Formula 1 Financial System

I would like to explain you some key features of the Formula 1 financial system. It will be very important for the future and for your current planning. Read carefully in the article!

First of all, some time before start of first F1 season we will pick the managers not involved in F1 team directly. We will have a comitee which will take care of all potential problems with the F1 system. I might be in this comitee if I decide not to participate in F1 as driver. For every problem there will be 3 F1 team managers randomly selected to participate on the solution.

What if my team goes to negative financial balance?
The comitee will be here to solve the case. Team manager and owners will be asked to propose how they want to fix the issue. There is maximum of 77 days allowed in negative balance then the team is bancrupt and we will create auction to find new owners for new team. The comitee have right to make team bancrupt earlier if they think the team will not get out of the trouble ever.

What is team image?
Team image is a value which describes how popular is the team in the world of MRC. But not among other managers and drivers. This is not affected by the team results, altough influcence of driver charisma and rating is obvious. All teams starts with team image 0, which will be slightly increased by your commercial department and the marketing campaigns. The maximum team image for all teams together is 15000 points.

How to create good marketing campaign to improve team image?
The result of the campaign depends on how good employees you have, facilities quality, the daily budget used and of course what campaigns are made by other teams. Obviously one person cannot be in real love wth 15 Formula 1 teams. So for example if all teams use 1M daily budget for campaign, the result would be almost the same as if all teams use 1000 daily budget. I would recommend you to start slowly and see what other teams do. Don`t waste money, they are too important.

When we will get sponsors for our team?
You got the start budget for the team expenses and that are the money you should use before first racing season. Sponsors pay the money to you to show their logo on the car during the races. You will be able to sign the sponsor contract for next season any time during the current season (except this season when this possibility would come little later).

How the sponsor contracts would look like?
Basically there will be signing bonus and weekly fee payed by the sponsor to your team during the season. Signing fee would be around 25-30% of the whole contract value, weekly payments will come on monday during first 10 weeks of the season. There will be 3 season sponsors available for team and 3 small short sponsor contracts for few weeks too.

What would affect the value of sponsor offers?
Important things are team rating (based on results and this is most important), team image (based on marketing) and team popularity (based on fans team have). Then also attributes of your drivers would be important too.

How the negotiations with the season sponsors will go?
One day after you change your commercial department task to seach sponsors, they will find 3 season sponsors for next season. There is no daily budget for searching sponsors. You will have 3 choices.
- accept the offer which would mean you would get the signing bonus immediatelly and the weekly fee will start comming during after start of the season.
- negotiate with sponsor which means your commercial department will work on this sponsor offer for another day which could lead into better offer but if you repeat this too long it can also lead to worse result.
- reject the offer and next day you will get offer from other company.

How about negotioations with small short term sponsors?
You will have only two choices. You can accept the spnsor and get the money or wait another day for new sponsors.

When is the right time to sign contract?
Remember that team rating is important thing. If you feel that your team rating is high, and might drop in next few days, you should try to sign sponsors as soon as possible. On the other side you should wait to sign drivers for next season, because their attributes might improve the offers too. Current drivers are not coounted for next season sponsors! Maybe it would be good to see first how are the sponsor offers changing in time, and then accept sponsors.

That is it for today, next time development questions...

Quote of the day: "Using double budget does not bring double result!"