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Motorsport Week

Why three teams could cost Force India more than $100m

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7 years ago
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Force India's fall into administration has been well documented over the past week and its future still remains uncertain and is likely to do so for at least another few weeks as potential buyers put forward offers to save the team.

Whilst there's believed to be five interested parties, a decision by three current teams could see that figure drop and potentially cost Force India – or whatever it might be called in the future – upwards of $100 million (£77m).

Those three teams are McLaren, Renault and Williams.

Why so? Well under Formula 1's commercial deal, a document called the Concorde Agreement signed by all teams in 2009, governs what happens to a team should it fall into administration. It states that any team that has entered into administration and survived, i.e. been sold, can continue to compete in the sport, but only as a new entity, regardless of whether it keeps the same name, factory and staff.

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That would mean Force India would lose out on any prize money it is owed, roughly $70m (£53m), for finishing fourth last season. But due to the complex nature of how prize money is distributed, it would also lose out on many millions more over the next two seasons.

Teams must finish inside the top ten two years in a row to qualify for a Column 1 payment, which is around $25m (£19m). Force India could lose out on two of these payments if it is considered a new team – on a side note, Haas have only just qualified for this payment meaning it'll see a prize money increase of roughly 170% from $15m to $40m for the 2017 season (paid at the end of 2018).

This can however be bypassed if all current teams unanimously agree to allow Force India to continue operating after administration under the same entry, but this option has been blocked by McLaren, Renault and Williams.

Although Liberty Media are believed to be negotiating with the three teams in the hope of swaying them into voting in favour, they're not required to.

It's not clear if the three are motivated by the extra income they would see as a result of Force India losing out on prize money, as it would be redistributed amongst the remaining teams, or whether they fear that Mercedes are lining up to take control of the team, therefore strengthening its grip on the sport in a similar fashion to Ferrari/Sauber/Haas and Red Bull/Toro Rosso.

Whatever the reason, the impact could see interested buyers drop out of the Force India sale, risking its entire future and that of 400 employees.

It's worth noting that Sergio Perez's action against Force India are different to the winding up order brought by a supplier, the former coming a few days before Perez and Co's action. It's the winding up order that means Force India is in danger of losing out on prize money rather than the action brought by Perez, which by itself would have avoided this issue.

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