There is a lot of rubbish written about Formula 1 on the Internet, sometimes on websites that might seem quite reputable. The sad truth is that these websites are too lazy or too cheap to do the work themselves and buy in cheap crap from the bottom-feeders of the sport, who have little understanding of what they are writing about, but enjoy customers who do not care about quality.
The financial details of the sport are not easy to find and tend to be shrouded in unnecessary mystery. One thing that everyone thinks they know is that it is only the top 10 teams that get the big rewards. This is not actually the case.
The fact that Marussia finished 10th in 2013, rather than 11th, is not perhaps as significant as some think it is.
The F1 prize fund is based on the amount of money that the sport generates in a year – and that changes from one year to the next. If one assumes that the prize fund is $700 million (we do not yet know for 2013) the structure is simple enough. There are three prize funds: known as Columns 1, 2 and 3.
Ferrari has a special deal which means that the Italian team takes a small percentage of the prize money straight off the top. This is believed to be two and half percent, but may have increased. If there is a prize fund of $700 million (after the Ferrari payment), this will be divided into two: the Column 1 and Column 2 funds each being $350 million. Column 3 is paid directly by the Commercial Rights Holder.
The Column 1 money is divided amongst the top 10 teams on an equal basis: ie $35 million per team. However the top 10 is not established based on the results of a single season, but rather on the results in two of the three previous seasons. In other words, if Marussia is 10th again in 2014, it will be eligible for Column 1 money, but that is not currently the case. Thus Caterham, which was 10th in two of the last three seasons, will still be paid $35 million in Column 1 money for 2013.
The Column 2 fund is $350 million as well, but this divides up differently based on a scale of percentages, based on the results for 2013 alone. The 10th placed team gets four percent, the 11th gets zero percent. So in real terms, in 2013 Marussia will get $14 million of the Column 2 fund (four percent of $350 million). Caterham will get nothing.
However, there is also Column 3, which provides for a payment of $10 million to each team outside the top 10 but nonetheless competing in the World Championship. This means that Caterham has lost $14 million, but will be paid $10 million, so the overall loss as a result of finishing 11th is just $4 million. If the same thing happens again in 2014 it will be a lot more painful. If Marussia is 10th again it will qualify for Column 1 and thus will gain $35 million a year. Caterham will lose the same figure. Thus, Caterham needs to up its game and finish 10th to save the day…