The Japanese team is the first victim of the credit crunch currently squeezing the sport. While the FIA is expecting a few more outfits to be grounded, most of the teams are putting on a brave front. By Matt Scott and Alan Henry.
The chief executive of the Formula One team, Williams, has denied suggestions that his outfit could be next to succumb to the credit crunch squeezing the sport following Honda’s exit.
Williams is the largest of the independent manufacturers and has remained steadfastly so. An association with BMW ended after the German motor corporation’s takeover attempt was rebuffed by the team’s founder, Sir Frank Williams.
With 500 direct employees, the team that made Nigel Mansell and Damon Hill world champions has a large staff base. According to a source in the Formula One Teams Association (FOTA) industry group, that size of independent operation has become unsustainable in the current market.
“The minute they took the decision (not to sell to BMW) they made it very difficult for themselves,” the source said.
“They’re opposed to the custom-made car regulations when it should be good for them as they are an independent team. They say they are proud to build their cars themselves.”
Williams are sponsored by the RBS bank which is looking to rein in its sponsorship deals. RBS said recently that sponsorships were “reviewed on a regular basis to ensure they are aligned to our business objectives.”
Adam Parr, the team’s chief executive, said: “Williams puts together a budget from a variety of sources based on our estimation of what we will need to go motor racing in a particular year. Most of our sponsors are on multi-year deals; we are currently in the position of having well over 90% of our funding in place for next year.”
Parr said there was no similarity between his organisation’s position and that of Honda. “The decision that Honda would stop Formula One was taken by their main board of directors in order to focus on other areas of their business. Williams exists solely to race in Formula One; that’s what we do and there is no question of the team’s owners, Frank (Williams) and Patrick (Head), thinking, ‘Oh, we’ll stop Formula One and do something else’.”
Toyota and Renault may also be vulnerable, given that they are car manufacturers like Honda, suffering a downturn in the market, and Max Mosley, president of the world governing body, the FIA, predicted that “one or two” more teams could collapse.
Toyota, one of the sport’s biggest spenders with an annual budget in excess of $400m, was thought to be the next most likely team to review its Formula One programme. But, with an announcement on new sponsorship expected next month, it said it intended to continue.
“Honda’s decision is a pity for us as a Japanese team,” said a Toyota spokesman. “However, Toyota is currently committed to succeeding in Formula One and to reducing our costs. We are contributing to the FOTA activities (negotiations between the teams and the governing body over new regulations) which will achieve significant cost reductions while maintaining the spirit of the sport.”
Renault, another said to be feeling the pinch, did not return calls but other teams asserted their confidence in the future of Formula One. Martin Whitmarsh, chief operating officer of McLaren, which is 40% owned by its engine supplier, Mercedes-Benz, led the defence.
“Clearly, in the current economic climate, Formula One faces a significant commercial challenge,” he said. “But, on a positive note, FOTA’s meeting in London (December 5) was very constructive. Acting together in the context of FOTA, the teams will continue to work hard to adapt the cost structure of the sport.”
Bernie Ecclestone, the sport’s commercial rights holder, said the Formula One would survive, although Honda’s decision to quit will give added urgency to the need for cost reductions. “I think Formula One is in no bigger crisis than any other company throughout the world,” the 78-year-old said. “The world is in crisis at the moment, but it won’t stop. Everyone has been working like crazy to reduce the necessity to spend to be competitive.
“Even yesterday (December 5) there was a meeting of the technical people to change the regulations in order for this to take place, and I have no doubt that there would have been a drastic reduction in the cost and the necessity to spend to be competitive — which is what we’ve been trying to do.”
How they fareFERRARIAnnual budget: $450mBase: Maranello, ItalyWell resourced and very well funded, the Formula One gold standard. Commercially close to being bullet-proof.
Security rating: 100%McLARENAnnual budget: $440mBase: Woking, UKStands shoulder to shoulder with Ferrari in the viability stakes, 40% owned by Daimler, the parent company of Mercedes.
Security rating: 99%BMW-SAUBERAnnual budget: $400mBase: Hinwil, SwitzerlandLean and efficient, wholly owned subsidiary of the famous Munich-based carmaker.
Security rating: 90%RED BULL RACINGAnnual budget: $370mBase: Milton Keynes, UKUses Renault customer engines but has no direct motor industry link. A promotional tool for the Austrian drinks company.
Security rating: 75%SCUDERIA TORO ROSSOAnnual budget: $200mBase: Faenza, ItalyRed Bull’s second team, which sprang from the remains of the former Minardi squad.
Security rating: 75%FORCE INDIAAnnual budget: $140mBase: Silverstone, NorthamptonshireStarted life as Jordan Grand Prix in 1991, has since had three other owners. To be bolstered in 2009 by technical partnership with McLaren.
Security rating: 75%RENAULTAnnual budget: $330mBase: Enstone, OxfordshireWholly owned offshoot of France’s national carmaker which prides itself on a lean management style. Potentially vulnerable if car markets shrink further.
Security rating: 70%TOYOTAAnnual budget: $500mBase: Cologne, GermanyWell funded and technically strong, but yet to deliver on potential after six years in the sport. Vulnerable, as linked to road car manufacturer.
Security rating: 70%WILLIAMSAnnual budget: $200mBase: Grove, OxfordshireThe most fiercely independent of all Formula One teams with a lean and focused management style. Wholly owned by Frank Williams and Patrick Head.
Security rating: 70%© Guardian Newspapers Limited 2008
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