F1 prepares to tighten its belt

LONDON, England (CNN) -- As the global economic crisis deepens, Formula One is starting to feel the pinch.


Toro Rosso boss Gerhard Berger wants F1 to be more tight-fisted as the global economic problems start to bite.

The sport's lavish image is in stark contrast to the belt-tightening going on in the outside world.

Many in F1 are well aware that the sport will have to make changes to how it does business to ensure it emerges from the credit crunch mostly intact.

Super Aguri, even with the might of Honda behind them, failed to make ends meet and folded after just 39 races earlier in the year.

But for Eddie Irvine, Michael Schumacher's team-mate at Ferrari from 1996-99, financial problems might work in F1's favor -- particularly for the grid's also-rans.

"Everyone is selling a lot less cars and these are the guys who are paying for F1," the Ulsterman told Sky News.

"The sponsorship deals are subsidized by car manufacturers. You're going to see spending [cut] back and it has to [be cut] back because it has been madness for years.

"It will be good for F1 because it will level the playing field off a little bit. Money hasn't made the show any better, it has made it worse."


Whether the show is better or worse because of money is debatable. There are many factors determining the quality of the product and after the second shock winner in two races at last weekend's Singapore Grand Prix, the argument for F1 being in rude health spectacle-wise is a convincing one.

What is not debatable is that F1 needs money -- there is no more cash-hungry sport around.

As is the way in any business, the haves, such as Ferrari and McLaren, are best placed to weather any financial storm.

There are no have-nots in F1, not with budgets that run into the millions of dollars. Independent teams such as Williams have a reported $160.6m to play with each season, while Toro Rosso have to get by on $128.2m.

But Toro Rosso and Williams are not operating in the same ballpark as McLaren or Ferrari. They lack the backing from a car manufacturer, meaning they have to buy engines, compromising them in other areas.


Red Bull-funded Toro Rosso have been up for sale all season, but no buyer has yet been found. The team's future is further clouded by the fact that from 2010 it will only be allowed to compete in F1 with a car that is designed and built at its own factory.

At the moment, Toro Rosso's machinery is designed at Red Bull Racing's facilities in the UK and their chances of building on Sebastian Vettel's incredible win at the Italian Grand Prix last month depends on them finding a buyer with deep pockets.

"I would struggle to carry on alone [without Red Bull]," Toro Rosso co-owner Gerhard Berger told La Gazzetta dello Sport.

"I need the backing of a car manufacturer, which isn't there."

Williams lost BMW as its engine partner at the end of 2005 and the following year they made a $49.5m net loss as revenues dipped 30 percent to $102.6m when IT firm Hewlett Packard also ended their sponsorship deal.

And new sponsors, as well as stay-away car manufacturers, are part of the problem as far as Berger is concerned.

"I think it is going to be difficult times, no question, and if you look at new sponsors coming into Formula One, it is very seldom, especially the big ones," he said.

"As I see it, it is not going to be easy the next two years. I think it is going to affect all of us."

A spending cap is to be introduced for 2009 for all outgoings bar engines (for which cost-cutting measures are already in place), marketing and PR and the salaries of drivers and team principals.

And, it might be said, not before time. The combined costs of all UK-based F1 teams rose by $39.4m to just over $1bn in 2006.

This level of spending could soon be considered a glaring anachronism. Red Bull Racing boss Christian Horner believes the teams and the sport's governing body, the FIA, must keep a lid on expenditure.

"The global economy at the moment isn't in great shape and it affects all areas of the pit lane," he said.

"It is down to the teams to work collectively with the governing body to make sure that we are responsible in what we do to control our costs."