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Questions over F1's financial sustainability

FEATURE BY MAT COCH
14/11/2012

Costs in Formula One have continued to escalate in recent years. More races and more competition have stifled efforts to restrict expenditure leaving some teams supported by large corporate owners willing to lose money in pursuit of glory, and those at the back who do not enjoy such financial luxury.

Three of these have recently announced plans directly relating to their financial future. Marussia has openly admitted it is seeking fresh investment, almost the Formula One equivalent of putting out the begging bowl, while Caterham has taken on a small new loan. Anything less than double-digit millions is small in Formula One. Finally, this week HRT revealed it is up for sale, with serious question marks over whether a buyer will be found.

"That's a pretty awful hornets' nest to wander into," sighed Jonathan Neale when Pitpass asked him about the sport's financial position. With a number of teams seemingly struggling despite the cost savings initiatives, are the teams and the sport itself treating the issue with the seriousness and urgency it demands?

"That question depends on where you sit," Neale claimed. "Clearly if you're in the situation HRT unfortunately find themselves in I'm sure they'll have a particular view."

Many of the sport's problems in recent times could, arguably, be traced back to the fact it has been run as a democracy. Technical changes require the approval of a number of bodies, including the teams, all of which have vested interests.

"I am very clear that within the FOTA teams and the discussions we are having with Jean Todt, getting to grips on costs in Formula One has been something that's been on the agenda," Neale stated. The once all-powerful FOTA is not the entity it once was. Not all teams are members while it represents the teams' combined best interests. It has achieved some notable success, but its power has been eroded by the likes of Red Bull leaving, ironically over the Resource Restriction Agreement which attempts to keep a lid on the teams' outgoings.

"There's a push for that to cover engines as well," said Neale. "The financial sustainability has been right up there as one of the priorities. Are we doing enough? Sure, there's always more that we can do, but it's complex. It's a tough business."

The gulf between the haves and the have-nots may have closed in recent years thanks to stable technical regulations, but the plight of those at the wrong end of the grid should not be taken lightly. They can often ill afford the latest technological gadgetry - Marussia and HRT operate without KERS, a complicated yet fundamental piece of kit which costs them measurably on track. Time lost on track equates to money lost off it.

Formula One teams operate more like covert military suppliers than the competitive sporting entities they actually are, and as a result are engaged not just in Grand Prix racing every other Sunday but in a spending race at risk of spiralling out of control. Just what the FIA can do to slow that spending remains to be seen as ideas come and go with seemingly no democratic decision made. Perhaps the time for a democratic approach has passed, but we'll probably need that to go to a vote.

Mat Coch
mat.coch@pitpass.com

To check out previous features from Mat, click here

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