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Ferrari Threatens to Quit Formula One Over Engine Rules

Updated on
  • Ferrari P&L would benefit from quitting the competition: CEO
  • Talks on new engine rules with Liberty Media kiking off

Ferrari NV could quit Formula One racing as of 2021 if the circuit’s new owner Liberty Media Corp. goes ahead with a plan for substantial changes in the competition, including new engine rules.

Chief Executive Officer Sergio Marchionne said the Italian supercar maker “will not play” unless it’s provided with “a set of circumstances, the result of which are beneficial for the maintenance of the brand in the marketplace and for strengthening the unique position of Ferrari.” Dropping out of the racing series could eventually boost Ferrari results, and “we will celebrate until the cows come home,” Marchionne said Thursday on an analysts’ call.

Ferrari is the only carmaker to have taken part in every edition of the Formula 1 World Championship, also known as F1, since its start in 1950. The Maranello, Italy-based supercar manufacturer has competed in more than 900 Grand Prix competitions, according to its website. Talks on new rules proposed by the U.S. owner, now called Liberty Media Corp.-Liberty Formula One, kick off next week. The current contract for Ferrari and other Formula One teams, the so-called “concorde agreement,” ends with the 2020 season.

Liberty Media intends to introduce engine regulations from 2021 which may include a budget limit as well as a new governance structure to revamp the competition. The performance gap between teams should be “controlled” because "you can’t pour millions of dollars in and start to widen it,” Ross Brawn, managing director of the F1 series, said in a meeting with investors Oct. 22.

Ferrari, which backs Liberty Media’s plans to reduce the cost of execution for the team, disagrees with any project that doesn’t include some sort of “powertrain uniqueness” as one of the drivers of “distinctiveness in the participants lineup.” Marchionne said. The executive has said that Ferrari isn’t interested in F1 if the nature of the competition is drastically changed for commercial reasons.

Still, analysts believe that Ferrari will play a decisive role in defining the new rules. “Marchionne has a strong hand,” said Max Warburton, an analyst at Sanford C. Bernstein Ltd. “He is clearly emotionally attached to F1, but in our view F1 needs Ferrari more than Ferrari needs F1.”

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