Thursday, October 9, 2008

Formula One in economic free fall?

Formula One teams seem prepared to turn the series into a standardized series in the mold of NASCAR and the IRL as a way to make immediate cost reductions amidst a global economic crisis. In an article out today we have the following:

"FIA president Max Mosley has ramped up efforts to bring F1's costs down amid fears that the sport is unsustainable in its current guise. He is due to meet with the Formula One Teams' Association (FOTA) after the Chinese Grand Prix to discuss an urgent plan of attack. And although he and F1 commercial rights holder Bernie Ecclestone have floated the concept of a standard engine, sources have indicated that several manufacturers would pull out of F1 if such a rule was introduced. However, despite the reluctance for a single-specification power unit, teams do appear willing to support the concept of introducing more standard parts - such as brakes or gearbox."

BMW and Honda have been very vocal against having standard engines although both manufacturers support reducing costs and seem ready to compromise with some standardization of the engine.

Money will change any plan; even in Formula One. The FIA and F1 wanted to keep technology and technology development a centerpiece of the sport as that pillar was supported overwhelmingly by F1 fans in a 2006 survey the FIA administered. At the time, Max Mosley said, "we recognize their (fans) view that technology is important but that the right balance with driver skill must be achieved and that improving car design to encourage overtaking must be one of our priorities. We are now working very closely with the teams and manufactures to ensure that we encourage the introduction of new energy efficient technology which will not only help to improve the show but will also have a direct environmental relevance for the motoring public."

They are delivering on the technology that have direct environmental relevance through KERS and have done some things with car design that may faciliate overtaking. Nevertheless, the need to do some more hatchet work on Formula One budgets seems very alarming. So, given the nature of the financial crisis and the easy willingness of teams to standardize the sport, one must ask the questions how 'liquid' is Formula One? How damaged is Formula One by this global crisis? One of F1's shareholders, Lehman Brothers (part of the CVC group that owns 16.8% of F1) filed for bankruptcy in September. So, how shaky are the other shareholders? Below is the link to the Business posts for Formula One America in which some of these issues are discussed.

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