I’m sure all of you are very familiar with how the current economic climate has been a plague to the very expensive Formula One sport. It’s not just teams that have folded (and resurrected), but some of F1’s biggest sponsors such as the RBS and ING have been shying away from the sport because they want to cut costs and disassociate themselves from F1’s image of lavish spending, which is seen as irresponsible in the current times. F1-related but not direct team-related expenditure by carmakers have also been cut, for example BMW used to host a party with its own grandstand, bar and restaurant area for up to 400 clients at the Australian GP that costs it over US$630,000 a year but this year there will be no such thing.
After Honda left, Toyota stayed on but had its budget cut over and over and over again. It is said that if Panasonic had not signed the sponsorship deal for 2009, they would have pulled out. To hopefully prevent even more teams from falling out of the race because of cost issues, the World Motor Sport Council recently announced an optional budget cap of £30m a season from the 2010 race season onwards.
Thus you can either spend your way to victory or innovate your way to victory. There is this saying by the late David Keith Duckworth, a mechanical engineer who designed the Cosworth Double Four Valve engine (once an F1 standard): an engineer is someone who can do for one dollar what any idiot can do for a hundred dollars.
It’s not just the teams and the sports itself. Venues are taking the hit as well. In Europe, F1 fans are deciding to stay at home and watch the race instead instead of buying tickets and experiencing the race first-hand. The Belgian GP back in September last year took a big loss hit of US$4.9 million, and it only had 52,000 spectators, which is 10,000 less than 2007 figures.
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