Would You Buy A Used Racing Team From These People?

Two of Formula 1's eleven teams have run out of money.  Marussia appears to be finished.  And Caterham is trying to raise money through crowdfunding. 

This story has been reported in the media as a reckoning for the sport, in which they will realize that the finances are unsustainable, and it will have to be remade.  Racing suffers from the same success-begets-success problem that a lot of sports face, in which good teams have greater income, which allow them to outbid other teams for top talent.  Auto racing has it worse for a couple of big reasons: one is that money doesn't just buy talent, it buys technology.  And there's the fact that no one has any reason to love the lesser teams:  In team sports, a bad team can at least count on at least some fans from their home town to support them even when they are uncompetitive. That's why I doubt the Caterham funding plea will work; sadly, there probably aren't many people around the world that will care.

Sports is a bizarro world where Americans are socialist and Europeans are unapologetic capitalists.  So NASCAR and IndyCar have low-cost, balanced series, while Formula 1 does little to keep lesser teams alive, never mind competitive.  So not only to winning teams win the big prize money and get the biggest sponsorship dollars, they also get the bigger share of the TV money.  So it's inevitable that lesser teams will get caught in a vicious circle.  Some people have suggested that the solution is to let the unsuccessful teams go under, and just have the rich and successful teams field more cars each.  But that won't work either, since the problem will just reappear: Even if there are fewer teams with more cars, someone has to finish last, and no one will want to sponsor them.

So eventually the sport will have to completely overhaul how it works.  But that will mean a radical shift in philosophy, as they drop the pretence that the sport is some ultimate technological competition at the bleeding-edge of engineering.  Instead, they'll have to tighten the rules to make the cars virtually the same, and sell it as a competitive sport.

But they won't be doing that any time soon.  In a world with many emerging markets, there is a constant supply of rich people and corporations looking for instant credibility and status.  Essentially, that's the case with Russian-owned Marussia, (formerly) Malaysian-owned Caterham, and the next candidate for bankruptcy, Force India. So expect all these teams to be back next year, under new names and ownership.