Life Lessons From The 2018 F1 Drivers' Earnings Report
There was a report that did the rounds last week that claimed to have accurate figures about driver earnings for the 2018 Formula 1 Season. Yes, such stuff gets attention and it got mine too, but here are some of the anomalies that I found in the report.
The total earnings of the season are usually known only at the end of the season. This is because driver earnings are almost always classified into fixed + variable (yes, like us corporate working people!). The variable can be further split into points earned, podiums and wins. But of course, there is a cap on how much a driver can earn and I am not sure if this report spoke of the overall cap itself. If it did, then there’s little guarantee that the reported number is what drivers will earn at the end of the season
Kimi ‘Iceman’ Raikkonen will reportedly make a cool $40 million for being Sebastian Vettel’s wingman. A different (also realistic) report quoted Raikkonen’s earning as $7 million in 2017, with a possible increase to $10 million with variable pay. I doubt that Ferrari upped Raikkonen’s pay nearly 4 times for scoring a solitary pole position and a few podiums in 2017
IF Raikkonen is indeed being paid $40 million, Ferrari’s driver salaries for 2018 would be a humungous $100 million. Now that’s nearly the entire operating budget of the Force India F1 Team!
Stoffel Vandoorne & Daniel Ricciardo
Stoffel Vandoorne’s earning has been reported as $7 million for only his second season in Formula 1 (and with Mclaren). Strangely enough, he would be earning more than multiple race winner and Formula 1’s ‘cool dude’ Daniel Ricciardo ($6 million)
Max Verstappen & Daniel Ricciardo
One isn’t sure who managed a coup over who, but Red Bull Racing’s payment of $10 million towards Max Verstappen’s talent seems fair, but I still can’t get over the fact that both Verstappen and Vandoorne are rumoured to earn more than Ricciardo. In Ricciardo’s case, I would assume that a legacy contract is the reason for the low earning and his renewal with Red Bull Racing or fresh contract with Mercedes will lead to a market adjustment (again, like us corporate people, Formula 1 drivers too suffer from lower pay than peers!)
Carloz Sainz Jr., Romain Grosjean & Kevin Magnussen
Carlos Sainz Jr. may have been promoted from Red Bull Racing’s B-team to the Renault works team, but the promotion hasn’t resulted in an increase in salary (let’s hope there at least an increase in speed!). Sainz Jr. will be earning a paltry $750,000 for the year. I suspect he would be drawing at least a million dollars for his talent and surname, if not more. Either way, I am yet to digest the fact that a Grosjean and Magnussen would be earning more than Sainz Jr.
Marcus Ericsson is expected to earn half a million dollars in 2018. This could be a zero return on ROI for Sauber!
Sergey Sirotkin & Lance Stroll
Sergey Sirotkin and Lance Stroll, the Williams’ boys who are pay drivers but dislike being called pay drivers – they’re slated to earn $1 million and a $1.8 million respectively. Here’s why I think its a bad business deal for them. They’re bringing money to Williams for their drive and this is public news. While the final sponsorship figures might not be public, even if they charged the industry standard of 10% for all sponsorship they brought along with them, they would definitely end up making more money! But of course, Formula 1 dreams aren’t about money alone. It’s about wins, world championships and okay, in their case – points and maybe a podium?
The total driver salary spends for the 2018 Formula 1 Season (basis the TMZ Sportz report) is ~$240 million. That’s equivalent to the annual GDP of a country called Palau!
Irrespective of the accuracy of the figures, there’s a good learning for all of us. Formula 1 drivers too suffer from the usual corporate structure and payment issues:
- Marcus Ericsson is a good example of how being your bosses’ favourite can lead to good pay even if you don’t deliver good work. But can this be your long term strategy to being relevant?
- Daniel Ricciardo’s situation proves that longevity and loyalty could be ignored if a young recruit comes and blows you away in every possible way
- Carlos Sainz Jr.’s Toro Rosso-Red Bull Racing-Renault loan is relatable. You may get a promotion and more responsibilities, but that might not lead necessarily lead to more pay
- You can be cool and the everyone’s favourite in office, but performance is the only way to retain your job and / or earn as much as your peers – that’s what Kimi Raikkonen’s case teaches us
- Sirotkin & Stroll prove that if you don’t get your business model right, you could end up making way lesser money than you actually can!
Here’s this The Felix Rosenqvist interview for you to tune into. He spoke about his Formula 1 aspirations and how he is attempting the reverse move from Formula E to Formula 1. He talks about his relationship with Mahindra Racing and how he is working hard with the team to stay ahead of his rivals. He shares his secret to mastering street circuits and how not having a favourite car allows him to be successful across different racing series. Tune in!