MOSLEY: Cost Cutting Necessary By 2010

(from autosport)

FIA president Max Mosley has warned that Formula One will be "in serious difficulty" if it does not take drastic cost-cutting measures by 2010.

Yesterday the FIA reiterated that if the newly-formed Formula One Teams' Association did not come up with proposals to significantly reduce the sport's costs, the governing body would enforce its own measures, and Mosley believes as many as three present teams could be in jeopardy unless steps are rapidly taken.

"It has become apparent, long before the present economic difficulties, that Formula One was unsustainable," Mosley told the BBC.

"Very crudely expressed, one of the teams at the back of the grid cannot possibly hope to raise more than - including the money they get from Bernie (Ecclestone) - say 40 million Euro, let's say £30-35 million, which in the real world is a huge sum of money, but that's the most they can raise. To compete today, they need two or three times that and even then they're at the back of the grid.

"You can't run a business where the outgoings are two to three times the income. Not for very long. It depends at the moment on millionaires - or billionaires, we don't have millionaires any more - millionaires subsidising them, people like Vijay Mallya of Kingfisher or Dietrich Mateschitz of Red Bull. Without them, those teams wouldn't be there.

"We've already got two gaps, we're likely to lose two or three more of the independent teams. Formula One cannot continue like that, that's been obvious for some time.

"At the moment we've got 20 cars. If we lost two teams we'd have 16, three teams 14. It then would cease to be a credible grid.

"Some of the manufacturers may be in difficulty now as well, because if you look at their share prices, their profitability, their sales, the days when they could just toss out 100, 200, 300 million Euro a year, which is what Formula One costs those big companies, I think they're finished. I really think it's a serious situation.

"If we can't get this done for 2010, we would be in serious difficulty. I think we can survive through 2009, but if we don't get it done in 2010, we may be in serious problems."

Mosley believes the key is reduce expenditure on engines and gearboxes at the earliest opportunity.

"There are various things we can do, but the most obvious would be to reduce the cost of the drivetrain," he said.

"At present, if you can believe this, the engine and gearbox together, for an independent team, is upwards of 30 million Euro a year. That could be done for probably five per cent of that cost without the person in the grandstand noticing any difference at all.

"Even those big spenders, if they're given the opportunity to save 100 or 200 million Euro a year, they'll do so. And we've got various means of making sure they don't spend the money, but it does need some draconian changes."

 

The only thing visible in his office is a Ferrari F1 car - draw your own conclusions

 

I think I will cut costs next year by not buying anymore F1 memorabilia.

This sport is in need of a major restructuring in its management.

 

Every time this clown opens his peverted mouth it costs the teams money, changing everything.

The only thing that needs cutting is him.

 

Must be biting into his Nazi costumes & hooker budget.

 

They should start at the top with the cost cutting and get rid of Bernie. After cutting out Montreal he has really screwed the pooch!

 

The writing is on the wall: F1 will be a total spec formula ala A1GP within 2 years. Me thinks many a fan will lose interest.

 

Could not agree more with all of you.

I have not been to a F-1 race since 2000, and see no need to go, you cant really see anything there, and the cost is just ridculous... I was in the paddock club and it cost up to $5K for the weekend per person... which for what you get is insane... all you get is some access to the cars and drivers... but not that much... Had I not been a guest, I would never have gone.

With all the finanical mess going around and Fiat asking the EU for a bail out of the european automakers, I cant see how long F-1 huge budgets will last. not to mention the sponsors budgets. it will most likely take several months for this to all catch up, but I am sure F-1 is in for a HUGE PAINFULL awakening!

The one thing about China and other non traditional F-1 countries.. especially China... if they decide to pull the plug... its not like they are going to respect Ecclestone and his lawyers... they can play to their own tune... same in Russia... so good luck to them doing all these deals with the former 3rd world.... when it comes crashing down its gonna hurt! I hope Ecclestone is at the center of the mess.

 

LoL...

 

I actually like the idea of all the cars with the "same" engine. It would be up to the driver to be at the top of the podium and there would be more action during the race.

 

This sport is headed for disaster. Over the last ten years they have called for lower costs but none of it has trickled down to the fan. This is just another crock. Let the sport implode and we'll see what comes out of it.

 

I agree... they (Ecclestone and teams ) have destroyed Formula One. as for one engine etc... making for better racing, that is not what F-1 is about. F-1 is about being at the pinnacle of the sport. The best cars, with the best drivers.... not a spec racing series. if you want close racing- watch Nascar, or if you want open wheel racing watch Formula Atlantic, or Mazda or BMW... you'll see very close racing. F-1 is supposed to be about or at least was for the past 40 years that I can remember, the best racing against the best... if somebody came up with a crazy technology that made them win, then the other teams had to catch up ... simple as that...
I guess I must be getting older now, because i just dont understand this obsession with close racing?

Now that Schumacher is gone, everybody laments that he is not in F-1! but during his day supposedly he made it boring? I dont get i!
Senna and Prost were supposedly making the sport boring because they won everything... now today the are like the gods of F-1? folks have to make up their minds.

