When cash is king

It’s the same old story: Formula E might be the future of motorsport but it’s money that makes the world (and racing cars) go round. Last week’s report that DTM racing outfit Team Rosberg is planning an entry into Formula E missed an important point: at the root of the team’s uncertainty at landing a place is the perennial and thorny issue of capital.

“We are planning to participate in Formula E, but the decision has to be made at the end of October,” team boss Arno Zensen told Current E. “At the moment it looks like that it will not happen, but we will still try. We haven’t yet found an investor with the right amount of money. We’ll know more in November.”

This is not a team without connections. It was founded by Keke Rosberg, a Formula 1 world champion. His son drives for the Mercedes AMG F1 operation. And the team is partnered with premium car manufacturer Audi.

That raises the intriguing question of just how much cash teams will need to race in Formula E. Some estimates put the total budget required for running a team in the first season at around $5million, but with the customer car for the one-make series yet to set wheels to tarmac and the series a full year from the start line, it would be fair to assume costs are still pretty woolly.

Entry fees and budgets

While the series is still taking shape, promoter FEH has made a great deal of noise about keeping costs affordable. An idea that’s floating around is that teams will not have to pay for the customer cars they are being supplied, but instead contribute a proportion of their sponsorship fees to FEH.

Building the cars will take cold hard cash, however, and it’s unlikely that organisations such as McLaren and Williams are able to – much less want to – create the cutting-edge machinery promised with nothing more than promises of payment.

It’s likely then that Formula E will levy an up-front entry fee to aid cash flow. That’s an accepted, tried-and-tested standard throughout racing. But how much might such a fee be?

Motorsport commentator James Allen revealed that entry to the 2013 F1 series required a flat fee of $500,000, with additional payments required for every championship point scored in the 2012 season. The arrangement saw some teams with bills of more than $3million in entry fees alone. (Albeit this can be dwarfed by prize money at the end of the year, with champions Red Bull reported to have scooped nearly $100million in 2011).

This USA Today article points out that costs follow a similar template in IndyCar. Each race requires an entry fee before teams have to factor in costs for cars, engines, fuel, tyres, equipment, personnel and entertaining sponsors. Tot all that up and teams are looking at somewhere around $1million per race, on a calendar that runs to 19 races.

Costs won’t approach those levels in Formula E, at least not in year one. Running in the teams’ favour are the compressed race format, which incorporates practice, qualifying and the feature race into a single day; the restrictions on number of tyres used (three sets per team permitted at each race – six tyres per car); the limited number of races – 10 in the 2014-15 season; and rationalised logistics, where all cars are likely to be stored in one place and shipped out all together for each date.

No one that Current E has spoken to has been willing to reveal anything about the numbers. It seems that tomorrow’s technology comes at a steep price, and that secrets will be just as jealously guarded in Formula E as in its older siblings.

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