Gene Haas retains the air of the sports car enthusiast he has always been, since he was a teenager in North Hollywood and worked in a machine shop on racing wheels. “Back in the 1960s, cars were a big part of a boy’s life,” he recalls fondly. “If you think about all those cool cars they were making then that you wish you had now, stuff that we threw away and didn’t want to keep — Corvettes, Mustangs. I mean, it was all primitive to junk, but it was the beginnings of what we see today.”
In March 1976, when Haas was 23, he encountered another world. The elite Europeans of Formula One came to Long Beach to race, in a grand prix won by two Ferraris; Clay Regazzoni in first place, with Niki Lauda in second. Patrick Depailler, a French driver who crashed and died at the Hockenheim track in Germany four years later, came third. “Oh, man. These were things you had never seen before, and all the parts were quite a bit smaller than what we were used to. Everything was a little bit more finessed, smaller, lighter.”
On this evening in Spain, 41 years later, standing quietly and watching his mechanics at work, Haas has made that exotic sport his own. His Haas F1 Teamstarted racing last year and his two cars with Ferrari engines, the thoroughbreds of the motor-racing world, sit in the Haas F1 pit, emblazoned with his name. He can stroll along the paddock, the elite enclosure to the rear of the pit lane, and greet his peers, or almost peers, the leaders of the other nine F1 teams.
Haas has a quiet, determined manner, blue eyes pensive under a thatch of silver hair, and fits easily in the polished setting of an F1 garage, like a mechanic who has been dry-cleaned. He earned the fortune needed to get here in the machine-tool business — making equipment used in the garages in which he worked as a teenager. Haas Automation is now the biggest US machine-tool maker, and Haas sees F1 as an opportunity to market the brand globally.
He has come a long way, and it is costing him plenty. The expense of competing in F1 is extraordinary — top teams such as Ferrari and Mercedes AMG Petronas often spend more than $300m annually and Haas F1 has a budget of $130m. Building a car capable of beating the best requires at least four years of burning cash at a stunning pace. Red Bull, the team owned by Dietrich Mateschitz, the Austrian billionaire, spent more than $1bn climbing up the ranks after entering F1 in 2005, before reaching the top three in 2009.
Unlike other motor sports, such as Nascar and IndyCar in the US, and Formula 2 in Europe, in which teams race similar cars, or have fixed budgets, F1 is largely bespoke. F1 “constructors” build their vehicles from scratch and can spend what they want, which has led to spiralling costs, and financial losses even among winning teams. “Don’t use words like ‘investment’ about F1 because that implies a return and there is no chance of it,” says Tony Purnell, technical director of British Cycling and a former Red Bull team principal.
Under the brilliant but capricious Bernie Ecclestone, F1’s leader for 40 years and now “chairman emeritus”, many teams departed, unwilling to keep on burning cash. F1 lost manufacturers including Honda and BMW following the 2008 financial crisis, and three new entrants in 2010 — Caterham, HRT and Manor — each failed. That makes it essential to hang on to Haas, who also owns a US Nascar team. “He is motor racing royalty, and my view is that F1 needs him more than he needs them,” says Nick Fry, former chief executive of the Mercedes team.
The other reason to make Haas welcome is his nationality. Having a US-owned team in what is largely a European sport is a rarity — the last was run by Carl Haas (no relation to Gene) in 1986. F1 currently races once a season in Austin, Texas, and there have been US drivers, such as Mario Andretti and Phil Hill, who won the championship for Ferrari in 1961, but F1’s claim to be the only global motorsport is dented by its weakness in the biggest media market of all.
Remedying this is a priority for F1’s new owners, the US cable television and media group Liberty, which completed the acquisition for $8bn including debt from CVC, the private equity group, this year. “Liberty’s takeover is the biggest change to F1 since Bernie and I got busy in the 1970s,” says Max Mosley, former head of F1’s governing body, the Fédération Internationale de l’Automobile. “It is a radical, radical change. It may shake the thing up completely.”
Chase Carey, former vice-chairman of 21st Century Fox and second in command to Rupert Murdoch, has become F1 chief executive and wants to stage a prestige contest in a city such as Miami or New York. “It is great to have a US team in F1,” he says. “Our rich European history is tremendously important to us and we want to build on that but this is a sport with a global fan base. I would love to have a Chinese team with a Chinese driver, or an American team with an American driver.”
So F1 has reasons to encourage Haas and to hope that his drivers can secure a place on the winners’ podium before long. There is only one difficulty: the nagging suspicion that he has bent the rules.
