Can fan power save cash-strapped F1 team?

Publish Date : 2021-03-31


Can fan power save cash-strapped F1 team?

The gap between Formula One's haves and have nots appears never to have been wider.

While all-conquering Mercedes prepares for the title showdown in Abu Dhabi, a cash-strapped team at the back of the grid has been forced to ask for donations from F1 fans to fund its participation in the final race of the season.

Caterham, like fellow minnow Marussia, has gone into administration and has missed the last two races in the United States and Brazil.



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Desperate to compete in the 2014 season finale, the team launched #RefuelCaterhamF1 with the express intention of raising £2.35 million ($3.76m) -- and set a self-imposed deadline of Friday, November 14 to achieve the target.

Read: Mercedes pair set for title showdown

Caterham is using a method called 'crowdfunding,' where individuals or companies making a pledge are incentivized, depending on the amount promised.

The Caterham team's administrators turned to one of the market leaders in this specialized area, Crowdcube, to run the appeal with fans directed to its website to see what is on offer.

About $5 dollars will get a funder a badge or T shirt. More expensive items would include a front wing from a 2013 car, with the highest prices reserved for individuals or companies wishing to have their name or logo emblazoned on the team's cars.

The approach has provoked a debate within F1 as to its merits -- with the sport's commercial supremo Bernie Ecclestone being typically blunt in his assessment.

'I think it's a disaster,' he told reporters at last weekend's Brazilian Grand Prix.

Luke Lang, the co-founder of Crowdcube, flatly rejected that criticism. 'I think that's a disappointing statement,' he told CNN.

'Caterham has worked tremendously hard to compete in F1 and some of the goalposts have moved slightly over the last for or five years to make it even more difficult.

'I think comments like that are not particularly helpful.'

Read: Is F1 running out of gas?

What is not in doubt is the appeal for cash has proved successful with over £1 million ($1.6m) raised in the first two days of the appeal and the halfway target reached by Tuesday.

Items such as the front wings or team overalls were proving particularly popular with donors.

It was Finbarr O'Connell, the Caterham administrator and for now its team principal, who came up with the idea, and like Lang is unapologetic about the approach.

'There are 200 people in the (Caterham) factory who were not paid for October and they deserve as much support as they can get,' he told CNN.

'He (Ecclestone) has now had races where two teams weren't there and three others were hinting at boycotts, so that's not good for him.'

O'Connell believes that getting Caterham to the start line in Abu Dhabi -- where there will be 'huge interest' in seeing which of the Mercedes pair of Lewis Hamilton or Nico Rosberg takes the F1 title -- will help him firm up the interest shown by potential buyers of the team.

'We are not talking about crowdfunding a team, we are talking about a single stepping stone to showcase it to investors in a race setting.

'This is a sharp injection in the arm to cure an immediate financial crisis but they will only survive if a new purchaser comes forward,' he added.

Lang said this 'one-off' approach was new ground for his company as well. 'It's a deviation from our usual business model where investors get equity shares or an interest payment in return for their investment,' he said.

'But it was an opportunity we could not set aside because Caterham is such an iconic British brand and we are doing what we can to help out.'

Caterham is not even the first team with links to F1 to use crowdfunding to fund its activities.

Read: Can crowdfunding revive Brabham?

The iconic former Brabham team has raised over $400,000 by this method as it attempts to return to the grid after a 20-year absence.

O'Connell is increasingly confident they will reach their ambitious target and line up on the grid on Sunday week.

'Interest all over the world is growing exponentially, a mixture of enthusiasts who want to buy expensive things and even non sports fans with sympathy for our cause,' he said.

'People like Renault (Caterham's engine supplier) and Total Oil have also been incredibly supportive.'

After the initial flurry of interest, donations slowed a little ahead of Friday's deadline, but according to Lang this is a familiar pattern.

'There tends to be a real burst of activity, then a slight plateau in the middle, followed by a resurgence of interest as the deadline nears.

'There are over a quarter of a million views on the page and I am really confident they are going to reach their target.'

That will mean good news for Caterham's Japanese driver Kamui Kobayashi, who has still to find a seat for the 2015 season.

His Swedish teammate Marcus Ericsson has been signed by Sauber off the back of a big personal sponsorship package.

Exactly how many cars will be on the grid in Abu Dhabi also remains an open question.

Read: 200 jobs go as Marussia folds

O'Connell's firm Smith and Williamson is a key player in the UK restructuring business and he told CNN that his own sources within the industry were talking up a rescue bid for Marussia.

Reeling from the horrific crash which has left its star driver Jules Bianchi in a critical but stable condition in a Japanese hospital, the Anglo-Russian team was dealt a further blow when its administrator announced last Friday that it had folded.

'The finality of that statement surprised me,' said O'Connell. 'I still think there could be more positive news for Marussia ahead of the Abu Dhabi race,' he added.

The two points gained by Bianchi for a superb ninth placed finish in the Monaco Grand Prix left Marussia in ninth spot in the constructors' standings.

Read: Bianchi's family reveals extent of his injuries

It would leave them set for a $50 million payout under F1's complicated rewards structure, having pipped Caterham for the vital 10th spot in the championship in 2013.

By contrast, Mercedes will be set for a near $100 million payout in prize money for claiming top spot after a dominant season.

But their operating budget, like those of other top teams such as Red Bull and Ferrari, is in excess of $300 million, dwarfing that of teams such as Caterham and Marussia.

They will surely never have to resort to what Ecclestone labeled the 'begging bowl' employed by Caterham, but O'Connell has no regrets as he battles to save the team.

He came up with the idea of using crowdfunding while cycling up the steep Highgate Hill in London on his way home, in some way symbolizing the uphill struggles of Caterham since it entered F1 in 2010.

'It's such an interesting proposition, the belief that a team could be reconstituted by fan power,' he said.



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Category :investment

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