It was only in Singapore that they were able to completely optimise the car, and will carry on subsequent development late into the season. A new aero package is to be bolted on to the chassis at the Mexican Grand Prix, bolstering their chance of holding their position in the championship.

Usually, a team lower down the pecking order doesn’t do so, instead choosing to shift their focus to the next season’s car. “The 2016 cars will only be an evolution from the current ones, the final year of these prevalent rules before new ones in 2017. So it makes sense to keep going in this direction because we will gain a good footing in terms of a starting point early next season, helping us push for better results. Why should we be satisfied with fifth? Why not fourth?” asks Mallya.

That will mean challenging the likes of Red Bull and Williams. It isn’t a viable target for the remainder of this 2015 season. But given the two teams’ current problems with engines and aero efficiency, respectively, it is a possibility next year. After all, margins in F1 have been ever reducing since the time Force India joined this sport.

“When I bought the team in 2008, a gap of half a second was not a large gap,” in Mallya’s words. “Today, in 2015, half a second is a huge gap. Over the years we have been fighting for tenths of a second. It has become that much more competitive, and in such a scenario, we are consistently in the top ten with two cars, and it is a tremendous achievement that makes me very proud. Every year we have improved our performances and it is a credible achievement.”

It was in 2007 that Mallya, in partnership with Dutch businessman Michiel Mol, bought the Spykar F1 team for €90 million. The team was based in Silverstone but operated under an Indian licence. Rechristening it Force India created a rage among motorsport aficionados in the country. At every opportunity possible, Mallya asked for patience from those watching, for getting results for a lowly F1 team is not an envious task. And it proved precisely so in the beginning.

In 2009, they finished ninth that season, reflecting that more work needed to be done on the car. One of the key ingredients was the team’s deal with McLaren- Mercedes to supply engines and transmission units from that season onwards. This association continues till date, only with McLaren out of the picture and Mercedes now a complete works team.

In turn, hedging their bets on one of the best power units available on the grid has allowed the team to focus single-handedly on developing the car’s aerodynamic efficiency. The results have been heartening. In 2010, the team jumped over BMW-Sauber and finished seventh. In 2011, Force India moved up one more spot. A resurgent Sauber-Ferrari team pushed Force India back to seventh in 2012, but the two teams exchanged places once again in 2013.

It might seem slow progress. Even so, the results aren’t too bad for a team that employs about 400 personnel when compared to 600-plus for the likes of McLaren and Ferrari, operating at less than half their respective budgets.

“We are the most efficient, bang for buck team on the grid,” says Mallya, explaining his team’s growth over the years. “F1 is not about flashy results. I would rather be consistent on all tracks and score more points and earn more performance income than do well on few tracks but end up lower in the constructors’ championship. The performance income I gain by being consistent is more valuable than the flashy podiums and limelight that comes up with it.”

For middle rung teams like Force India, performance income is important. F1’s prize distribution is heavily skewered in favour of the marquee teams, and the remaining are only offered meagre sums to fight over. In 2013, profits from the sport’s commercial were estimated at $1.8 billion, and when it comes to distributing it, top teams are the only ones that benefit.

Along with prize money for yearly performances as per championship standings, the likes of Mercedes, McLaren, Red Bull and Ferrari—traditionally rich teams—receive an additional historical bonus on account of past championship wins. Ferrari are even paid an appearance bonus. In comparison, teams like Force India are only paid performance incentives and they are forced to contend with this smaller piece of the pie, thanks to disconcerting contractual agreements between the top teams and the rights holders. As such, if that 2013 figure is considered, the Scuderia received approximately 210 million in comparison to Force India’s meagre 81 million.

“The commercial rights holders have put themselves in a bind when they wanted to do an IPO,” Mallya points out. “They needed to have confirmed participation from the top teams till 2020 and had to pay them more, which has led to this situation. As Bernie Ecclestone has noted, those contracts need to be torn apart for a better and more sensible and equitable distribution of prize money. But that can only happen if the big teams agree. The sad part is they look at their own selfish interest.”

That’s why fifth place assumes such significance for Force India. There have been numerous reports about the team’s financial standing. Mallya’s troubles are well known, while team partner Sahara India Pariwar (which purchased a 42.5 per cent stake in 2011) is faring no better.

Earlier this year, when their car launch was delayed, one reason cited was a lack of resources and unpaid bills of part suppliers. Those rumours are still around. While Renault were actively seeking to buy into a team, Force India’s name popped up time and again.

The French firm’s representatives reportedly met Mallya this summer. Nothing came of it, though, as Lotus seemed to be their preferred choice. Thereafter, reports emerged that Audi might join Formula One. It was said they might also look at buying a stake in Force India.

The team chooses to remain tight- lipped about this. But there is some truth to it as seen from the manner in which Force India, along with Sauber and Lotus, threatened to boycott last season’s USA GP in Texas. Ecclestone’s intervention prevented that move, but matters haven’t been resolved yet. Fed up, Force India and Sauber have finally lodged a formal complaint to the European Commission against F1’s non-competitive practices this past week,.

Being in fifth place gives Force India a larger role in F1. As part of the strategy group, it not only gets a vote on the rules that govern the sport, but is also able to voice the grievances of smaller teams. “The top teams want everything their way,” says Mallya, “For this sport to be sustainable, you can’t have just the big teams running around. The commercial rights holders and the FIA have to realise that this sport needs to be sustainable for all. You cannot get rid of the smaller teams and have the big teams run three or four cars. Who will want to watch? Small teams are as important to the DNA of Formula One.”

(Chetan Narula is a Delhi-based sports writer)

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Chetan Narula in Singapore