I can only think of one NASCAR driver that everybody knows from the past - Richard Petty... and mostly not because of his driving... but in F-1 you have all the greats... Fangio, Clark, Surtees, Stewart, Fittipaldi, Lauda, Hunt, Andretti, Piquet, Villeneuve, Prost, Senna .... need I go on? For F-1 to be exciting the rules should be opend up not closed in.... that is where the innovation comes in, where technology is perfected, and the automobile moves on.

 

There is a huge amount of money being made in the worldwide TV rights to F1.

Problem is the money isn't going to the teams, it is going to make Bernie richer, and he will bleed the sport until it is on life support...

Maybe Bernie needs to give out more in appearance money and put less in his wallet....

If that were to happen it would go a long way to addressing the cost issues.

There's plenty of money in F1, just too much of it going into Bernie's pocket....

 

I couldnt agree more. Bernie continues to bleed F1 dry, while Max makes it irrelevant in the meantime.

 

I don't agree.

Bernie largely cashed out of F1 a couple years ago when he sold most of the company. That was financed through a bank loan, and the interest payments alone on that loan are HUGE (over $200 million a year, IIRC). Bernie makes money from the tracks paying for races, as well as the TV money, and trackside advertising. But when you look at the numbers, he's not making tons off it each year... he already made his money when he (mostly) cashed out. F1 is in a financial situation such that it *must* generate more and more money each year. How do you do that? Well, cutting races that pay $5mm for the race in favor of those who will pay $50mm for the race is a good start... if he swaps low payers to high payers in two instances each year, he's likely making an extra $80mm or so a year. He's also trying to get new fans, so he can increase the TV coverage of the races, increasing the value of the TV rights.

But it's not like tens/hundreds of millions are flowing into Bernie's personal accounts each year - not at all.

The problem Bernie has is that the manufacturers are sort of at odds with him on this... they want to be in North America, but that race doesn't pay well for Bernie. If he could expand the TV market, it could be good - but to do that, he'd have to kick in a lot of his own $$, and he's a guy who prefers to have his butt kissed, rather than kissing someone's butt. So, his other option is to push Max to reduce costs in F1... then he can try to prop up the value of the TV rights and the revenue from races, while not paying more to the teams, under the justification that it's costing them less than before to participate.

Bernie is not stupid... he knows exactly what he's trying to do, IMO. The question will be what will the manufacturers do that are at odds with Bernies plans? I imagine that's a very big part of why the FOTA was created.

It will be interesting. Also, Bernie is going to be dead soon... I imagine his widow will retreat into obscurity and just make $$$ on F1 from then on, and it will be left to the corporate owners to decide what will happen. That may make things even worse... partly because a corporate/commercial partner can't forgive BS like Mad banging hookers in Nazi orgies and taking $300mm payoffs to give up the TV rights, and partly because Bernie does have a keen sense of forgoing some $$ today to get more tomorrow. A corporation with a short-term CEO is going to be more interested in short-term results. In that case, historic races like Monaco, Monza and others would very much be in jeopardy, and F1 could turn into a circus of banana-republic based races where the highest bidders get races. Then we can all revel in the excitement of the North Korean GP, the Belorussian GP, the Moldovan GP, the Iranian GP, and the Paraguayan GP.

 

If the financial sky keeps falling, most teams will wither and die, regardless of any Bernie / Max politics.
think Toyota and Honda are going to keep pumping $$ into F1 if they are only selling a few hybrids next year?
Think all those sponsors will? Buddy of mine works for one of the major sponsor of the BMW F1 team. They are (more than likely) not renewing for next year. New CEO is American, not much of a race fan. Now there is not even a race in North America. BMW, with their successes this year, will surely ask for more $$$ (I think the tab for next year was estimated to be $20 million).
Just the financial realities of chicken little's dance could kill it all quickly.

Not having my buddy's company sponsoring BMW F1 will be sorely missed....
(me and the good Dr....)
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Many of the manufacturers have already said they'd oppose the one engine make rule (where one company produces the engine and then they brand it "Honda," "Toyota" or what have you and would probably pull out all together if that happened. But some did say they would be open to tightening the regulations on the engines so that they would be able to cut cost. Also the idea for a two engine per-season was appealing to some.

I'm fine with two engines per season, getting rid of refueling (not that that's a current option), standard gearboxes, standard brake ducts and the like but not for one manufacturer to make all the engines.

If F1 did that I think you'd see a rush of the manufacturers to ALMS and LeMans. Maybe even to IRL.

 

Because otherwise it is a boring procession of follow-the-leader? It is pathetic that TV coverage has to follow the mid-pack to see any actual racing. F1 might as well be a BMW/Porsche driving school with point-bys...

 

Eccelstone came out Japan's Thursday press conference and agreed with Mosley. The end is near. He supports Mosley 100%

http://www.timesonline.co.uk/tol/sport/formula_1/article4909895.ece