Ferrari Quit Threat – How serious is it?

Chief Executive Officer of Fiat Chrysler Automobiles Group and Ferrari Chairman Sergio Marchionne visits the pit of Scuderia Ferrari at the Autodromo Nazionale circuit in Monza ahead of the Italian Formula One Grand Prix. AFP PHOTO / ANDREAS SOLARO (Photo credit should read ANDREAS SOLARO/AFP/Getty Images)

Scuderia Ferrari is by far the most storied team in Formula 1. The Italian team founded by Enzo Ferrari in 1929 has taken part in every F1 season since the first season in 1950. The most successful team in the sport has 16 Constructors’ and 15 Drivers’ championships to its credit. The fanbase of the Maranello-based team is the largest in the F1 world.

Ferrari Quit Threat – How serious is it?

For many fans Ferrari is Formula 1 and Formula 1 is Ferrari. When Ferrari says they might quit F1 because of future regulation changes proposed by the new owners Liberty Media, everybody has to sit up and listen.

Ferrari Chairman’s threat

During the traditional pre-Christmas lunch in 2017, Ferrari Chairman Sergio Marchionne met select members of the Italian media. The top man at Ferrari made it clear that his threats to quit the sport because of the proposed regulation changes post-2020 were not to be taken lightly.

Marchionne said:“Some people say that our threat about the 2020/2021 regulations is a bluff, but they’re playing with fire. The situation has changed since 2015. Starting from that moment, everyone knows that if we threaten to do something, we do it.

“One of the greatest advantages is that the current Concorde Agreement [between teams and F1] is very different from previous ones and ensures a greater contractual freedom, even during the agreement with Liberty Media.

“The previous contract made it impossible for the team to evaluate an alternative outside of the circus. Now we can analyse the possibility to create something similar to Formula 1 in terms of a show.”

Reasons for the Ferrari threat

What are the proposed regulation changes that prompted this outburst from Marchionne to the extent of threatening a breakaway series? U.S.-based Liberty Media took over as new owners in 2017. The Concorde Agreement between the F1 management and teams expires in 2020.

In a bid to popularize the sport and even the playing field for the teams, the new owners have proposed simpler and cheaper engines from 2021. Since 2014, the expensive and low-noise V6 turbo-hybrid engines being used has caused much heartburn among the teams and fans.

So the new owners and Managing Director Ross Brawn have proposed louder, cheaper and simpler engines (Power Units) that will do away with the MGU-H component all together. This proposal to standardize engines and possible cost caps has angered the Ferrari team. Marchionne thinks this is the wrong direction in terms of strategic and technical development and ruins the DNA of the sport.

Behind the scenes, there is also a proposal to have a more equitable distribution of revenue between the teams as part of the new agreement. Ferrari gets a $100 million payment now for its historical standing in the sport, before revenues are divided between the teams based on a formula created by former F1 Supremo Bernie Ecclestone. Elimination of this windfall payment is not something the Italian team will take lightly.

Another proposal that has raised the hackles of the Italian team is a proposed end to the veto it has on any new F1 rule. It is the only team that has such a power and wields it to good effect. If the FIA ends this veto power, it is another serious threat to the “first among equals” status of the team.

What others are saying

Mercedes boss Toto Wolff has expressed his unhappiness over the proposed engine rule changes. Wolff has also warned that Ferrari’s quit threat should not be taken lightly. Former F1 boss Ecclestone has warned about the serious implications of the Ferrari quit threats. Pirelli’s Mario Isola has also said this is a serious threat from Ferrari.

Is it for real?

Ferrari has a history of quit threats which makes the latest one look like another case of crying wolf. When any rule changes relating to capping costs, engines, budgets, technical regulations is proposed, if it threatens the pre-eminent status of the Italian team, a threat to quit normally pops up. But the powers that be in F1 have always found a way to ride the storm out.

Ferrari is in the midst of a prolonged title drought since 2008. The 2017 season saw them slug it out with Mercedes for top honors for most of the season. The team has a good baseline car to build upon for the new 2018 season as the regulations are stable. Ferrari led by four-time world champion Sebastian Vettel must be considered one of the favorites for the title in the upcoming season. Several sports betting sites including betstar have Ferrari at 7/2 odds to win the championship in 2018.

When the team gets into the thick of battle and starts winning again the current outbursts will die down. An alternative breakaway series would be prohibitive in terms of resources and costs for Ferrari. It is in the best interests of the team to stay in Formula 1.

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