While Günther Steiner may be out of a job in Formula One right now, Toto Wolff will continue to have his for another three years. The Austrian extended his deal with AMG-Mercedes the other day and will continue to serve as their Team Principal until the end of 2026. Despite the team’s recent struggles, this was no surprise given the past success they had under Wolff. Reading between the lines though, I can see how this extension provides a glimpse into the future of the team.
One key element in creating a winning F1 team is continuity. If a team can retain certain key personnel and keep skilled people within the organization it lays a solid foundation for success. Think of Williams during their heyday or McLaren during the Project Four era and you get the idea. More recently, Red Bull has enjoyed great success by retaining Christian Horner as Team Principle and Adrian Newey as Chief Designer. Keeping Toto Wolff at the helm makes a lot of sense from a continuity standpoint.
However, how long will Wolff remain? He is a 33% owner of the team along with Ineos and Mercedes-Benz, but will he want to remain long-term. There has been talk in the past that Wolff is looking to sell his shares and Ineos was rumored to be keen on buying them. While Mercedes has been in F1 since the mid-nineties, they have only been a complete factory team since 2010. If economic conditions change or the Board of Directors decides that motorsport isn’t the best use of company funds; they could walk away from the sport.
One might scoff at that notion because Mercedes has had tremendous success in F1 over the past twenty-five years. Yet major manufacturers have come and gone over the years, most recently in the wake of the 2008 Global Financial Crisis. In the aftermath of that event; Toyota, BMW, and Honda all left F1. In Mercedes’ case, that may not be likely but it is a possibility at some time in the future. So nothing is guaranteed on that front.
Consider how the team has become less competitive over the past few seasons. The combination of Max Verstappen, Adrian Newey, and Red Bull Racing has become formidable; it is likely to remain so for the next few years too. Mercedes need to make changes and adapt to the new rules lest they continue to struggle for podiums much less wins. What is clear is the halcyon days of 2014-2020 are behind them and the team needs to improve. Toto (and the Boards of Mercedes and Ineos) reckons that he is the best man for the job.
Maybe he can but there is another factor to consider, team valuation.
I don’t know if Wolff can get Mercedes to the top again. How much of the team’s success was due to Ross Brawn and others before Wolff came on to the scene? Also, did the technical advantages that Mercedes had at the beginning of the turbo-hybrid era mask shortcomings with the car’s design? We’ve seen how aerodynamics has become more important relative to power with the new rules; which has seen Mercedes struggle compared to Red Bull. Plus, there has been speculation over how complacent the team has become after all of their success during their dominant era. That thinking could be a factor as well.
So keeping Toto at the helm would show continuity, which makes improvement possible, and keeps the value of the team up. Even if they don’t win races or championships, the team will still be worth over $3 billion. From a business perspective, as long as the team remains valuable to investors and attractive to sponsors; it will continue on. After all, the current AMG-Mercedes team came from the Tyrrell/BAR/Honda/Brawn lineage the preceded it. With the cost cap and current business model of Formula One, the team should remain a valuable asset to it’s owners.
It also sounds like Wolff wants to make another run at winning Championships with Lewis Hamilton. When Niki Lauda convinced Hamilton to leave McLaren and go to Mercedes, it brought the last element in place for success. A lot of Wolff’s wealth was due to what Hamilton did on the track for the team, as well as his profile as an international sportsman. I think both of them want to win again and see that they have a few more years to do so. Plus with the new rules in 2026, there is an opportunity for them to leapfrog Red Bull just like they did after the 2013 season.
Keeping Hamilton on-board, retaining most of the key personnel, and maintaining the trust of the other shareholders is crucial to maintaining the value of the AMG-Mercedes team. Toto was wealthy even before he entered F1, he is a shrewd and capable leader. Whether this leads to success on the track remains to be seen, the early races of 2024 will provide an idea of where they stand. What’s more important in the mid to long-term though is the value of the team. On that front, extending Toto Wolff’s contract has already made the investor’s happy.
