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GP Week : Issue 183
Formula One is staring down the barrel of a gun, facing a major escalation in costs that has put the survival of more than half the teams on the grid at risk. The switch to the new 1.6 litre V6 turbo engines, the return of in-season testing and a hike in entry fees by the FIA means the teams face a bill that could add up to a mammoth $2 billion over the next seven years, The Guardian reported this week. As a result, at least seven teams will have a battle on their hands just to survive, according to McLaren team principal Martin Whitmarsh. “Formula One works best in a crisis, but it is a shame that we have to create a crisis to deal with,” he told The Guardian. “This sport needs 10 or 11 teams, and we should fight to keep the 11 teams we have now. But we are not good at doing these things. We seem to drop the ball. I fear that we will have a crisis and then we will have to get real and sort it out. I cannot see in their shoes [the seven smaller teams] how you can construct a sustainable business model.” The spiralling cost of competing in the top tier of international motorsport has been a major worry for teams for many years, but the situation has worsened in light of the financial crisis that has seen sponsors cut back on their spending in a sport held up as an example of profligacy and excess in an age of austerity. Discussions on cost reduction have been on-going for years, but have led to no concrete solutions. Spending has continued to rise. In 2009, the teams signed a gentleman’s agreement, known as the Resource Restriction Agreement, which aimed to gradually reduce budgets after a mandatory budget cap proposal mooted by former FIA president Max Mosley threatened to tear the sport apart. But mistrust between the teams on the allocation of spending rendered the RRA ineffective. “The FIA has supported the Resource Restriction Agreement, but that failed because the teams could not agree,” an FIA spokesman told The Guardian. “The FIA would still like to help teams to cut their costs. However, it cannot intervene in the discussion on the costs of the new engines. That is between the constructors and their customers.” Teams are also angered by the paltry income they receive from the sport, with private equity firm CVC Capital Partners – who own a controlling stake in the sport’s parent company – siphoning off more than half of Formula One’s income. The as yet unsigned new Concorde Agreement sees teams sharing 60 percent of the sport’s income, up from their existing 47.5 percent stake, but to the frustration of the smaller ‘privateer’ teams, the money will not be distributed equally, with the well-financed Ferrari, McLaren, Mercedes, and Red Bull getting a disproportionately large share. “I think CVC have done an absolutely awful job,” Force India deputy team principal Bob Fernley told The Guardian. “In my view they are the worst thing that has ever happened to Formula One. Everything we're doing at the moment is about increasing costs. There is no initiative at all about reducing costs. If we don't sit down and address it very carefully we're going to lose teams.” F1 >>> NEWS INFLATION IN THE AGE OF AUSTERITY The world’s first truly ‘green’ motor racing series, founded with the twin aims of promoting the use of electric cars and improving the quality of air in cities, will make sure motorsport fans’ craving for wheel-to-wheel action will not go unsatisfied when Formula One shuts down for the winter. The Formula E series, set to launch in 2014, plans on running a reverse calendar with the season starting in September and ending in June, which – given the lack of motor- racing between November and March and the curiosity surrounding a zero - emission racing series – should put the spotlight firmly on the new championship. “ We are seriously considering a calendar which goes the other way of other motorsport championships, with a start in September through to June like sports such as football,” the series promoter Alejandro Agag told veteran Formula One journalist James Allen. “It gives us a unique position. We could race when other racing championships are not there.” There has been a lot of talk about the FIA-backed Formula E – which will feature cars exclusively powered by an electric motor running solely on city street circuits – as motorsport in general adopts a greener stance while car manufacturers and sponsors are also aware that partnering with a ‘green’ racing series can only add to their image in an environment conscious world. The series has already signed such storied motor racing names as Renault, who will be Formula E’s technical partners; watchmaker Tag Heuer as the championship’s official timekeeper; McLaren, who will supply the engines, transmissions and electronics that will power the cars; and Michelin, who will be the championship’s official tyre supplier. Speaking at a private dinner in Monaco over the weekend, Renault executives explained that – with their current portfolio of electric road cars – the French automotive giant couldn’t afford not to be involved in Formula E. London, Los Angeles, Miami, Rio de Janeiro, Rome, Buenos Aires, Beijing, Bangkok, and Putrajaya have signed up to host nine of the ten scheduled races in the series’ debut year . The races will last an hour but drivers will swap cars every 20 minutes due to current battery capabilities. Agag explained that the battery life, or the distance the cars are able to travel on the electric equivalent of a full tank of gas, will only improve as competition spurs the development of battery technology. “People may feel curious about the concept of swapping cars but this will change as we show the development of batteries,” Agag told Allen. “In the second season, the battery will last 30 minutes and in the third season 40 minutes. We will then probably not need to swap cars and people will be able to see the advance in battery technologies.” See feature later in this issue for more on Formula E FORMULA E-ASY BEING GREEN 10 GPWEEK.com // 10 GPWEEK.com // PARTNERS: