FALL 2023

AUTHOR

Ignacio Felix-Padilla, University of Pennsylvania

ABSTRACT

As of August 2020, there were eight Formula One drivers without a firm contract to race in the 2020-2021 season, out of only twenty driver seats in what is the highest circuit of car racing worldwide. Every year, teams have to decide to sign a driver that is already racing in, or that was recently racing in Formula One, or bring up a new driver either out of Formula Two (the racing league directly one level below Formula One) or from another racing league (Balfour, 2020). Teams had to make a decision: go for the experience or gamble for young potential.

Despite being a sport with hundreds of millions of followers globally, and with billions of dollars in revenue and media spend, only twenty drivers compete at the Formula One level annually, with many dreaming of becoming one of the selected few (Gough, 2020; Lange, 2020). In 70 years of history, there have been less than 800 Formula One drivers, with less than 120 drivers having raced over the last 20 years. Of these 800 drivers, only 33 have ever won a championship, and only 76 drivers (less than 10% of the total) have won 2 races or more in the 1,035 races since its inception (Davies, 2020). Being a good driver is not enough. These drivers want to be the best. Over the past few years, there has been a surge of younger drivers in Formula One. Many of these young drivers have had some very good results. For example, Lewis Hamilton, the current champion, started in Formula One at 22 years of age and is now the driver with most races won ever (Donaldson, 2020). Teams are constantly evaluating whether to sign a new driver with the promise to be the next big thing or to sign an older, more experienced and proven driver, even if that person may not win a championship. Along with that decision, comes an economic decision as well, which is how much to pay that driver.

The null hypothesis to be proven or disproven through this research is that a rookie driver is a more efficient decision for teams versus hiring an experienced veteran.