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Alarm bells have been ringing for weeks over whether the sport can survive in its current format before key talks between the FIA governing body, Formula One chiefs and the 10 teams taking part in the circuit.
“The crisis is the last wake-up call for a sport that was not healthy and was not sustainable and had reached a point where we need drastic changes,” McLaren team principal Andreas Seidl told reporters at the eve of the conference.
Formula One financial storms
Formula One, motorsports most expensive luxury brand, has withstood financial storms before. Following the 2007-2008 crisis, manufacturers BMW, Honda, Toyota and Renault resigned. In 2009, the French Grand Prix was canceled and the Toyota-owned Fuji Circuit in Japan was withdrawn.
But Formula One cut costs and recovered.
This time, the blow to sport and the global economy is more difficult and sport may be less equipped to deal with it.
Two races (Australia, Monaco) have been canceled, seven (Bahrain, China, Vietnam, the Netherlands, Spain, Azerbaijan, Canada) have been postponed and the last rounds, starting with the French Grand Prix on June 28, are in doubt.
Moody’s downgrade
Ratings agency Moody’s downgraded Formula One, owned by US group Liberty Media, in early April, but said it felt the sport could survive a lost season.
“Formula One has strong liquidity and a cost base that is flexible enough to manage during a severely restricted 2020 season,” Moody’s wrote, adding that F1 “It could probably handle a complete cancellation.”
The leadership of the sport is not ready to rule out this season.
“If we could start in early July, we could do a 19-race season,” Ross Brawn, F1 managing director, said on April 8.
Brawn said that under FIA rules “eight races is the least we can have a world championship.”
“We could get eight races starting in October. So if you wanted a standstill, it would be October. ”
Sponsors May Rethink Future Participation
The image is different for teams.
Even those with wealthy sponsors, such as Renault and Daimler (Mercedes’ parent company), could rethink their future involvement in F1.
The uncertainty increases because the commercial and government agreements for the next season are still being negotiated by the FIA, Formula One and the teams.
One problem is lowering the spending limit, which is currently $ 175 million per team.
McLaren’s Seidl says the impact of the coronavirus pandemic remains unknown, but Formula One needs to assure its sponsors that it can withstand the blow.
“With all the financial losses we will face this year and the magnitude is still unknown because we don’t know when we will compete again, it is important that we can show our shareholders that (whatever) this year’s losses are, you can make up for it in the coming years. years “.
Reduce the spending limit
The spending limit “will be lowered,” FIA President Jean Todt told AFP on April 9.
“Motor racing, starting with F1, is too expensive,” he said.
“But the pandemic is making it harder to cover these costs. There is a risk of losing equipment and manufacturers. “
Alpha Tauri’s Franz Tost said his team would lose between $ 1.5 million and $ 2 million (between 1.35 and 1.8 million euros) per race.
When asked if he could see the teams sinking, McLaren CEO Zak Brown told the BBC: “I could see four teams disappear if it is not handled in the right way.”
He added that it could be difficult to replace any equipment that was retired
“Given the time it takes to build an F1 team, and given the economic and health crisis … to think that there would be people lined up to take over those teams as there always has been.”
“I don’t think the timing could be worse from that point of view.”
However, Seidl was optimistic that the crisis could accelerate the sports reforms his team needs.
“We have a good sport,” he said. “I hope we can get out of this crisis with Formula One in better shape.”
– By Raphaëlle Peltier © Agence France-Presse
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