The guiding spirit of F1 since the first world championship in 1950, more influential even than Ecclestone, is Enzo Ferrari, the Italian entrepreneur who built the greatest of teams around his eponymous racing car. “I build engines and attach wheels to them,” Ferrari, who died in 1988, once said. Like Haas, Ferrari was a machine-tool maker: Scuderia Ferrari, the team that has won a record 16 championships, emerged from a small factory in Maranello in northern Italy.
F1 started out primarily as a contest of drivers, including mavericks such as Sir Stirling Moss, who raced various vehicles rather than sticking with one manufacturer. Ferrari established the principle that machine mattered more than man: whoever drove the best car would probably win. “Unless you’re in one of the top teams — Ferrari, Mercedes, Red Bull — you’re fighting to get there,” admits Romain Grosjean, 31, the Franco-Swiss driver for Haas F1.
Ferrari is also the embodiment of the “constructor” — not just a racing team, but an integrated enterprise that designs, builds and races the entire vehicle. F1 rules allow teams to buy engines, and Ferrari and Mercedes engines power rival vehicles, including those raced by Haas and Force India. But before Haas arrived, the principle was that each team built the rest: all the components of an F1 car, from the chassis to brakes, steering, ventilation and aerodynamics.
To Haas, with his background in Nascar, this did not make sense. He viewed it as an eccentricity of rival teams, many based in a cluster in Oxfordshire due to F1’s partially British roots. “Our interpretation was, ‘Man, you can buy all this stuff, why are these guys making it?’ There’s a lot of British pride there but rather than the British way, we do it our way. We think it’s stupid to make it. We’ll buy it, lease it or whatever we’ve got to do to go racing.”
In practice, that meant not only buying a Ferrari engine but taking a chassis built by Dallara, the Italian supplier of vehicles for IndyCar and Formula 3. Having studied the rules minutely, the team decided that it could comply if it built the rest, but this has not convinced everyone. “Haas has a deal that breaks the rules and everyone pretends not to see because they understand the importance of having those guys on the grid,” says Paolo Aversa, a lecturer at Cass Business School in London who studies motorsport.
There were rumblings of discontent after Haas’s arrival, and F1 tightened the rules on how much the team is allowed to use Ferrari’s wind tunnel in Maranello — vital for the aerodynamic testing of cars in preparation for races. But Guenther Steiner, Haas F1’s Italian team principal, dismisses any talk of rule breaking. “They changed a few things after we came in but it doesn’t make it illegal what we did. So we are fine and people leave us alone.” He grins: “I hope we don’t upset them any more. We don’t like to upset people.”
Haas was not being entirely wilful: worries about keeping the numbers up in F1 had led to discussions about new entrants being able to race “customer cars” — vehicles built by existing teams. “As is typical of F1, all those grandiose ideas were nothing more than ideas,” Haas says ruefully. “The big teams didn’t agree to customer cars, nor cost caps or personnel limits. They didn’t agree to any of that stuff.” So, he and Steiner worked out a way to get as close as they could.
Despite Haas’s disdain for eccentricity, his approach to F1 evokes what Enzo Ferrari dismissively called the British “garagistes” in the 1960s — teams such as Lotus and Cooper that assembled cars from suppliers’ components and engines. “We don’t have to build [the whole vehicle] so maybe Mercedes has 1,200 employees and we only have 140 but we don’t need so many,” says Kevin Magnussen, Haas’s other driver. “We don’t have to go through a lot of layers. It goes faster.”
One thing that went faster than expected was Grosjean’s Ferrari-powered Haas in its inaugural grand prix in Australia in March last year — the first time that a US team had competed for 30 years. He finished surprisingly strongly in sixth place, and Haas F1 ended the 2016 season in eighth position out of 11 in the constructors’ championship. “I think we surprised everyone because the expectations for us to fail were pretty high,” says Steiner.
Things have been patchier this year. In Barcelona, Grosjean finished 10th and Magnussen 14th, and Haas F1 is in eighth place out of 10 after seven races. “We have had our highs and our lows. They are a little too far apart, to be honest,” Steiner says. Getting the cars to perform consistently while advancing against experienced and wealthier teams is difficult, and Haas does not fool himself that he has a chance of winning an F1 championship soon.
“I don’t think I’m looking at that now,” he says. “It’s kind of like you’re in the forest and all you can see are trees.” He recalls the experience of Stewart-Haas Racing, his Nascar team based in North Carolina, which was founded in 2002 and won championships in 2011 and 2014. “Perhaps it will look different in five years. We’ve won championships in Nascar and we never had any hope of doing that, so it is possible. It will just take some time.”
There is no mistaking the ranking in the paddock in Barcelona. Each team has huge trailers arrayed in lines — at least one for spare tyres, others for hospitality and operations. Mercedes and the Ferrari trailers anchor one end of the paddock, with Haas near the other. Steiner is undaunted. “They are mini-corporates, it’s a different game,” he says of the big teams. “We are like motorsport from the old days. There is an owner, he has a team, you go racing.”
