Riding roughshod over the FIA?

27/11/2008

The day of the Formula One teams seizing the reins of power has dawned. It may not seem like it, and it's certainly not something they are boasting about, but, as Pitpass' business reporter Chris Sylt reveals, never have the F1 teams had such control over the future of the sport.

As Pitpass recently reported, all it takes is for the teams to stick to their guns and demand a 30% increase in the amount of prize money they get from F1 and they have both the sport's rights holder and the governing body, the FIA, by the short and curlies. Given the gloomy economy, this demand may not be far off.

The reason it puts the teams in the driving seat is simple - if their demand was realised it wouldn't leave enough money in the bank for F1's rights holder to pay off the debt it took out to buy the business. The upshot is that F1 would face bankruptcy which could even put races in jeopardy. Since the FIA ultimately owns the sport's rights, this is not something it wants to happen and this may well explain its drive to bring more money to the teams by cutting their costs. However, it is rapidly coming to light that if the F1 teams want to spend then they'll do it come what may.

The recent news that in 2007 the Honda F1 team had costs of £147m, the highest of any UK-based F1 team, has come as quite a blow for the sport. Last year, for the first time ever in F1, teams ran with engines frozen to the previous year's specification and there was good reason for this homologation.

Way back in June 2006, FIA president Max Mosley said "the reason for homologation is that we want to eliminate engine development costs." The freeze was due to be introduced in 2008 but he specifically added that bringing it forward to 2007 "would save everybody a fortune and avoid a great deal of unnecessary expenditure." The critics cried that since many of the teams are fuelled with almost-bottomless budgets from car manufacturers, they would just divert their spending to different areas of the F1 programme and it seems they were right.

In 2007 Honda's costs accelerated 21.9% on the previous year despite the engine freeze. Perhaps, mindful that this would happen, the FIA began talk earlier this year of introducing a cap on budgets but as soon as it had made this announcement, the critics began their crying once again. One of the biggest criticisms was that the system would be tough to police since it could be disputed whether certain aspects of the teams expenditure related to F1. Once again, it seems that the critics were right and the budget cap hasn't even been introduced yet!

A website report has recently emerged claiming that the revelation about Honda's record costs for 2007 is inaccurate since "Honda was being forced to pay for most of Super Aguri's operations in addition to its own activities." It's a nice little yarn but, unfortunately, the facts about it aren't in black and white.

The company which runs the Honda Racing F1 team is called Honda GP. Its accounts state that "the activities of the company are all dedicated towards the design and development of a car to complete successfully in Formula One motor racing," and the team's website states that it is "the official website of Honda GP." In short, any spending by Honda's F1 team shows as costs on the accounts of Honda GP. There is no mention of Super Aguri in its accounts.

Of course, Honda GP may have spent the money on Super Aguri. The accounts contain no breakdown of its costs so it could have spent money on aunt Bessie and uncle Tom Cobbley too. But even if it did, this would still be spending by Honda GP. Nothing can change that and any suggestion to the contrary is in itself inaccurate.

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