F1 agrees to ‘significant’ cost cuts next season

By Grant Clark and Alex Duff, Bloomberg

NEW YORK/MADRID — Formula One’s teams and ruling body, bracing for the fallout of the global financial crisis, agreed to “significant” cost savings from next season.

The most-watched motor sport will also “urgently” explore further proposals to reduce expenses, the teams and the Federation Internationale de l’Automobile said in a statement after meeting in Geneva Tuesday.

Max Mosley, the federation’s president, is targeting costs and has described the US$1.6 billion teams spend annually as “unsustainable.” His plans have gained impetus because the financial meltdown is threatening the future of smaller teams. The meeting produced “significant costs savings for 2009 and 2010,” the FIA and Formula One Teams’ Association said in a statement, without giving details. “FOTA are working urgently on further proposals from 2010 and thereafter.”

According to autosport.com, the new measures include increasing engine life to three races from two races in 2009; manufacturers making 25 engine units available to smaller teams at a cost of 10 million euros (US$13 million); holding a meeting at the Brazilian Grand Prix to settle testing limits for 2009 and reach an agreement on energy-recovery systems for cars.

The same parties will also get together after the Nov. 2 season-closing race in Brazil to discuss savings related to chassis development, autosport.com added.

The 10 teams were represented at Tuesday’s meeting by Fiat SpA Chairman Luca di Montezemolo, who oversees Ferrari, and Toyota Motorsport President John Howett.

The FIA is making a fresh effort to rein in spending by teams owned by carmakers, including Renault SA and Bayerische Motoren Werke AG, to prevent the smallest competitors folding or withdrawing from the sport.

“Even before current global financial problems, teams were spending far more than their incomes,” the FIA said in a note before the meeting. “As a result, the independent teams are now dependent on the goodwill of rich individuals, while the manufacturers’ teams depend on massive hand-outs from their parent companies. There is now a real danger that in some cases these subsidies will cease.”

The FIA has been pushing for cost savings since 2003, when the Grand Prix grid was reduced to 10 teams — the lowest number since 1971. Super Aguri swelled the field in 2006 only to go out of business after four races this season, leaving the sport with two vacancies.

After eliminating some driver aids in 2003 and freezing engine specifications this year, the ruling body is seeking to introduce standardized engines from 2010.