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ideas of finances in autosport
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a425couple
2017-09-05 21:34:15 UTC
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http://blackflag.jalopnik.com/the-coolest-racing-series-in-the-world-got-too-expensiv-1797381301

Here is an interesting excerpt from the whole story

(About WEC / Le Mans)
However, with Audi and Porsche repordidely spending in excess of $200
million annually, and Toyota having recently increased its 2016 budget
to nearly $100 million, Famin said Peugeot would be unable to compete
with those numbers.

“The FIA WEC is a magnificent championship with beautiful cars,” Famin
said. “The series is ideal for manufacturers and is much better than F1.
“The technology is interesting as well as the format. Manufacturers
fight with [each other] and we remember the manufacturers as winners
more than drivers, with a few exceptions.
“The big reservation concerns the budget, which is currently far too
high. We can only praise the approach of the FIA and ACO to reduce
costs. ...
“Peugeot will return to endurance racing the day it will be possible to
mount a real project with something behind it.”

We’ve seen those numbers before. Audi’s LMP1-Hybrid efforts were
estimated at nearly $250 million a year, as Porsche’s are rumored to
hover at over $200 million; news website Sportscar365 estimates Toyota’s
to be around $100 million annually.

As a bit of comparison, Ferrari competed in F1 on an annual budget of
$470 million in 2013 including hospitality, NBC Sports reports, making
it the highest spender for that season. But the smallest F1 team, CNN
reports, runs on a yearly estimated budget of $44 million. The top
Verizon IndyCar Series team ran on $15 million in 2013.

With costs nearing F1 levels and more relevant racing series out there,
an LMP1 exit makes sense. It isn’t fun to hear about, but it makes sense.

Formula E Is Hilariously Cheap By Contrast
Formula E’s annual budget is far below even IndyCar, with CNN reporting
that teams had a $3.5-million annual spending cap in 2016. For the
fifth, sixth and seventh seasons of Formula E, which span from 2018
through 2021 since the series runs from the fall of one year to the
summer of the next, FIA regulations mandate that the price of any race
car should not exceed 800,000 euros.
That’s $945,000 at current exchange rates, which is less than 1 percent
of what Ferrari spent on research, development and manufacturing of its
F1 car in 2013. The $945,000 figure is the max price for the Formula E
car, ready to race and powertrain included.

The current Formula E race car does not look terrible for $945,000. It
sounds a bit plastic-y, but it really does not look terrible. Photo
credit: Getty Images

-----------------------------------------------
The entire story is interesting, and here it is:
The Coolest Racing Series In The World Got Too Expensive

Alanis King
8/02/17 11:48am Filed to: PORSCHE

The Porsche 919 at the 24 Hours of Le Mans. Photo credit: Dan
Istitene/Getty Images
For the past few years, racing fans who tuned in to the FIA World
Endurance Championship could watch Porsche, Audi and Toyota duke it out
in the series’ top LMP1 class—a class that featured the most advanced
race cars in the world going at it in the 24 Hours of Le Mans and some
of the best tracks on Earth.

But Audi is out, and as of Friday, Porsche is too, all for the much
lesser electric open-wheel series that is the FIA Formula E Championship.

Article preview thumbnail
Porsche Confirms It's Dumping Top Le Mans Class For Formula E

The rumors are true. Porsche, which stormed back to the the FIA World
Endurance Championship’s top…

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Much of it is a symptom of the growing costs of running a Le Mans
Prototype 1 race car, which is in line with what some Formula One teams
spend. For manufacturer after manufacturer, these costs have been too
great to justify in the face of Formula E’s cheap, media-friendly
alternative.


Porsche indicated that drivers and crews wouldn’t get the axe with the
Le Mans exit. Photo credit: Getty Images
Formula E is just a few years younger than WEC, which started in 2012.
But the choice for manufacturers is simple, with Formula E’s lower-cost
setup offering companies a testing ground for electric cars, a step
above LMP1’s permitted hybrids in terms of future technology. This
recent all-electric exodus is also forebodingly similar to what happened
to WEC’s predecessor, which died a bleak and self-imposed death in the
1990s partially due to letting costs get out of control.

A year or two ago, this seemed all but implausible. When rumors came
Thursday that Porsche would end its dominant program in LMP1, we were
left to wait and sweat it out. As one of only two manufacturer-backed
teams left in the LMP1 division, a Porsche withdrawal would have
devastating impacts on the series and could even kill its top class
altogether.

