Friday, October 31, 2014
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Formula One urged to cut costs as teams fail

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[October 31, 2014]  By Alan Baldwin
 
 AUSTIN Texas (Reuters) - Sauber principal Monisha Kaltenborn has urged Formula One's decision makers to act in the sport's best interests and tackle a looming crisis after two teams went into administration in the space of a week.

Speaking after the governing FIA said the predicament of Marussia and Caterham showed the need for cost-cutting measures, Kaltenborn said she was 'beyond frustration' with how the situation had developed.

"It's one thing to just talk about this terrible scenario that some teams are not going to be there but for the sport and the people responsible for the sport to have let it come that far is extremely disturbing," she told reporters at the U.S. Grand Prix on Thursday.

"Some stakeholders and people are just not willing to understand where the problem lies," added the Indian-born principal, whose own Swiss-based team is facing considerable financial challenges.

"What we really need to look at, and we as a team have been saying for so long, is you have to get the figures right in the sport. I think it's a real shame that we have turnovers of billions of dollars and as a sport, as a community, we are not capable of making sure that 11 teams survive."

Formula One has annual turnover in excess of $1.5 billion but more than half that goes to the commercial rights holder, with private equity group CVC the largest shareholder.

The teams share some 47.5 percent but only the top 10 get a share of the prize money and payments are based on performance and vary considerably.

ECONOMIC BALANCE

Former FIA president Max Mosley warned this week that more teams could go bust unless the revenues were shared more equally to ensure all could compete.

The FIA issued a statement on Thursday questioning the "economic balance" of the championship and pointing out that it had warned repeatedly of the need to cut costs.

Caterham and Marussia, both tail-end teams, are absent from this weekend's race in Austin and in danger of folding completely due to considerable debts.

That leaves just nine teams and 18 cars, the lowest at a race weekend since 2005.

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The FIA announced last year that it wanted to introduce a cost cap in 2015, but in April the governing body's president Jean Todt said the plan had been scrapped because the leading six teams, who form part of the decision-making F1 strategy group, were opposed.

Todt said then that the governing body could not impose a cost cap and measures would have to be introduced instead through the sporting regulations.

Commercial supremo Bernie Ecclestone has given both teams dispensation to miss races while they try to find buyers. The Brazilian Grand Prix is the weekend after Austin, with Abu Dhabi the final race later in November.

Teams that miss races are, however, in breach of contractual obligations to compete in the entire championship and also forfeit prize money payments.

The FIA said stewards had decided that both teams were in breach of the regulations but had decided not to impose any penalties due to their financial circumstances.

Germany's Nico Rosberg, who is challenging Mercedes team mate and championship leader Lewis Hamilton for the title, said the human aspect of the crisis must not be ignored.

"It's a very negative impact, mainly for the people who are working at Caterham and Marussia. That is the most important part of all this, for their families and everybody that's tough. That's the worst part."



(Reporting by Alan Baldwin, editing by Toby Davis/Greg Stutchbury)

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