Under Bernie Ecclestone, guest access to the paddock on race days was the preserve of billionaires. No Angel, Tom Bower’s biography, opens with him striding across the paddock with Mick Jagger and Naomi Campbell, and greeting Jennifer Lopez and Sir Philip Green. There was another kind of guest after the Spanish Grand Prix: a small boy dressed in Ferrari red who had been seen on TV crying when Kimi Raikkonen crashed on the first lap.
The boy was led to the paddock, where Raikkonen posed for photos with him and gave him a Ferrari cap. A clip titled “Raikkonen turns a young fan’s tears to smiles” was posted on F1’s YouTube channel and the story made it into the The Sun and The Telegraph. “Under Ecclestone, it would never have happened,” says Aversa. “That was perfect — it did more social media shares than any Hollywood actress in a skimpy dress.”
The truth is that F1 needs to take more care of its fans, rather than putting on a battle of machines and relying on its reputation for glamour. Television audiences for motorsport have declined: although F1 reaches 390 million viewers, it has lost 137 million viewers since 2010. Racing cars lack the resonance for Uber-travelling millennials that they have for Haas. “The car itself is 130 years old, so interest has declined,” says Haas. “But, hell, look at the Kentucky Derby. I don’t know shit about horses but everyone shows up for that.”
This bluntly expresses Liberty’s philosophy — that F1 must be made more attractive to a wider range of fans, rather than delighting a declining core of enthusiasts. “F1 is seen as highly technical and the pinnacle of motorsport and we need to retain that, but too little has been done for some years to make it more accessible,” says Ross Brawn, F1’s managing director of motorsports and former co-owner of Brawn GP, the team that won the 2009 F1 championship.
One thing that F1’s new owners want to change is that much of the combat between teams is invisible. Not only is it hard for the casual fan to grasp the differences between rival cars but the teams keep technology under wraps to prevent rivals from seeing innovations. “This complex car, this magic world — very few people get to see the lovely bits,” says Rob Taylor, Haas F1’s chief designer. “It is shrouded in bodywork and mystery because we don’t want to show our competitors.”
Carey does not hide his frustration at cameras being blocked from vital aspects of the spectacle. “When I hear [remarks like Taylor’s] I say, ‘We have some of the greatest engineers in the world but we are doing this for one purpose, which is to create the best experience. You say you don’t want to show it because the people in the pit next door might see?’ That is the engineering mindset. They look at the world they compete in and do not remember why we do this thing.”
As well as putting more on display, F1’s chief executive hopes to turn grands prix into better spectacles, drawing on lessons from events such as the US Super Bowl. That implies making a week-long celebration of a race coming to a city such as New York, and arranging music and other entertainment around it. “Too many races feel like they did 10 years ago, as if the Yankees were still in their old stadium,” he says. “We need a live experience that encourages excitement.”
But the lesson of the boy at Barcelona is that humanity is the biggest draw. “Stars are more important than ever, and glamour and mystique is what captivates people. In a world in which experiences are valued over products, we are the ultimate experience,” Carey says. One of F1’s challenges is that the superiority of the machines over those driving them has sapped the emotional connection between fans and its most compelling stars — those behind the wheel.
F1 cannot, and would not want to, regain one of the original factors behind its visceral appeal: mortal danger. When drivers raced the tracks in previous decades, the injury toll from crashes was frighteningly high. Michael Cannell records in The Limit, his book about the 1961 season, that 20 drivers died between 1957 and that year.
Haas’s drivers never forget they are in peril. “You know that you face the death risk. It is part of motorsport,” says Magnussen. Jules Bianchi, the French driver, died after crashing in the Japanese Grand Prix in 2014. But the risks are much lower, thanks to reinforced cockpits and safety features — Ayrton Senna’s death in 1994 at the San Marino event was the last F1 fatality before Bianchi’s. “I’ve hit the wall at over 200mph and I’m still here,” says Grosjean with a smile.
The flaw is not that races are safe but that they are predictable. Mercedes won three championships between 2014 and 2016: the only contest was between Lewis Hamilton and Nico Rosberg, the Mercedes drivers. This season is more open so far, with Ferrari’s Sebastian Vettel tussling Hamilton for first place. But the Haas drivers can only dream of beating them. “You want to watch a sport believing the underdog has a chance to win,” Carey says. Ensuring such excitement for fans, as with most things about F1, comes down to money.
More than any other sport, F1 has huge financial barriers to entry. That is partly because of the enormous costs — “It has become an arms race between a handful of guys at the top,” Carey says. The rewards are also heavily skewed towards the top teams due to Ecclestone’s habit of cutting deals with teams such as Ferrari that penalised those at the back of the starting grid.
