The seven UK-based Formula 1 teams can be forced to cut up to 1,250 jobs if a strict spending limit is imposed next year, revealing the sources of motorsport.
Liberty Media, which bought the sport in January last year for £ 6.3 billion, annually sets a limit of £ 117.6 million for each team. There is increasing speculation that the move will cause job losses if the teams reduce costs.
The core areas of Motorsport Northamptonshire and Oxfordshire – known in the industry as Motorsport Valley – are expected to be the hardest hit. An investigation by The Mail on Sunday with the help of senior sources indicates that the teams may have to reduce nearly a third of their total workforce of 3,951 employees.
Bail-out: the Force India team
The average F1 team spends £ 171.8 million a year. The biggest lenders in Britain – current Mercedes champions led by Lewis Hamilton and Valtteri Bottas – had a budget of £ 274.9 million in 2016.
Teams justify their spending through race results as opposed to profit. British teams made a combined net loss of £ 3.5 million in 2016 with a total turnover of £ 1.2 billion.
Many say that spending large teams makes it impossible for smaller outfits to compete. Force India from Northamptonshire had to be rescued by a group of billionaires after depositing in the government in July.
Salaries are one of the largest expenses and some of the largest teams employ 1,000 people. Driver salaries and marketing staff are exempted from the limitation as well as employees working on the design, development and production of the engines.
Over the past decade, the number of staff in UK teams has increased by 28.5 percent.
A high-level source from the automotive industry said the industry is bracing itself for potentially devastating cuts. He added: "People can move jobs within the industry, but may not want to go."
But a McLaren spokesperson said: "McLaren Racing not only supports the proposed budget ceiling, but we believe it should be introduced in its entirety as soon as possible for the long-term health of Formula 1. Few other major sports work without any degree of financial control to ensure a sustainable competitive environment.
We are confident that we can manage our existing resources within the proposed final budget number. McLaren is a diverse organization with a fast growing company from Applied Technologies and a successful Automotive company. Add to that our involvement in other car racing categories and our ongoing consideration of new series, and we are convinced that we can redistribute resources and redirect them accordingly. & # 39;
A F1 spokesperson said: "The introduction will be phased to allow for adjustments, and through improved revenue distribution that goes hand in hand with the cost limit, smaller teams will be able to expand their organizations, making it more redistributive of labor. Some teams absorb surplus labor in their road vehicle groups, others are already involved in other motor sports, including Formula E. & # 39;
There is no guarantee, however, that sufficient alternative positions are available. Mercedes team boss Toto Wolff recently said: "My biggest priority is protecting our structure and our people."
Wolff supports the plan to phase in the cap and added that it had to be a process, not an event … It has to take a number of years and it has to take into account the different structures being set up. & # 39;