The worst?ǣcase scenario

Jarno Trulli, Toyota, Istanbul, 2008, 470150

Call it the credit crunch, call it the sub-prime crisis, whatever you call it, I call it trouble.

It?s hard to pinpoint exactly what the consequences of the developing global economic downturn will be for Formula 1. But it?s hard to imagine them being good.

And to the pessimists it could look very bad indeed.

The car manufacturers

When I first began following Formula 1 in 1989 the only manufacturer-run team in the sport was Ferrari. Renault and Honda were both present as engine suppliers.

Today the car manufacturers account for six of the ten teams and supply all the engines. And much of that transformation has happened since the turn of the millennium. Consider when the each of the various manufacturer teams arrived in F1 in their current guises:

Ferrari 1950
Mercedes* 1995
Toyota 2002
Renault 2002
BMW 2006
Honda 2006

*As engine supplier to McLaren

The popularity of Formula 1 among the world?s car makers is undoubtedly part of the sport’s attraction. But however vast their budgets are, they are subject to the same financial forces as the rest of us.

The impact of the financial down turn on the car manufacturers is starting to become clear. Toyota, which has been gradually edging ahead of General Motors to become the world’s largest car manufacturer, revealed last week its profits in the first three months of the year were 28% down – substantially below expectations.

Only last winter we were hearing rumours that Toyota would can its F1 project if solid results didn’t materialise. All the manufacturers are in F1 to succeed – and they can’t all win the world championship. And, in the form of Max Mosley’s well-documented indiscretions, they all have the perfect excuse to leave.

Withdrawal

Fernando Alonso, Nick Heidfeld, Sepang, 2008, 470313

Whatever slick and glossy marketing spin they use to market their involvement in Formula 1, let?s be clear about one thing: for them F1 only has value as a marketing exercise. Williams Grand Prix Engineering Limited are not using F1 to sell cars, they’re only in it purely to win it. Apart from Ferrari, who’ve been there since the start, you can’t say the same of the other manufacturers.

If F1 ceases to make sense financially, the manufacturers will simply up and leave. Renault did it in 1985 as a constructor and again in 1997 as an engine supplier. BMW did it in 1987 as an engine builder as did Honda in 1992. Others have left the sport and not returned, such as Ford and Peugeot, who currently feel other forms of motor sport (rallying and sports car racing respectively) fit their marketing needs better.

One might argue ??yes, but most of them returned, which proves the enduring appeal of Formula 1.?? That may well be the case ?ǣ but if several of them were to abandon F1 at short notice, where will all the cars come from in the meantime?

On leaving the manufacturers couldn’t sell their old chassis to GP2 teams to run in F1, because that?s not allowed. And besides which they may not wish to leave their intellectual property lying around for others to grab – when Opel left the DTM in 2005 it refused to let anyone use its old cars for exactly that reason.

In the 1990s F1 had independent constructors and engine builders to fall back on. Today they are increasingly marginalised in Formula 1 – no independent constructor has won an F1 race in four years, since Juan Palo Montoya’s last hurrah for Williams at Interlagos.

Chain reaction

One manufacturer leaving could prompt others to do the same. If Toyota left would their fierce Japanese rivals Honda stay long? What about BMW without rival premium car builder Mercedes?

The loss of Super Aguri has left F1 with just 10 teams and 20 cars. This is believed to be the minimum number of entrants Ecclestone is required to bring to Grands Prix. If it fell below that, he may require two teams to each bring a third car.

And if that responsibility fell to regular points-scorers like Ferrari and McLaren the likes of Renault and Toyota could face the prospect of not scoring any points for the rest of the season while their rivals lock-out entire podiums. How well would that go down in their board meetings?

Recovery

A recovery in the markets would not necessarily improve the situation in Formula 1 overnight.

As Ron Dennis has pointed out, because the most valuable F1 contracts tend to be long-term deals, sponsors and the like may be forced to remain in F1 as the economic going gets tough, and already be long gone as the wider economy begins to recover.

The engine freeze regulations might add another unwelcome complication for manufacturers returning to the series or new ones joining. Engine development is presently banned for F1 teams. But if a new team were to join they could spend as long as they liked covertly developing a 2.4-litre 19,000 rpm V8 and hand themselves a whopping advantage when they do join in. Which would not go down well with their rivals…

Admittedly this is a deliberately pessimistic outlook on the future. But I do think the sport is vulnerable as the economic forecasts continue to worsen.

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24 comments on The worst?ǣcase scenario

  1. there were exactly the same fears at the end of 2004 season when Ford pulled plug on F1. Jaguar for sale, Minardi Jordan without engines. The talk of some teams having to field 3 cars was very ripe. And what happened ? The season 2006 stared with 11 teams and 22 cars … Few months later there were 11 new subjects applying for the final entry …

    The promised changes did not materialize, Prodrive did not enter, Super Aguri is out, Toro Rosso is up for sale. Not rosy picture. But things can change quickly.

    Right now it is worth for team like Honda to spend hour of wind tunnel time and millions of dollars to come up with two ugly endplates for already ugly dumbo ears. That is simply ridiculous … If for example this sort of wasteful spending can be eliminated by new rules, it may make the F1 feasible again for privateer teams … Not a miracle medicine, but one of the steps … Budget caps similar to the farce that was made public yesterday will lead nowehere …

  2. DG said on 16th May 2008, 9:07

    I think the escalating costs will make the Manufacturers think again about staying in F1, and the Teams too, especially when you have a better chance of actually winning a race on the same circuit in a GP2 car or a Touring Car!
    Bernie and his accountants have made the wrong choices recently – instead of allowing SuperAguri to stay in the Championship and maybe gain more backing, he physically shut the door on them. I think he will do exactly the same thing to any other team in financial trouble, big or small, and that is why the Teams will be leaving!
    I also think that it won’t be too long before Red Bull and Williams are both classed as ‘Customers’ for not designing their own engines – bye bye Frank (and surely his KERS engine is based on Toyota too?)
    Bernie does appear to want only Manufacturers in F1, but with all the recent debacles and the various freezes in development, do any of the following seem interested – Ford, Volkswagen, GM and Peugeot? TATA bringing Jaguar back would be nice, but I think they will be heading for GT Racing and ALMS.

  3. MarathonMan801 said on 17th May 2008, 11:29

    The loss of Super Aguri has left F1 with just 10 teams and 20 cars. This is believed to be the minimum number of entrants Ecclestone is required to bring to Grands Prix. If it fell below that, he may require two teams to each bring a third car.

    Would that be *every* team? If the number of teams drops to 9 (18 cars) would they all be required to field 3 cars, making a field of 27 cars?
    How would that sit with the team expenditure cap?

  4. Sav722 said on 17th May 2008, 16:33

    Good point, I don’t think it would be very team surly?

    But then, if the FIA were to only offer some teams to run third cars, the organisation will once again be accused of favouritism.

    I know some don’t like customer cars, but maybe F1 needs to allow them. It’s the only realistic way grid numbers will be boosted in the near future, Prodrive are a well funded and well-structured company – so they would be able to stay in F1 for some years.

    It’s either that, or F1 needs more Vijay Mallya’s…

  5. If it was up to only the FIA to fill up the grid, im sure you will just see 8 Ferrari’s running :)

  6. What if a company such as Dallara or Lola offered full F1 Spec cars to anybody at a decent price, and maybe with a choice of engines?
    They could not be called ‘Customer Cars’ since Dallara would not be fielding a ‘Works Team’, but they would not be ‘Works Teams’ themselves since they wouldn’t have developed the cars themselves. And if there is an engine choice too, it would still keep in the rules as they are now, with no new engine development being made.
    I think that would safely allow smaller teams to compete and be able to spend their budgets on Bernies fees and not too much on the cars themselves – Dallara or whoever can keep development costs down since it doesn’t need to support a ‘Works Team’ as well, though it would be interesting to see how the testing would be done!
    McLaren used to do something very similar in the past, but not in F1, with the majority of the cars on the grid being McLarens, but not ‘Works’ McLarens.

  7. MarathonMan801 said on 19th May 2008, 14:17

    McLaren used to do something very similar in the past, but not in F1, with the majority of the cars on the grid being McLarens, but not ‘Works’ McLarens.

    When was that? And what was the formula?

  8. DG said on 20th May 2008, 8:24

    I couldn’t remember myself when I wrote it – it was one of the American series in the 60s – I will try and find my reference again

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