This article will talk about whether the Haas model has worked as a Formula 1 team and if it has or will offer a new way to run a Formula 1 team. The Haas model is a way of running a Formula 1 team.
Haas entered Formula 1 to prove that a team can be run on a low-cost budget and still be competitive. They would do this through sponsorships, outsourcing, and partnerships.
Background
Haas entered F1 in 2016. Their low-cost project began by buying the collapsed Marussia F1 team HQ. They would also form a close relationship with Ferrari, which would provide their engine in the future.
This relationship with Ferarri was crucial to their survival in the team. Their low-cost project would be boosted through sponsorship not to take too much money from Gene Hass’s pocket. (The team owner). Using this explanation, the Haas model refers to a team that enters the sport on a low-cost model and uses relationships, partnerships and sponsorships to operate over heavy investment from the team owner.
As stated in the introduction, the Haas model relied on the relationship with Ferrari. Outsourcing their engine cuts a considerable cost from the get-go. Partnering with the oldest team in the sport also brings a sense of reliability and stability that entities sponsorship deals and drivers.
Haas’s Cost-Cutting Strategy Through Partnership with Ferrari
Haas would also legally buy as many parts as possible from Ferrari to build their car. Again, this is a considerable cost cut as there is less overhead on employee wages and research and development budgets. Partnering with a bigger, more established team allows for longer-term projects in which the team can evolve and grow without having a high start-up cost.
Wind tunnels are a huge part of the sport, with each team having a set allowance to use one. A new squad like Haas cannot afford to build a wind tunnel from a start-up, which also goes against its low-cost ethos. The relationship forged with a bigger team allowed Haas to use wind tunnel hours at a lower cost than utilising another team.
Wind tunnels require the most up-to-date technology to avoid being left behind by competitors. A team like Ferrari will likely have top-grade technology, which Haas’s competitors were unlikely to have.
Embed from Getty ImagesHaas’s Strategic Position and Outsourcing Approach
A new team like Haas did not aim to win races or gain regular podiums, meaning they were a low threat to Ferrari, allowing the relationship to blossom.
The chassis is a considerable cost when building a car. Haas also outsourced this. Having an independent manufacturer produce it dramatically reduces costs even further.
So far, Haas has bought multiple parts from Ferrari, signed an engine contract with Ferrari, and outsourced its chassis. It also purchased a European headquarters from a bankrupt team, reducing its startup cost.
Challenges in the Haas Business Model and Driver Changes
As discussed, sponsorship and partnership are significant parts of the Haas model. Financially, Haas began to struggle, which indicates that this business model was not working. This was shown by dropping a vast team asset at the end of the 2020 season. Haas would drop both drivers who were experienced in the sport and opted for signing two rookies.
This is where the sponsorship reliance comes in. Haas would sign with Russian business Uralkali, which would become the team’s title sponsor. Nikita Mazapin would sit in the Haas car as part of the deal. The idea of pay-to-drive drivers is not new or unique to teams on a low budget. To add to the agreement, the American-owned team would “not” have a Russian flag on the front wing of their car as part of the season’s livery.
This sponsorship deal secured the team’s future in the sport, allowing them to survive COVID-19. Haas has regularly checked the team’s business model to assess and adapt its financial viability.
Embed from Getty ImagesHaas would also sign Mick Schumacher. This is important to note, as bringing an iconic name back to the sport is a gold mine for sponsorships. It was rumoured then that Haas needed to sign a German driver to secure a healthy deal with a potential German business. Haas relied on this income to survive and ultimately build for the future.
They have been known to sign landmark deals with businesses. The Rich Energy sponsorship was a significant part of the team for the limited time the deal existed. The sponsor dominated the livery, with the brand’s colour scheme plastered over the car. This deal provided financial security, again lowering the team’s base funding.
Comparison to the rest of the Grid
Teams like Mercedes and Ferrari have become iconic names in the sport. Mercedes relies on its car brand reputation to secure brand deals. It is the same with Ferarri. Their sponsors fit in with the brand identity. They are high-value brands that want to be associated with high-value cars and teams.
