FREE NEWSLETTER

Alpha Tauri’s Franz Tost casts dire warning over smaller F1 teams’ survival

8 April 2020

As reported in the German language motorsport-total.com and Autoweek, Franz Tost, team principal of Red Bull junior team Alpha Tauri, has said that should Formula 1 not get underway until after July, some teams could be in real trouble in terms of surviving.

“If we start competing in July, we will come out with a black eye,” he said. “If we don’t start, it will be very critical. When we don’t contest a Grand Prix, it costs us $1.5 million to $2 million. If nothing happens throughout the year, it will be a very critical matter. If you have no income, it is obviously an economic disaster.”

His claim was reiterated by Haas F1 Team boss Guenther Steiner who said, “If we don’t have a World Championship, it will be difficult for many teams to survive.”

The finances under threat include not receiving constructor championship prize money upon which some of the smaller teams rely on. The knock-on effect will be the ability to field a team in 2021.

“We need to wait and see which races we have, what income we have and how it looks with the sponsors,” Tost said in the interview. “Do they stay, do they disappear? What does the whole economic situation look like?

“We have to face reality to find out where we are economically. Then we have to sit down and say, ‘This is the challenge we are facing and we have only this money and that money left.’ Only Liberty Media can give us a starting point. They are responsible for the money from sponsors, from television rights, from organisers, which they then distribute to us.

“If they cannot distribute anything, we don’t have much to spend either. Now, we wait and see.”

Meanwhile credit rating agency Moody’s has changed the financial outlook of Alpha Topco Limited, the holding company for the group of companies controlled by Liberty Media Corporation through its holding companies Delta Debtco Limited and Delta Topco that exploit the commercial rights to the FIA Formula 1 World Championship, from “positive” to “negative” due to “severe disruption to the 2020 race calendar” and “expectations for weakened earnings and cash flow generation.”

According to financial journalist Chris Sylt in Forbes, F1’s revenue is expected to dive from its total of $2 billion last year. Broadcasters are the biggest single source of this and provided a total of $762.8 million in 2019 with hosting fees bringing in $602.1 million.

Moody’s considers that Formula 1 is relatively well placed to recover after the coronavirus crisis, underpinned by its contracted revenue nature, strong franchise, large fan base and high cash conversion. However, the company might face some revenue challenge in 2021 due to the timing of TV contract renewals, as well as a weak macroeconomic backdrop. Increasing environmental concerns may also affect the image of the sport and the company’s ability to grow its sponsorship and other income. The strength and attractiveness of the Formula1 franchise, though, provides some protection in the context of wider broadcasting market challenges.

Partners

Bosch logo
SADEV
AVL

Latest issue

FREE Newsletter

Stay up to date and a chance to win 1 Years Subscription*

  • This field is for validation purposes and should be left unchanged.

Latest Tweets

Stay up to date with our social world

RACE TECH magazine @RaceTechmag
22 Jan
PROMOTED CONTENT: Pressure Scanner Favoured by Aerodynamicists https://t.co/X3R5db4iXx https://t.co/Erg23EIev7
RACE TECH magazine @RaceTechmag
21 Jan
WEC kicks off the Season with new Hypercar category and all women link up @FIAWEC @fillon_pierre #WEC #Hypercarhttps://t.co/mo0q5VUS6K
RACE TECH magazine @RaceTechmag
21 Jan
WEC kicks off Season with new Hypercar category https://t.co/TU2pnFdUeQ
RACE TECH magazine @RaceTechmag
19 Jan
Get 3 issues FREE when you subscribe to RACE TECH's print magazine for a year. Includes FREE digital issue and FREE… https://t.co/RmAn5jmXF5
RACE TECH magazine @RaceTechmag
19 Jan
Don't miss our January sales! Back issues of RACE TECH only £3! https://t.co/ceH98KR9T5 For a limited time only… https://t.co/852QP37ia1
RACE TECH magazine @RaceTechmag
13 Jan
McLaren Racing set to join Formula E https://t.co/tiDPO5RglN
RACE TECH magazine @RaceTechmag
11 Jan
BATTERY TECH: With #Battery #technology key to the seismic shift towards #electrification @Chris_Pickering talks to… https://t.co/P7TCsQIsXu
RACE TECH magazine @RaceTechmag
7 Jan
GET READY FOR A GOLDEN ERA: #Porsche and #Audi commitment to #LMDh paves the way for the creation of a breed of tur… https://t.co/llQ0O33AvH