The 'four pillars' that committed Mercedes to F1

Jonathan Noble
·2-min read

Its recent tie-up with INEOS, which has resulted in a shareholding reshuffle, has created what team boss Toto Wolff has called a 'joint powerhouse' to keep pushing on in F1.

Yet the complications in sorting out the INEOS buy-in, and a neat three-way ownership split of the team, allied to sorting out a fresh team principal contract for Wolff, explains why it took so long to go public with the plans.

But what is clear speaking to Mercedes chiefs now is that, rather than there being any intense debate this year about if F1 fitted well with the road car company's future amid changing times for automotive manufacturers, the sport actually easily ticked all the boxes it needed to for the German car maker.

For Mercedes chairman Ola Kallenius, when it came to discussions about whether or not to commit to F1 for the new Concorde Agreement period from 2021, it was important that the decision was based on rational reasons – and not just on the emotions of enjoying the racing.

Lewis Hamilton, Mercedes F1 W11, in the pit lane

Lewis Hamilton, Mercedes F1 W11, in the pit lane<span class="copyright">Andy Hone / Motorsport Images</span>
Lewis Hamilton, Mercedes F1 W11, in the pit laneAndy Hone / Motorsport Images

Andy Hone / Motorsport Images

The finances

F1 costs have risen dramatically in recent years, with successful teams spending hundreds of millions of pounds each year in their efforts to win.

The rampant acceleration of expenditure was unsustainable and risked even successful car makers pulling out of F1 if they could no longer justify the spending to their company's boards.

F1's imposition of a budget cap from 2021, allied to changes in the way the sport is financed to make it more equitable for everybody, are factors that have made staying in F1 a no-brainer for Mercedes.

"The third thing [for us] was financial sustainability," added Kallenius. "The cost cost cap helps. We were an advocate for it. It makes the economic proposition better, so I think we're ticking that box as well.

Future profitability

What the changes in F1's costs have also done is perhaps change the business model of teams completely.

Whereas once they were nothing more than money pits for owners, now there is a chance to make the finances much more attractive – and even make a profit.

"The fourth one was, does it always have to be a cost centre, or can it be a sports franchise, like a football club or an American football club in the US?" continued Kallenius. "And we can see now that people are starting to look at this more like sports franchises.

"Getting a great and strong, professional partner, that knows professional sport, like INEOS, into the picture shows that. The fact that somebody like Jim [Ratcliffe, INEOS CEO] makes a decision to join forces with us, I think reinforces that fourth pillar.

"And with those four pillars, to me, the decision is clear. We're in."