There’s never been a better time to own a Formula 1 team, but as the good times at Haas risk being lost thanks to underinvestment it risks making it the bad relationship on the grid forever.
It’s time for owner Gene Haas to either screw it up, maximizing the investment allowed in the team, or get out by selling to someone who will.
There is, of course, a middle ground by which a minority stake can be sold to raise funds for necessary expenditure.
Alpine, for example, sold 24% of its F1 team to an investment group but retains control.
But the point is that Haas has a fantastic opportunity and is in danger of squandering it.
It’s easy to criticize Haas given their poor on-track performance in 2023, but that’s not the main symptom of the problem.
Instead, you have to ask whether a team that did a remarkable job of establishing itself in F1 in much tougher economic times and survived oblivion during the COVID-19 pandemic is squandering the opportunity presented by F1’s recent growth.
HOW MUCH IS HAAS REALLY WORTH?
Haas F1 is still worth a lot of money thanks to being only one of 10 F1 teams.
Earlier this year, Forbes estimated the team’s value at $780 million, and with no shortage of would-be investors looking for opportunities to buy teams or even own them outright, there’s no reason for that value not to materialize.
For sufficiently motivated buyers, and there are a few of them around, it could be even higher.
But it’s not just F1’s popularity that’s fueling talk of multi-billion dollar teams.
The prevailing financial conditions, notably the cost cap, set at $135 million per season and the fairer distribution of the share of F1 revenue shared by the teams, mean that the financial foundations are better than they have been for decades – perhaps never given the potential rewards on offer.
So the conditions are ideal for Haas.
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When he joined the network in 2016, spending was unlimited — meaning even heavy investments could represent just a drop in the ocean.
So you could be pouring hundreds of millions into your team year after year and see little or no return in terms of either competitiveness or value.
Owner Gene Haas publicly questioned whether it was worth continuing given the struggle to land sponsors, suggesting that after five years of competition it might be time to call it quits.
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This was before the COVID-19 pandemic hit, with the financial impact meaning Haas’ future looked bleak.
But having weathered that storm thanks to team principal Guenther Steiner’s strategy to minimize investment in on-track performance for the rest of 2020 and 2021, along with the moneyed drivers – notably Nikita Mazepin and his money from Uralkali – Haas survived.
The new, more favorable Concorde Agreement was signed and a team that could realistically have been shut down entered the brave new financial world of F1.
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In addition, the team was in a better position technically with the establishment of a design office in Maranello under technical director Simone Resta.
It maintains a technical partnership with Ferrari, which supplies all components allowed under the regulations, and continues to be allied with Italian chassis manufacturer Dallara, but today Haas is more of a “complete” F1 team than ever.
Now, Haas has to build on that, and the full funding doesn’t seem to be there to do it.
HOW CHALLENGES ARE LEAVING CHAOS BEHIND IN SPENDING
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To maximize an F1 team’s performance potential, it is essential not only to be within the cost cap spending limit, and Haas was close this year, but also within the allowable capital expenditure.
This allowance was recently increased by another $20 million, which can be invested in infrastructure and essential tools.
Haas’ direct rivals are spending big.
AlphaTauri is upgrading its facilities by moving some of its operations to Red Bull’s Milton Keynes campus, Sauber is benefiting from Audi money and Williams is gradually growing under continued spending from Dorilton Capital.
Haas must keep up or risk being left behind. Despite landing some lucrative partners, such as title sponsor MoneyGram and newcomer Play’n Go, Haas is unlikely to have the capital to cover them all.
Finishing last in the constructors’ championship when he was in the mix to finish as high as seventh, which represents a difference of about $30 million given that there is a difference of about $10 million per position in prize money, is also a big blow.
Since Haas was eighth in 2022, that means one source of income is cut by about $20 million.
There is unlikely to be any top-up to compensate for this, so it will depend on pumping in more money to get close to the level of investment you need to do more than tread water.
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“We just have to cover it,” Steiner tells The Race when asked about the financial impact of the latest finish.
“We found more partners. We announced Play’n Go, in Las Vegas, they are great partners and helping to make up for the losses.
“But in the end we have to see where we’re going to find the additional funding.”
However, Steiner also defends the group’s position on the basis that it’s all well and good with cash, but it depends on the right investment.
