F1 to weather Market Crisis

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The recent meeting between FOTA and the FIA has born some fruit as to the direction F1 needs to be heading in order to stave off financial disaster in the looming world recession. In an interview by Autosport, Williams CEO Adam Parr shared some insight as to his feelings regarding the recent meeting and F1’s ability to stay afloat as well as the future of Williams F1.

RBS, ING, Baugar Group and many more are feeling the tightening of the financial markets and seeking government assistance. AIG recently acquired government salvation only to host a retreat for more than $440,000 which was met with outrage by taxpayers and government officials. The message here is that if these institutions are being bailed out with taxpayer money or government money, it is not business as usual. Things have to be cut and many may see the F1 investments as the first things to go.

The sponsor model is alive and well but like many things attached to the economic fortitude; it will ebb and flow. Adam has plainly stated that Williams are facing difficult times and pay particularly close attention to his comments regarding the spec engine concept. I find it intriguing that he declined comment. The bigger issue here is the Engine freeze, which F1B was strongly against, and how it has stained F1’s ability to remain competitive and effectively frozen all teams into spending huge amounts of money on an engine, that when frozen, cost a fortune. Instead of seeking a more cost effective engine solution and then freezing that model.

“We are not commenting on that (the standard engine proposal), but Williams’ view is that we have to cut costs as a sport. That view is shared by almost everybody else.

“The single biggest cost for an independent team or manufacturer is the engine, so we have to do something about it. When we froze the engine for five years it was a massive mistake, a massive mistake. We froze a very expensive engine, and the thinking at the time was that it was not a performance differentiator and therefore you could freeze it. Subsequently it turned out that maybe it was a performance differentiator, or it has become a performance differentiator, and therefore you cannot have a frozen engine.

“All but one of the manufacturers has said that opening up an engine for a development war is not feasible, because they have not got the money or appetite to do it. So what are you going to do? If you cannot race for competition for the engine then you have to have an engine that is not a performance differentiator.

“What is the point in having an engine that is not a performance differentiator that costs an unfeasibly large amount of money? What is the point? It will be like spending 100 million Euros a year on tyres when we all have the same tyres. What is the point? Williams’ view is we don’t know what the right solution is, but clearly you have got to start with the engine.”

Again, Max’s words that F1 is unsustainable is fine. Max’s solutions are not. Spec tire, engine, freeze, KERS, Spec engine, standard ECU et. al. None of these initiatives have proven to be the savior of F1 or increase passing (the red herring argument against F1) and it remains to be seen just what the radical changes for 2009 will bring. I suggest that they will be more pragmatism from Max that only exacerbates the situation rather than solving it. It seems Max’s motive.

Working in a industry that has been speeding downt he road toward ‘green’ initiatives, I can tell you that the ‘green’ movement has become more than just planet management; it is a business with endowments worth millions for professors, millions infused into the architectural world, training and LEED certification. An industry created from guilt and fear of earth damaging activities that are not all supported factually or empirically. Having said that, the ‘green’ F1 initiatives that Max is so desperate for may meet their end with the world recession. I have already experienced entire building projects that were going to be LEED certified changed to standard buildings as the entire ‘green’ process costs significantly more than standard construction. Where am I going with this? The FIA position that F1 should be ‘green’ is a money cost not a money saver and when the economy is heading down, this may be the first thing to go. Then the sponsors and then the teams.

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