Red Bull is different in that it relies on sponsorship with its drinks brand and income gained through its massive sports sector. This differs from Haas, which doesn’t identify with the deluxe products, nor do these brands want to be associated with Haas on the same scale. This means they must find different ways to secure deals and thus use incentives.
The team doesn’t have the reputation that the car-branded and long-established teams have, meaning that to secure survival, it must work harder for its sponsors.
What they do have is being the American F1 team, which separates them from a euro-centric grid.
While Haas does have a NASCAR team, it is separate from the Formula 1 team in almost every way.
Haas’s Journey and Future Prospects in Formula 1
Since its start-up, Haas has succeeded in many ways as a Formula 1 team. Initially, the team succeeded in being point scorers more than many expected. They have had some pretty rough patches, but now they sit in a promising place that will allow them to grow as a team. They will enter next season with a brand new driver line-up.
Unlike previous driver line-ups, they have had a pick of the drivers they wanted. They will have the promising Ollie Berman, who will partner with experienced driver Esteban Ocon.
At the time of Haas’s entry into Formula 1, there was a genuine issue around the barriers to entry. We recently saw this issue with teams trying to join the grid but failing. To get onto the grid, a significant part is pitching what you would add to the sport to the FIA. In the case of Haas, they provided a sustainable, low-cost bid that should have pioneered a new form of Formula 1 team.
Has the Haas Model Worked?
The Haas model had good momentum until COVID-19. It ran on a high external investment and low internal investment model. COVID-19 massively affected this, so it had to switch business models to one revolving around survival rather than development.
However, the resources they used have allowed Haas to work as a team. During the Mazepin era, they could have quickly appeared as a failing team, selling off everything they could. They focused on sponsors for a while but used this to their advantage.
When signing up with a German brand, they must post about it on social media. This could have gone down very severely as F1 is primarily a sport and not mainly a marketing platform. They used social media to their advantage.
Impact of ‘Drive to Survive’ and Gunther Steiner’s Popularity
Since the release of Drive to Survive, Gunther Steiner, their team principal at the time, has become a grid favourite. This, paired with the German homeware stores’ obligated posts, became a meme that covered up what could have been a dire set of marketing decisions.
Although signing Mick Schumacher ultimately failed, it was a clever idea—a cheap driver with a famous name who was highly marketable.
Post-COVID, the team had not bounced back as much as other teams. New and their first significant regulations changed as a team, furthering their progress. Now, the team sits as a back mid-grid team.
They are not back markers and can offer competitive racing cars. They are capable of scoring points, do not rely on certain tracks to do well, and are a stable team.
Embed from Getty ImagesThe Haas Model: A Blueprint for New Teams in Formula 1
The Haas model is perfect for new teams that want to enter the sport and build their way up. The sport cannot afford teams to come in with large internal investments and still provide good racing while staying within financial regulations. The sport needs teams like Haas to make up the midfield and offer an underdog.
It is important to note their ever-changing business model. A team like Haas cannot afford to “weather the storm”. They must change and adapt. They did this to enter the sport, get through COVID-19 and now, after significant regulation changes.
The Haas model changes with business needs. They let go of drivers like Schumacher because he was risky for sponsors. They also let go of Mazepin after losing the main sponsor for different reasons. Now, they have released their two experienced drivers.
They have cut investment into the season’s car to focus on longer-term goals. Releasing the man who got them into F1 in Gunther Steiner further backs this up.
Too often, F1 teams have stayed stuck in their ways. Ferrari and Williams are bad for this. Haas changed and adapted because it could continue to sell its business model to sponsors and drivers due to its low internal costs compared to the rest of the grid.
As discussed in one of my previous articles, F1 has become too expensive for new teams and fans. Haas has paved the way for a new type of team—maybe not a straight replica, but certainly one that follows a similar suit.