But we didn’t have to wait long. On Friday, it was official. Porsche,
winner of the last three 24 Hours of Le Mans even after falling to 56th
place at one point this year, would end its World Endurance Championship
LMP1 efforts at the end of 2017 and leave Toyota as the lone
manufacturer left in that category.

This exodus is all thanks to LMP1's crippling costs, but you also need
to look at the class’ resulting lack of competition, and its struggle to
provide relevancy to the most cutting-edge tech in road cars.

The dominating Porsche 919 is out. Photo credit: Ker Robertson/Getty Images
LMP1 Costs Are Astronomical

Peugeot is an excellent example of how cost is what’s choking the top
class of the world’s premier endurance-racing series. Peugeot, rumored
to return to LMP1 around 2016, had interest in WEC’s top class even for
its inaugural 2012 season. But each time it’s tried, the financial
commitment has been too much.

Peugeot had been one of the top teams in LMP1’s diesel era from the
mid-2000s until 2012, when the company pulled out of its World Endurance
Championship effort just two months before the season began. Europe was
in a financial crisis at the time and Peugeot was on the ropes, as it
had bet big on midsize sedans—just about the worst-performing kind of
car in recent years. Autosport cited a company statement as saying the
withdrawal was due to hard economic times and a focus on turning around
declining car sales.

Peugeot has been healthier as of late, with sales back up and the
economic crisis resolved, but they took one look at LMP1's huge
hybrid-era costs and passed, as Sportscar365 reported last year:

Speaking to Endurance-Info, Peugeot Sport director Bruno Famin said the
escalating costs to compete in the premier class of the FIA World
Endurance Championship currently has the French manufacturer not being
able to commit to such a program.

“The budget is [the problem],” Famin told Endurance-Info. “The President
of PSA dreams of a return of Peugeot to the 24 Hours of Le Mans and more
generally, in endurance [racing].

“But for this there are conditions… That PSA gets better, which is
pretty much engaged and that the requested budget is sharply down.

“Currently it’s just an idea and a target on the horizon.”

Peugeot, which ran factory 908s in Le Mans-labeled series from
2007-2011, pulled the plug on its program just weeks prior to the
inaugural round of the WEC in 2012 due to company wide financial issues.
Famin called out other companies spending ridiculous amounts of money,
and hinted that Peugeot would love to go back to endurance racing once
the financial commitment needed to compete returned to something sane.
From Sportscar365:

However, with Audi and Porsche repordidely spending in excess of $200
million annually, and Toyota having recently increased its 2016 budget
to nearly $100 million, Famin said Peugeot would be unable to compete
with those numbers.

“The FIA WEC is a magnificent championship with beautiful cars,” Famin
said. “The series is ideal for manufacturers and is much better than F1.

“The technology is interesting as well as the format. Manufacturers
fight with [each other] and we remember the manufacturers as winners
more than drivers, with a few exceptions.

“The big reservation concerns the budget, which is currently far too
high. We can only praise the approach of the FIA and ACO to reduce
costs. ...

“Peugeot will return to endurance racing the day it will be possible to
mount a real project with something behind it.”

Porsche’s Timo Bernhard, Brendon Hartley and Earl Bamber won the 24
Hours of Le Mans in 2017, but it wasn’t before devastating issues that
dropped the team to 56th in the running order at one point during the
race. Photo credit: Dan Istitene/Getty Images
We’ve seen those numbers before. Audi’s LMP1-Hybrid efforts were
estimated at nearly $250 million a year, as Porsche’s are rumored to
hover at over $200 million; news website Sportscar365 estimates Toyota’s
to be around $100 million annually.

As a bit of comparison, Ferrari competed in F1 on an annual budget of
$470 million in 2013 including hospitality, NBC Sports reports, making
it the highest spender for that season. But the smallest F1 team, CNN
reports, runs on a yearly estimated budget of $44 million. The top
Verizon IndyCar Series team ran on $15 million in 2013.

With costs nearing F1 levels and more relevant racing series out there,
an LMP1 exit makes sense. It isn’t fun to hear about, but it makes sense.

Formula E Is Hilariously Cheap By Contrast

Formula E’s annual budget is far below even IndyCar, with CNN reporting
that teams had a $3.5-million annual spending cap in 2016. For the
fifth, sixth and seventh seasons of Formula E, which span from 2018
through 2021 since the series runs from the fall of one year to the
summer of the next, FIA regulations mandate that the price of any race
car should not exceed 800,000 euros.


