Monday’s announcement that Silverstone has agreed a 17-year deal to host the British Grand Prix from 2010, thus ensuring the venue is not replaced by Donington Park, will come as welcome pre-Christmas news for the sizeable army of F1 fans.
Formula One Management (FOM) concluded that Donington’s owners had failed to convince them they had the necessary £135m funding with which to upgrade facilities and make it the nation’s principle motor racing venue.
Instead, Silverstone will pay an annual rights fee of £12 million to stage Britain’s grand prix, a sum scheduled to increase by 5 per cent per annum, though a ten-year break-clause has been agreed upon by both parties. It means that Silverstone’s minimum commitment will be a shade over £150 million between now and 2020.
While Formula One’s usual suspects were wheeled out to comment on how wondrous the deal is and how it guarantees a British grand prix for years to come, perhaps a more pertinent point is: will any teams be able to afford to compete in F1 by 2027?
If that sounds overly alarmist, consider the involvement of Japan, the world’s pre-eminent car-making nation and that of its car manufacturers.
In the 12 months since Honda quit F1, Japanese manufacturers have all but disappeared from world motorsport.
Economic circumstances, which this year accounted for Toyota’s first net loss in six decades, have underpinned the decisions of companies such as Mitsubishi, Suzuki, Subaru and Kawasaki, to opt out of motor racing. Last month, Toyota, which failed to win a race in eight F1 seasons and which spent more than $450 million limping into 5th place in last year’s F1 manufacturer’s championship, decided enough was enough. It too will terminate all grand prix involvement.
After spending an estimated $2.5 billion on F1 since 2001, the sport’s usefulness to Toyota has declined dramatically. Indeed, that it stuck with F1 for so long is remarkable. Attendance at this year’s Japanese grand prix was 40 per cent lower than in 2008, television audiences are falling, while today’s car buyers are more interested in fuel efficiency than raw power.
The same factors persuaded BMW to announce in July that it was to quit F1 at the end of the season, while Renault is presently understood to be giving serious consideration to its future involvement. The French car-maker spent $393.8 million (£246m) on last year’s Formula One campaign despite reporting a 2008 operating loss of €275 million (£262m) in February. The company has scrapped its dividend and bonuses for all staff and slashed its capital spending and research and development budgets by 20 per cent.
Renault’s car division lost €873 million (£831m) in the second half of last year as sales collapsed in the final three months when it cut production by 45 per cent.
The company’s fragile financial state resulted in the French government bailing it out to the tune of €4.4 billion (£4.19bn) while rejecting charges that it was being protectionist. Against such a backdrop, heavy expenditure on motorsport is increasingly difficult to justify.
It’s not just Renault feeling the pinch: in the space of 18 months, global car sales have fallen from 70 million to 50 million, a statistic which explains the decision of F1’s exclusive tyre manufacturer, Bridgestone, another company headquartered in Tokyo, to withdraw from the sport at the end of 2010.
The company’s accounts provide ample evidence for the decision: in the first three quarters of 2009, Bridgestone’s sales were down by 25 per cent, while its operating income plummeted by a staggering 90 per cent.
Significantly, in a note to its consolidated financial statements, Bridgestone announced it was implementing a range of initiatives, which include the development of “eco-friendly products and businesses”. Formula One’s roaring engines and luxury-class imagery hardly fit with such a strategy.
But if prohibitive expenditure and Formula One’s less-than-green image has been enough to persuade hard-hit manufacturers to quit (or think of quitting) the sport, then its Byzantine politics continue to test the resolve of even its most dedicated corporate supporters.
Into this smouldering world of incomprehensible sums of money and political shenanigans that would have shocked Machiavelli, next season come three newcomers and one returning F1 team, an influx of new blood which suggests there are plenty of companies prepared to have a tilt at achieving grand prix glory, irrespective of how much it costs.
The Malaysian-funded Lotus return for the first time since 1994, having been awarded the final grid spot and join Campos GP, Manor and US F1 as one of four new teams for 2010.
Ferrari has, rather sniffily, already doubted each team’s F1 credentials and questioned how many of the new quartet will make the starting grid for the first race of the 2010 season.
It’s a fair bet that all four will, though how many will make Silverstone’s race on July 11 is debatable; the size of the live television audience is likely to be further depressed that day as it coincides with football’s World Cup final. Whether Silverstone attracts a full house on the first day of its 17-year run as an F1 venue is even more questionable, though in this instance, organisers will have an excellent excuse if they do not. It is, however, only usable once.