KNUTSON: What Is Mercedes’ Future In F-1?

KNUTSON: What Is Mercedes
Questions have been raised about Mercedes’ participation in Formula One beyond 2020. (Steve Etherington photo)
Dan Knutson.

BLOOMINGTON, Minn. — Only one auto manufacturer has competed in every season of Formula One since the world championship was founded in 1950.

That, of course, is Ferrari. The famous Prancing Horse Scuderia will contest its 1,000th F-1 championship race this year.

Other manufacturers have come and gone over the decades. No matter how committed they say they are to the series, they can suddenly pull the plug. The worldwide recession caused Honda and BMW to abruptly leave at the end of 2008, and Toyota followed  a year later. Only Honda returned.

Mercedes only ran a works team in 1954 and 1955, and from 2010 to the present. It pulled out of F-1 at the end of the 1955 season because of the horrible accident during the 24 Hours of Le Mans that killed 83 spectators and driver Pierre Bouillin (who raced under the name Pierre Levegh) and injured nearly 180 more fans.

Suddenly, racing was very unpopular around the world and with the board of directors at Mercedes.

Mercedes returned to F-1 as an engine supplier in 1994 and as a works team when it bought the former Brawn/Honda/BAR team.

During the offseason, rumors circulated that Mercedes would withdraw from Formula One at the end of the year. But they were just that — rumors.

The rumors were fueled by parent company Daimler saying in November that it would cut at least 10,000 jobs and reduce staff costs by around 1.4 billion euros ($1.5 billion) by the end of 2022. Furthermore, there was speculation that the current F-1 was not all that relevant to the company’s move toward electrification.

But Mercedes has no intention of leaving F-1. Team principal Toto Wolff insists Mercedes is in F-1 for “the long-term.”

But that is not to say Daimler has not closely examined its entire F-1 project.

“With everything we (Daimler) do, we have to question ‘is it the right activity that we deploy?’” Wolff said. “It’s whether it’s in the petrochemical business, whether it’s as an OEM (original equipment manufacturer) in the car industry or whether it’s F-1. We, as Daimler today, we see the advantages and the benefits that Formula One as a marketing platform provides to us and we see the data. And that is the underlying condition why we’re doing it.

“F-1 provides a great marketing platform for our brand,” Wolff added. “This is what we do. We build race cars and we build road cars. F-1 is the halo platform for hybrid engineering.”

F-1 makes financial sense for Daimler.

“We see the data … participating in F-1 is one of the greatest returns on investment in the whole Daimler Group,” Wolff explained. “This is an exercise that costs little in comparison to the billions of marketing value that are being generated.”

The target is to make the F-1 team turn a profit.

“We want to make it a no-brainer from the sheer numbers,” he said. “The marketing is huge and the return on investment should be the icing on the cake.

“We see that in the American sports leagues that most of them, the NFL or the NBA, are profitable franchises. And this is my personal aim and my personal contribution with our partners to turn this into such a corporate company, so that from a service standpoint it becomes a no-brainer to participate.”

Like the other nine F-1 teams, Mercedes is negotiating with Liberty Media and the FIA on contract terms for the new Concorde Agreement that will replace the current one that expires at the end of the year.

The Concorde Agreement lays out how the sport is run and how the commercial income is distributed.

“It’s an ongoing process and it’s a complicated set of contracts, trilateral contracts between the FIA, the commercial rights holder and all the teams,” Wolff said. “That needs time and the devil is in the detail. So I wouldn’t want to commit here to give you a specific date because there are quite some topics that remain to be agreed on.

“It’s (a) work in progress. Clearly, there is the will and the wish for all of the stakeholders to come to a close before we embark on the 2021 season, because (otherwise) that would be an uncomfortable situation.”

Speaking of negotiations for 2021, Wolff wants Lewis Hamilton to renew his contract that also expires at the end of this year.

“It is the obvious pairing going forward,” Wolff said. “We would like to have the fastest man in the car and I know Lewis wants to be in the fastest car, so there is an obvious mutual outcome.”