Pay Drivers are having their heyday in Formula 1

The past couple of months or so there has been a lot of talk in the F1 paddock about “Pay Drivers”. So what does the term Pay Driver refer to? A Pay Driver is one who, instead of being paid by the team for which he races, drives for free and brings with him a certain amount of funding in the form of sponsorships or at times through family funding. In a general sense, a Pay Driver is not up to the mark or doesn’t necessarily have the required talent or credentials when compared with a driver who is considered good solely based on merit. Pay Drivers are a common feature in many of the feeder series of Motorsport like GP2 (considering Formula 1).

Not a recent idea

The idea of Pay Drivers has been there in Formula 1 for a long time, particularly during 1975 and 1976, when ten drivers drove for Frank Williams Racing Cars (predecessor to Frank Williams and Patrick Head’s highly successful Williams F1 outfit) as Pay Drivers. But back during those days there was no stringent rule on the number of drivers a team could use over the course of a season. It is beyond imagination how a team could use as many as ten drivers in a season; what would have been be the fate of the drivers’ championship in such a scenario? Scary thought!

Why do Formula 1 teams hire Pay Drivers?

So why do teams hire Pay Drivers over other deserving drivers who have come up the ladders of motor-racing solely on merit? The answer is money. As we all know Formula 1 is a demanding sport with respect to skills, technology, manpower and most importantly the amount of money needed to run the operations of a team. A top Formula 1 team which wins championships on a regular basis has its annual budget anywhere between $ 350-450 million. And the middle rung teams would have their annual budget anywhere between $ 200-300 million. The back markers (usually referred to the teams at the back of the grid) require around $100-150 million to stay afloat.

When money of such magnitude is required to run a Formula 1 team, there are bound to be instances of Pay Drivers. The mid level teams such as Lotus Racing, Williams F1, Force India have no strong backing in terms of sponsorships, and their owners too cannot afford to pump in such kind of money. So how do top teams like Ferrari, Mclaren, Mercedes and Red Bull invest so much of money into their day to day operations?

Mode of investment of top teams

Scuderia Ferrari Marlboro

Ferrari and Mercedes are involved in Formula 1 on an advertising platform for their respective automotive brands, with their parent companies providing the required amount of funds in order to gain global exposure. Red Bull Racing, since their inception, have used Formula 1 as a vehicle to advertise their other range of products. Also, since 2011, Infinity (a Renault-Nissan alliance) has invested a lot of money, solidifying the future of Red Bull Racing as a consistent championship winning team. Mclaren on the other hand have aligned themselves with title sponsors over the years to help fund their Formula 1 campaign. Currently Vodafone are the title sponsors for Mclaren and are pumping in around £40m per season. So these four teams are the only hope for a good driver with strong potential and not much sponsorship back up. That equals to just 8 racing seats open for merited drivers. These numbers are really discouraging.

The other mid and low rung teams too follow the same principle of title sponsorship, but the sponsors do not pay much when compared to the top teams. This is because during the course of a race more coverage is given to the front runners who obviously would be from one of the top teams; the middle and lower teams do not get much coverage and as a result the sponsor’s name and logo cannot be seen by everyone. Formula 1 sometimes is cruel!

How a Pay Driver can have an adverse affect on the sport

Nico Hulkenberg and Pastor Maldonado

So inevitably, teams short on funds rely on other tactics to stay afloat. One of the tactics is to hire a reasonable Pay Driver. The most striking examples of this are Williams F1 and Pastor Maldonado. In 2011 Williams unceremoniously dropped Nico Hulkenberg to make way for Maldonado. During this period Williams were in need of some funds and Nico didn’t have a sponsor backing him, while Maldonado had a strong backing of PDVSA, a State-run oil company of Venezuela. PDVSA sponsored Maldonado’s career to the tune of £29?million a year. Unfortunately, this left Hulkenberg without a seat for the 2011 season.

Call it coincidence or fate, Hulkenberg finds himself in the exact same position even today. Both Hulkenberg and Maldonado are vying for a seat among three different teams, Lotus, Sauber and Force India. Hulkenberg would have certainly found a racing seat in Lotus were it not for Lotus’s current financial condition. Lotus’s finances are cramped at the moment and they are currently looking for a new investor who can bring some money to keep the team afloat. It is being said that if the current deal which involves Quantum Racing goes through, then Hulkenberg would be hired. If not, then Maldonado, who brings in a lot of sponsorship money, will be hired. Perhaps Hulkenberg is the most unlucky driver in Formula 1 at the moment – nothing is going his way.

Another Pay Driver who has a lot of backing is Sergio Perez. It was being said that after Vodafone’s title sponsorship deal with Mclaren ends this season, Telmex, owned by the richest man in the world and a fellow Mexican Carlos Slim, would be the title sponsor for Mclaren. But since Perez has been dropped by Mclaren in favour of Kevin Magnussen, Telmex will surely not come on-board. It is being speculated that Danish investment bank Saxobank is interested to invest in Mclaren on an advertising platform which would be a good tie-in with the Magnussen who is also Danish.

Formula 1 teams are playing a game of poker while hiring drivers which is ultimately detrimental to the growth and development of Formula 1 as a sport. Talented drivers like Nico Hulkenberg are battling to save their careers for absolutely no fault of their own. Their only shortcoming, if you can call it that: being short of sponsorship money. In no other sport do we see teams picking individuals based on the amount of sponsorship money they bring in. But sadly this is the state of Formula 1 and motorsport as a whole at the moment, and will likely get worse in the coming seasons once the new set of regulations comes into effect from the 2014 season. Teams which are not into the manufacturing of engines and powertrains as a whole, will have to buy the package offered by Ferrari, Mercedes and Renault. This further increases the financial burden of the teams.

But Formula 1 is sport which does require a lot of money. That is an obvious precondition. So the Formula 1 teams need to find some innovative ways to bridge the financial gap. Take for example Brawn GP. When Honda left Formula 1, they handed over the team to Ross Brawn with some financial backing. All Brawn GP had to do was gain some bank balance so they could go forward for 2010. So Brawn GP came up with the idea of regional advertising. They worked race-by-race deals with regional companies looking for exposure. Of course the amount of money through such deals won’t be much, but you have to give it a chance so that the other teams will be encouraged to try similar innovative ideas. One recent example for this is Mclaren sporting Verizon as their title sponsors instead of Vodafone during the course of the United States Grand Prix.

If no steps are taken to address the issue of running a Formula 1 team smoothly with minimal financial constraints, more Pay Drivers will be hired and the distinction of Formula 1 being the highest form of motorsports will take a major beating. Above all, fans will be disappointed at not seeing a driver who by popular perception is good but unfortunately cannot find a race seat.