The costs are hard to comprehend until you see a car being stripped and rebuilt by a cluster of mechanics, bending over their vehicle to adjust gleaming titanium ducts and fans, fastening tiny bolts in place with delicate wrenches. Each of these parts is individually made, and is altered constantly as the team’s engineers try to shave hundredths of a second off lap times. “An F1 car has something like 3,000 parts and you have to redesign every part every year,” says Fry.
Cars can gain 10 per cent in speed or efficiency each season, between March and November. Many changes are made on the fly, with spare vehicles for each team in transit around the globe, like a travelling circus. Meanwhile, every team is making a similar effort, often building on decades of accumulated expertise and innovation. “There is 20 years of development in a steering rack. How can you make that up in a year? You cannot. You cannot,” says Steiner.
To stand a chance, a new team must lure swaths of specialist engineers, often with advanced degrees — “I studied aeronautics and astronautics, so I was thinking of [working on] aircraft or spacecraft,” says Ben Agathangelou, chief aerodynamicist for the Haas F1 team. They are hard to recruit and highly paid, with the top technical directors earning up to $10m a year — “F1 has superstar technical directors in the way that most sports have superstar athletes,” says Purnell.
A lot of the expertise is in aerodynamics because the simplest way to make a car go faster is to pin it firmly to the ground with its own slipstream as it corners, allowing the tyres to grip. Most of the downward thrust is supplied by the underside of the car, which is shaped like an upside-down wing. The teams tinker constantly with the shape of the underside and wings, testing them in sophisticated wind tunnels, where the digital instrumentation alone can cost $1m.
Aerodynamics lay behind the only recent case of an F1 team winning without losing a fortune. When Honda left F1 in 2008, it sold the car it had developed to a management team led by Brawn and Fry. The car had an innovative underside that increased downward thrust and they won the championship the following year after swapping the Honda engine for a Mercedes one. They immediately sold the team to Mercedes, which now runs it under its name.
“The clever part was not getting in when we did but getting out,” says Fry. “As soon as we won, we realised that an F1 team in the hands of individuals was not sustainable. It is great fun, lots of attention and very glamorous but the reality is that most people lose their shirts. It is not for the faint-hearted.”
The last revenue deal agreed by Ecclestone, which runs until 2020, gives the best teams a disproportionate share. Television broadcast revenues, fees paid by the circuits, and advertising produced $1.7bn in 2015. Of the $960m paid to teams, Ferrari received $192m and Mercedes $171m, while the least successful teams received $47m each. Any new entrant spending $250m annually could easily lose $200m a year for five years — an entry ticket of $1bn.
Mosley tried to change F1’s economics in 2008 by introducing a cap on spending of $65m per year, but failed when F1 teams including Ferrari refused to agree to the reforms. “It was almost self-evident that if you wanted a proper contest, the money available had to be limited,” he recalls. “At the moment, the winner is the one with the most money. If they had the same money, it would depend on who had the best engineers and drivers and it would become a sporting contest.”
Haas does not have the comfort of a spending cap but he has reduced his costs to about $130m a year by not building the entire car. His aim is to reach the middle of the F1 pack, getting a revenue share of $70m or $80m and reducing his annual losses to perhaps $40m with other income. He regards that as acceptable for a few years because he gains both marketing benefits from having his company’s name on F1 cars, and research and development insights.
“We’re here to see if we can operate inside the boundaries of F1 and actually make a go of it,” he says. “Some of the parts they make are pretty phenomenal — what you see on these cars, you will not find anywhere else — so it’s an R&D investment. If we’re mid-pack and lose $40m a year but we get those advantages, it makes sense. It seems like a good business proposition.”
Few have ever described F1 as a good business proposition, but Haas has another hope. F1’s owners must renegotiate terms with the teams by 2020, and will not want to lose his team. “Long term, we want to look carefully at that model, or even an expanded version,” says Brawn. “People say that we should not dumb down the cars but do they think the cars were dumb 10 years ago? They weren’t.”
Securing change would require Ferrari and others at the top to lower the barriers to entry and compete on more equal terms. They have resisted before and will not concede easily. “Everyone knows it is necessary to reduce the costs and redistribute the income but the problem is agreeing it,” says Fry. “The top teams want to maintain the status quo. Ferrari is in a very good negotiating position and won’t be afraid to use it.”
“As long as I’ve known, there has been talk about lowering the costs, but it never happens,” says Purnell. “I remember talking to Bernie [Ecclestone] and he said to me, ‘There are always billionaires who want to spend a fortune on the glamour of F1. They spend more than they ever believed and then they leave. But there’s always another one.’”