Brexit: Does it signify a crash for Formula 1?

21 March 2018

Although Formula 1 is seen as an international sport, with races taking place from Australia to Germany, there are 7 out of the 10 teams racing in the 2018 season based within the United Kingdom. The Formula 1 season begins in Australia with the first race taking place on 25 March 2018, as we gear up for the first “And it's lights out and away we go …” of the 2018 season, we explore whether Brexit will have an impact upon the future of Formula 1 within the UK as we know it. 

Formula 1 is a sport that continues to evolve and change.  The Sporting Regulations and Technical Regulations which are updated on a yearly basis, are certainly keeping the teams on their toes.  What is unique about the regulation within Formula 1 is that the regulations are prescriptive in terms of what the teams cannot do rather than what they are allowed to do.  The 2018 season will see the teams adapting to the change in the use of the safety car and the ‘halo’ (the cockpit head protection system) that has caused quite a lot of controversy.  Also this season there are further regulations regarding the use of engine oil, specifically not to be used as a fuel additive. 

With the addition of the ‘halo’, the cars this season will look very different to the 2017 cars as there are no more ‘fins and wings’ that are able to adorn the cars.  The reduction to 3 engines as opposed to 4 in 2017, the addition of super hard and hyper soft tyre compounds and the infamous penalty places impacting on grid starting positions, will all be something that the teams will need to contend with.  The sport is also seeing a change to the infamous pit girls this season who will be replaced by “grid kids”.  This is certainly a change that highlights Formula 1 is a sport which is prepared to evolve and perhaps this particular adaptation to the paddock may signify that a female Formula 1 driver may not be in the too distant future.

Enforced change in Formula 1

In a sport that is used to adapting to change the question remains to be seen as to how the sport will answer the changes potentially to be enforced upon them when the UK leaves the EU on 29 March 2019.  The Federation International de l’Automobile (FIA) sets the rules for Formula 1 as its Governing Body.  With over half of the teams racing this season based within the UK there has been little speculation as to how Brexit will impact upon Formula 1.  Given that the FIA govern Formula 1, it may be a question the FIA needs to address as to whether or not they will support the teams that race within Formula 1 to ensure that it does not impact the sport in a negative way.  The teams operating from what is affectionately termed ‘Motorsport Valley’ are: Red Bull, Williams, Renault, Mercedes, Haas, Force India and McLaren.

Formula 1 and immigration

There are a number of issues that Brexit raises in relation to Formula 1 and how it could continue to operate.  Formula 1 attracts a great amount of talented employees to each team to include drivers, engineers, designers and mechanics to name but a few roles.  With the questions over how the UK will deal with immigration following Brexit the main issue to be encountered by the teams is attracting talent from outside the UK and retaining it. Given that a number of people within the EU and outside the EU work within the Formula 1 industry in the UK, there could potentially be a significant risk to their immigration status to be able to continue to work within the UK and support the F1 industry. 

Financial implications of Brexit

Brexit is not necessarily thought to be entirely detrimental to the teams operating from the UK. Claire Williams of Williams Racing was quoted in 2016 as expressing a plus side to Brexit, noting the pound versus the euro has an impact on whether the team are able to purchase their Mercedes engines at a preferential rate when buying in pounds or euros. It was beneficial for Williams in the 2016 seasons, but it is a serious consideration for the teams as Britain will be left with the pound following the 29 March 2019. The impact this may have upon trading within the EU and the rest of the world will be a serious consideration for Formula 1.  Ultimately Formula 1 is a business and it is designed to make money, the teams will need to adapt and manage the financial implications of being outside the EU, with purchasing parts and logistically moving those parts in and around the world whilst the teams are racing throughout the season.  In looking at the potential financial implications it is worth pondering whether Brexit could create a deficit in the amount of money that Formula 1 contributes to the British economy. The Mercedes winning Formula 1 team, although flying the German flag, are based in the UK, including their bespoke engine manufacturing division. It is estimated that in 2017, Mercedes contributed over £111 million to the British economy by the production of their V6 turbo engines. Is this a contribution that the British economy can afford to lose if the teams in the UK are forced to re-evaluate whether it is economically beneficial to remain in the UK post Brexit?

It was reported that the F1 industry as a whole was taking a “wait and see approach” to whether or not Brexit will have an impact upon Formula 1 and the industry which it supports within the UK.  This approach may not be a wise one for the employees of the teams that operate from the UK and indeed the fans of Formula 1 who wish to ensure they continue to enjoy a sport they love. The teams and the FIA will need to be thinking about implementing contingency plans this year to ensure that Brexit has a minimal impact on Formula 1 for the 2019 season.

Protecting the F1 industry within the UK

Ultimately whether Brexit has an effect upon Formula 1 remains to be seen, however it is unlikely that the FIA will put into place any measures in order to protect the F1 industry within the UK.  This it seems will need to be addressed by the individual teams although the FIA may need to have a hand in understanding the potential implication of Brexit on Formula 1 as a whole.  It is important to ensure that Formula 1 remains an exciting and dynamic sport, that continues to grow with cutting edge developing technology and innovation which gets better each and every year.  It will be necessary to address the issues Brexit could bring to the sport to ensure it isn’t ‘lights out...’ for Formula 1 as we know it for the 2019 season.

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