Is There Actually a Money Problem in Formula One?

Earlier today, the FIA issued a statement regarding the meeting with FOTA in Geneva:

“Today’s meeting in Geneva has produced significant cost savings for 2009 and 2010. FOTA are working urgently on further proposals for 2010 and thereafter.”

Wow. Whole wealth of information there. For all we know they sat around a table picking their noses all day.

And that's what some people seem to think. There are many out there who beleive there is no problem with the costs involved in Formula One and that the FIA is just blowing smoke to try and make themselves look better after Spanky got in trouble.

There's no doubt that F1 has become horridly expensive, and that the rise in costs is due in part to the FIA's frequent changing of the technical regulations. But constant rule changes would have little effect if the costs of R&D, materials, and construction weren't so high in and of themselves.

If NASCAR changed its technical regulations every year, it wouldn't be very costly. After all in NASCAR, the teams would likely just be able to take a hammer to the existing body to change it. But even if they had to build all new pieces, the additional costs would be minute just because of what materials they use and how they shape the pieces.

There's a reason NASCAR's financial concerns are solely due to the poor economy right now.

But lets get back to F1. After all the problems the FIA has caused F1, why should we beleive them when they claim Formula One's costs have become unsustainable in the long run? After all, they DID contribute to the problem, and maybe they're just blowing it out of proportion so they have an excuse to find a way to fix it.

I believe the FIA. I believe the costs either are, or will soon be, unsustainable. Why do I believe them? There's only reason I believe them...

ALL OF THE F1 TEAMS ARE SAYING THE SAME THING.

The teams know better than you, I, and even the FIA how bad costs are getting. If THEY say its becoming unsustainable, then its more than likely becoming unsustainable.

So what can they do? Well, the only thing that CAN be done is change the technical regulations.

But wait, hasn't that contributed to the rise in costs? Yes, but it can also fix it. And that's where FOTA comes in.

FOTA knows more about what will and will not save money than the FIA does. They're the TEAMS, after all. Their input can help structure regulation changes that will REDUCE costs in the long run.

Any regulation change will force usage of a larger team budget the season of its implementation. The question is how will it change things in the long run?

The FIA's original idea of standardizing specific engine components was a good one, it would decrease costs while keeping in F1's true spirit, but the full-standardized idea they've suggested since then is poor.

It would certainly save money, but a standardized engine does not belong in Formula One, even if you let all the manufacturers build their own engine. Even with them all being forced to follow the same plans, some manufacturers would do it better than others, and the standardized engine would lock out some manufacturers from building a competitive engine.

A fully standardized engine is a good, simple way to save money. But it has no place in F1 and would destroy it in the long run.

The FIA did suggest two rather good ideas, however: Lowering the costs of customer engine deals, and standardizing certain car pieces.

Yes, it was noted that there are several parts of F1 cars which cost mcuh money for each team to make, but which offer no real performance benefits. Standardizing these parts would be a good way to help, but its impact might be minimal.

But I'm rambling. This here isn't really supposed to be a look at ways to cut costs, its just supposed to take a look at the matter and figure out if there really IS a money problem in F1. I say there is. And I say steps need to be taken.

Everyone will disagree on what needs to be done, but lets all remember that FOTA understands the problem better than any of us. If they think it will work, its more than likely to work than anything I've suggested.

It would help if the Axeman would be willing to cut his profits to give more money to the teams, but I'm not convinced that would do enough.

If you'd like to discuss cost-cutting measures and improvements in F1, please refer to my Four Ways To Improve Formula One article and discuss it there. I'd like to limit discussion here to the financial aspects of F1(and other forms of racing, for that matter)