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“I look back to the old days when people said money makes you a better team, it didn’t because some people spent a lot of money and didn’t win anything, so you have to be careful,” says Steiner.
“They should not be expenses, but investments. That’s the key word here. What are you investing in to get better?
“It’s not like you’re going to get a refund tomorrow, it takes time. A lot of people talk about investing and it’s a lot of propaganda, it’s about whether the investment works.”
That’s true, but you can’t always count on opponents wasting investment. Haas must keep up if they want to have a chance to be more than a perennial back-of-the-grid operation.
You could argue that Gene Haas would be within his rights to cite the team’s current lack of success as evidence that investment level isn’t the problem.
He would be right to the extent that the 2023 games are not a direct result of this, given that there is no doubt that he had the resources to do significantly better.
However, this would neglect the big picture.
HOW HE WASTED THE POTENTIAL OF 2023
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The 2023 Haas was quick in one lap, but ate its tires in races, meaning points were rare.
This was the consequence of some flat-footed technical decision-making and failure to change aerodynamic design direction until months of stagnation in finding performance in the windtunnel.
This new direction led to a hastily designed change in aerodynamic philosophy introduced late in the season, which was not an immediate hit, but the team hopes it will have accelerated its learning curve to feed the knowledge into the 2024 car.
“We got hit really hard because we didn’t make progress in development,” says Steiner. “We put in all the effort, there was no limit to the effort and we had the budget to make upgrades.
“Everyone thinks we don’t do upgrades because we don’t have money, but we didn’t find performance, that was the biggest thing.
“And the other thing was that by the time we realized it, it was a little late and we should have caught it earlier.
“We just have to get better in the windtunnel, otherwise the team isn’t too bad. It could always be better, but we just haven’t found anything.”
WHAT DOES THE IDEAL FUTURE LOOK LIKE FOR HAAS?
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There is no immediate intention to go it alone instead relying on Ferrari for most of its car, which is a sensible strategy that allows Haas to focus on improving by producing the aforementioned parts of the team that make the big difference in terms of of performance.
And there is no doubt that the problems in 2023 were aerodynamic, not mechanical.
However, there is still much that can be done in the current business model.
And that’s what Gene Haas needs to invest in so that the team not only maximizes its performance under its current limitations, but can be able to grow long-term alongside its opposing teams.
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“Right now, the best way for us is to keep the same business model because if you change it you have to do it little by little,” says Steiner.
“The difficulty we have is that if we try to take on more work, it wouldn’t go well because you usually take one step back before you go two forwards if you change completely.
“In the short term, we stay with the same business model.
“There are pros and cons to this model. For example, we don’t have a 60% wind tunnel, and investing $50 million to build a wind tunnel in 2023 is difficult because wind tunnels will be around, but not forever.
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“And Gene already has a windtunnel, Windshear, but that’s 100% and asking him to buy another windtunnel is a tough ask.
“Ferrari’s windtunnel is good, so we have a known quantity and why change it?
“It’s more important for us to look at the components we’re building, the aircraft. The problem is not the business model.
“We have to take advantage of the business model we have at the moment, which we are not because we are last in the league.
“There’s more to it than that. Can you win a world championship with our business model? I don’t think so, but can you be fifth? Yes, because we’ve done it before.”
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Next season should be better for Haas and there’s no reason why they can’t finish higher in the championship.
That’s the current short-term goal, to make the most of the aerodynamic capability it has.
But along with that must go team development, and that will require maximizing investment.
A visually obvious example of where he is lagging is his paddock motor, which he has been using since 2016.
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While this may not seem relevant to the car’s performance, when you’re trying to bring partners and comfortably have the smallest setup in the paddock, it makes a visual statement.
These are the areas where money could be spent to positive effect and will probably only need an additional $50-100 million over the next few years to ensure that the rate of growth is maximized.
What’s frustrating for those who have followed Haas’ story over the past decade is that it has achieved so much and survived against the odds, yet it is in danger of not taking the final step to ensure it not only maximizes its value, but also its potential. of her performance.
Ultimately, it’s Gene Haas’s choice since he owns the team, but it seems perverse to go through all this and invest so much and not pump out a relatively small amount to go the last mile, nor sell to leave someone else do it.