Formula E is where everyone is heading. Photo credit: Getty Images
That’s $945,000 at current exchange rates, which is less than 1 percent
of what Ferrari spent on research, development and manufacturing of its
F1 car in 2013. The $945,000 figure is the max price for the Formula E
car, ready to race and powertrain included.


The current Formula E race car does not look terrible for $945,000. It
sounds a bit plastic-y, but it really does not look terrible. Photo
credit: Getty Images
The World Endurance Championship did make an effort to keep costs down
with some changes to aero, staffing and testing-day restrictions in
2016. But the “down” part wasn’t exactly about making the series less
costly than it already was. It was to keep prices from climbing even higher.

But keeping costs from getting even higher wasn’t enough, at least to
keep Porsche or Audi around. By dumping the spaceship-looking LMP1 cars
and moving into Formula E, Porsche will effectively save a solid $200
million a year while also testing its full-electric technology in race
conditions.

Formula E Also Offers Something LMP1 Can’t: Competition

Over the five years that the World Endurance Championship has run, the
four main manufacturer efforts have been from Audi, Toyota, Porsche and
Nissan. Only one remains. Here’s when and why the others quit:

Nissan: The team competed in WEC in 2015, but Autosport reports that the
team withdrew shortly before the 2016 season began due to development
issues. The race car had just gone through a complete redesign, and
Nissan hadn’t begun manufacturing yet. LMP1 project boss Mike Carcamo
told the website that it didn’t make sense to test and develop during
race season, and that the team would prefer to focus where it could be
successful.
Audi: The manufacturer left WEC after the 2016 race season, strapped
with Dieselgate burdens and on its way to compete in Formula E.
Porsche: The company will leave WEC after this race season, heading up a
Formula E effort and leaving Toyota as the only remaining manufacturer
in LMP1 at the time being.
With the LMP1 class down to one committed manufacturer after this
season, there isn’t much of a reason to stick around—for fans or for
teams. If there’s no one to compete with, spectators have no measure of
how your cars stack up against anyone else’s.

The fewer teams you compete against, the less your triumphs mean. After
Audi’s 2016 exit, the LMP1 class was down to just two teams, Toyota and
Porsche. That couldn’t have given Porsche too much incentive to keep at it.

(Also, if you’re wondering which manufacturer was the last to run a
factory-backed prototype car after the fall of the WSC in the early
‘90s, yep, it was Toyota.)


With Audi, pictured, and Porsche gone, Toyota will be the only one left
in the top LMP1 class. Photo credit: Getty Images
That makes LMP1 an expensive endeavor that doesn’t have a big payoff in
terms of competition and showing what a car can do. Meanwhile, Formula E
is dense with manufacturers—both existing and incoming.

Electric Racing Is A Testing Ground For Street Cars, Which Is What Le
Mans Used To Be

Before Porsche’s exit, the World Endurance Championship made an even
harder push to transform its top class into a testing ground for new
technology in its manufacturers’ street cars. The LMP1 class integrated
hybrids into competition, and Le Mans begged Porsche, which already runs
hybrids, to stay just last month by mandating plug-in hybrids for LMP1
class in 2020.

Now, we’re trying to find out if LMP1 will make it to 2020.

That’s for good reason, too. It doesn’t make sense to shovel out
hundreds of millions a year to compete in cars that fall on the middle
step of the gas-electric ladder, when, in reality, the automotive
industry is moving to electric power in the near future and electric
racing can be had for a tiny, tiny fraction of the cost.

Formula E gives companies a place to test their electric road
technology, which is what’s appealing right now. With the early 2020s as
the target date for a lot of manufacturers to start pumping out
electric, autonomous vehicles on a regular basis, testing this stuff in
harsh racing conditions is important.

The planned support series for Formula E, expected to come around in the
next few years, will be electric and autonomous. That’s even more useful
to test in.

For instance, rumors last year were that BMW was looking at entering an
LMP1 program just like Peugeot. But BMW went to Formula E instead, for
relevance purposes. Autosport reports that motorsport boss Jens
Marquardt said the focus on hybrids didn’t mesh with the company’s focus
on the electric BMW i brand, and that the current LMP1 rulebook “does
not fulfill [BMW’s] needed criteria.”

