Friday, March 14, 2008

F1 spending to be limited as per FIA

Teams might be restricted for their spending....

Money is the oil that keeps Formula One's engine purring. Having plenty is normally a good portent. Having little is a quick way to the back of the grid.

Toyota are reputed to have the biggest spending budget in Formula One.

Super Aguri survived on less than $90m in 2007 -- it may sound like a lot, but in Formula One it's the equivalent of being in the poor house.
This week, the Japanese team, which finished ninth in the 2007 constructors' championship, escaped their pre-season funding woes after reaching a takeover agreement with the London-based Magma Group, an auto industry consultancy company.
Super Aguri's plight, caused in part by the non-payment of monies owed to them by a key sponsor, saw them make more than 20 staff redundant over the winter. It also severely restricted their testing program.
That they will line up for the opening grand prix in Melbourne is testament to their determination. But they can only gaze jealously at the big spenders.
Toyota are believed to top the spending pile dominated by the manufacturers, lavishing up to $550m a year on their bid to overhaul Ferrari and McLaren.
Unfortunately, the money has not helped them make much progress. In 2007 they were sixth in the constructors' championship -- the same position they finished in 2006.
McLaren, their closest spending rivals, have an estimated budget of $500m thanks to the contributions of Mercedes-Benz -- involved since 1994 -- and Vodafone.
The prancing horse has Shell, Philip Morris tobacco, the Abu Dhabi government and Alice (a telecoms giant) as major funders of their $405m budget.
Meanwhile, Renault's estimated $300m budget -- fairly meager compared to their more spendthrift rivals -- is swelled by the Dutch bank ING, which signed up last year as a title sponsor.
At the other end of the scale are Super Aguri and last year's poorest cousin Spyker (now Force India), which is expecting its budget to nearly double to $120m in 2008.
Colin Kolles, Force India's team principal, believes they now have the money to leap from their 10th place finish last year to midfield.
"I have been with this team through some difficult times over the past three years, but with dedicated team owners, a realistic budget and high ambitions, I can now see a long-term future for us... we could be in a position to be a regular points finisher," he said.
Force India's long-term commitment to the sport will be music to the ears of the FIA, the sport's governing body.
The large disparity in funding levels is an issue it is determined to control.
Max Mosley, the FIA president, began 2008 with a letter to the teams outlining its plans, which could see the budgets of the top spenders nearly halved.
FIA is proposing a cap on spending for all costs other than engines, drivers and expenditure for promotion and marketing.
The goal is a more even playing field, with the independent teams like Force India and Super Aguri having the ability to more consistently challenge the dominant manufacturing teams.
The FIA is also desperate to ensure the independents remain in the sport, and that more backers like Force India's Vijay Mallya feel they have enough cash to join and be competitive.
Mallya said their involvement as India's first team was a matter of great pride.
"Not everyone can say we own an F1 team and we are on that grid. It takes a lot to be there in the first place."
However, convincing everyone of the need for budget caps and agreeing on them will be hard work.
A Force India spokesperson said given the number of motor manufacturers involved in Formula One capping spending was not a realistic proposition, however superficially attractive it might be.
There was a big difference in budgets, but they had to be cleverer with their money, the spokesperson said.
"As we are a smaller team we are more able to take quick decisions ... if the decision making process is poor and subsequent execution inefficient no amount of money will make you competitive."
The top teams do not like to talk about their budgets and, while some privately generally support the idea of a limit, they will fight hard to set the spending bar high.
Moreover, some fear a cap will harm the sport's development -- removing its drive for innovation and creativity -- and that changes will be impossible to police.
Critics also believe rules introduced in recent years to level the playing field -- the move to a single tires supplier and using engines for multiple races -- have had the opposite effect.
Mosley has warned that if a majority of the teams do not agree to the FIA's proposals by July, funding levels will be set for them.
It is the finish line a number of the teams will not want to cross.

Article from CNN.

1 comment:

Bikram Aditya said...

Nice one from a real Formula 1 savvy