F1 is an expensive business, so how will it fare in the current global climate? Time Out investigates
You can’t open a newspaper these days without hearing the phrase ‘credit crunch’, and now it has reared its ugly head in the high spending world of F1. So the question is, how much of a problem will it be?
The first big shock of the winter was when Honda announced in December that they were pulling out of F1. In the past the car company had always claimed the £200 million it cost them to run the team every year was worth it, but in an emotional press conference the president of Honda, Takeo Fukui, himself a huge motorsport fan, announced that the team would not take part in the 2009 season and they would make attempts to sell the team. The team has since been subject to a management buyout by team principal Ross Brawn, and will start the season re-badged as Brawn GP.
In February the sport took another body blow with Dutch bank ING announcing that it would cut spending in F1 by 40 per cent. The bank, which invests heavily in track side advertising as well as being the title sponsor of the Australian, Belgian, Hungarian and Turkish Grand Prix events was forced to shed 7,000 jobs worldwide. It followed this announcement by saying it will not renew its sponsorship with Renault when it expires at the end of this season. A huge blow, as the team receives the vast majority of its sponsorship capital from the bank.
The Middle East’s own Mohammed Ben Sulayem, who lives in Dubai, has been keen to back the FIA’s cost-cutting policy: ‘There was going to be a problem in Formula One even before the current financial crisis came along,’ he says. ‘The costs have been spiralling out of control for some time. The economic problems the world is facing have brought everything into focus, and Honda’s decision to withdraw from F1 is a big warning.’
Sulayem, President of the Automobile and Touring Club of the UAE, added: ‘There are a lot of things that can be done to save money, and if the teams really want to do it they can. For instance, wheel nuts alone cost a Formula One team US$1.2 million a year, and that’s just ridiculous. This is making the sport too expensive, and if action isn’t taken now we could end up with only three or four teams. That just wouldn’t be a championship.’ It’s not all bad news, however, and many key figures have thrown a more positive spin on the situation. Former driver Eddie Irvine has been quoted as saying he believes the crisis could actually make the sport more competitive.
Ferrari president Luca de Montezemolo says: ‘The crisis represents a huge opportunity to improve Formula One, in terms of cost, competition and to really look ahead.’ But with costs being cut, what really lies ahead for the sport can only be guessed at.