But while BMW was still thinking about WEC, its budget was huge. BMW had
a proposal with a rumored $450 million first-year and developmental
budget, which is just $20 million short of Ferrari’s F1 budget mentioned
earlier. That’s a ton of money for a series that isn’t a household name
like F1 across the ocean.

BMW’s board shot down that costly proposal, and announced earlier in
July that it would be joining Formula E for the 2018-2019 race season.

(As an aside, this problem is reverberating across the motorsports
world. BMW’s rival Mercedes recently skipped out of its position in
Germany’s legendary touring car series DTM for Formula E.)


BMW is moving past the safety-car business and into the race-car
business when it comes to Formula E. Image via BMW
With emissions crackdowns and one Dieselgate scandal after another among
companies, it really only makes sense to go electric—on roads and in
series that promote development. (Things like NASCAR, for example, have
almost entirely moved past the “testing grounds” phase of their life
cycles. Modern NASCAR is here for entertainment, not necessarily to test
the latest V8 gasoline engines.)


The Formula E New York City ePrix. Photo credit: Getty Images
That’s not to say Formula E has it all figured out and will be the next
big thing in racing. Despite attracting a lot of car companies with low
costs and promises of battle grounds to compete with the latest electric
technologies, the series still has to get fans in seats and tuned in on
television—without large eruptions of laughter, which is actually a
problem Formula E has, ideally.

Article preview thumbnail
All Of The Things I Never Would Have Known About Formula E Without
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In order for these moves to be worthwhile from an exposure standpoint
for the companies that have mad the commitment, Formula E as a series
has a lot to improve on. That goes further than the financial side,
which isn’t great: In its inaugural 2014-2015 season, Formula E lost
$68.4 million.

But, regardless, it’s going to have cars in the field for a new and
novel racing series. That’s a start. WEC, on the other hand, keeps
making the mistakes that Le Mans racing has in the past.


The Formula E New York City ePrix. Photo credit: Getty Images
Repeating The Same Mistakes

The World Endurance Championship has been around since 2012, which
sounds young. But its roots are much older than that, and WEC filled a
void in auto racing when it came around five years ago. The void it
filled, grimly, was left by the demise of the World Sportscar
Championship in the early ‘90s.

The World Sportscar Championship ran under various series names and sets
of regulations from 1953 through 1992, when the tech mandated on the
race cars almost exactly matched that of F1. Budgets did, too. Teams
realized that what they were spending on the WSC could get them an entry
in F1, which had much better publicity and TV coverage.

So, teams went to Formula One instead. F1 had a lot more opportunity for
exposure, and the costs to field a team—around $15 million in the late
1980s and early 1990s—were virtually the same in both. When the payoff
is better in a rival series, teams leave.

For WEC, things are beginning to look a lot like they did two decades
ago: not good. Prices are out of control, and the alternatives, like
Formula E, are simply better, cheaper and come with the same or more
exposure.

If WEC continues to repeat the mistakes of its predecessor, the series
could end up just like it: long dead, leaving only the reminiscence of
worldwide endurance racing behind. Repeating the same mistakes is no way
to go through life, and it’s no way to run a successful racing series,
either.

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~misfit~
2017-09-06 05:20:43 UTC
Reply
Permalink
Raw Message
Post by a425couple
from
http://blackflag.jalopnik.com/the-coolest-racing-series-in-the-world-got-too-expensiv-1797381301
Here is an interesting excerpt from the whole story
[snipped]
Post by a425couple
Formula E Is Hilariously Cheap By Contrast
Formula E's annual budget is far below even IndyCar, with CNN
reporting that teams had a $3.5-million annual spending cap in 2016.
For the fifth, sixth and seventh seasons of Formula E, which span from
2018
through 2021 since the series runs from the fall of one year to the
summer of the next, FIA regulations mandate that the price of any race
car should not exceed 800,000 euros.
That's good and all but I hope it doesn't stifle innovation too much. After
all if F1 is / was the pinnacle of motorsport and a cradle of innovation
that trickled down to road cars then with a lot of road cars going electric
it would be great if FE could do the same for electric road cars.....
--
Shaun.

"Humans will have advanced a long, long way when religious belief has a cozy
little classification in the DSM*."
David Melville (in r.a.s.f1)
(*Diagnostic and Statistical Manual of Mental Disorders)
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