Formula One calls crisis summit in Monaco to thrash out cost-cutting proposals

[TheStig]

This being Formula One, crisis meetings take place in Monaco. The sport's ruling body, the FIA, host their gala dinner in the Principality on Friday, where Lewis Hamilton will be presented with his first world drivers' championship.

Before the icing is put on that cake, an awful lot of cream will be stripped from the sport in the wake of Honda's shock departure. The F1 World Council meets the day before to hear a raft of cost-cutting proposals, and team owners are to convene independently to thrash out plans for a greater share of prize money.

The teams share approximately half of the £500 million annual profits generated by F1. The greater part of that dividend accrues to the teams at the top of the grid. Any new initiative will see the lesser players taking a greater proportion.

The teams, led by Ferrari president Luca di Montezemolo, have the backing of FIA president Max Mosley, who said: "The FIA would join with FOTA (Formula One Teams Association) in seeking to persuade FOM (Formula One Management) to divide the prize money so that up to 12 teams are guaranteed at least $50 million (£34 million) each. This would ensure a full grid with a strong possibility that new teams will enter the championship, filling vacancies."

Commercial rights holder Bernie Ecclestone, who, along with the sport's majority owners CVC Capital Partners, controls the purse, will seek to put money in the pockets of the teams by making inroads into the costs of competing rather than his takings.

Di Montezemolo said: "In the short run we'll organise a meeting with Max Mosley to present him the details of our proposals. Furthermore it's necessary to meet with Bernie Ecclestone to talk about the distribution as far as the earnings are concerned."

Mosley has expressed fears that Honda will not be the last to evacuate the pit lane. Jacques Villeneuve cheekily suggested that Honda's retreat was not motivated by the credit crunch but by the failure of the team to deliver value for money. One win in a rain-affected race since taking ownership of the team from BAR three years ago has done more damage to Honda's bearing than the economic downturn, which in his view is a convenient excuse.

Be that as it may, the imperative to slash the cost of competing is advocated universally. McLaren, whose budget last year was only a tad shy of £300 million, second only to Toyota, aim to reduce their spend by more than a third next year.

Speaking before Honda announced their intention to quit, McLaren co-owner Ron Dennis said: "We know we have to reduce our costs to cater for the inevitable downturn in income that is coming in 2010 and 2011.

"We predict that our turnover will drop to as low as £175 million a year. Our budget comes from the advertising budgets of the companies that support us, and inevitably advertising budgets get slashed or, at least are significantly trimmed in times of economic strife."

Attention over the next 48 hours remains focused on Honda's negotiations to acquire a buyer for the team. Honda have pledged rudimentary support for a further three months to give team principal Ross Brawn and chief executive Nick Fry an opportunity to strike a deal.

Speculation yesterday linked a consortium from Dubai, though the financial integrity of Dubai Investment Capital is thought to be threatened by the downturn in the economic prospects of the holiday destination. Brawn spent the weekend pursuing another avenue, which was expected to yield a definitive answer by Monday.

A staff of 700 await positive signals from the Honda headquarters in Brackley. Any solution will inevitably result in job cuts, a development that will spread to all the teams in the pared-down reality that looms.

There cannot be many stranger sights in sport than a quorum of multi-millionaire team owners passing the begging bowl around the Monaco waterfront. That, effectively, is the scenario in the Principality this week.

F1 has been living beyond its means for too long. Reality is forcing a savage correction. With wheel-nuts costing £800 a throw, none can argue it wasn't coming.

Money pit: How Grand Prix teams run up bills of £280m a year

Unit cost of individual components on the car:
Engine £600k (annual bill £36m)
Gearbox £750k
Chassis £700k
Telemetry (engine mapping) £125k
Steering wheel £50k
Brakes £50k
Wings £25k
Fuel tank £15k
Exhaust £10k
Tyres (per set) £10k (annual bill £6m)
Pedals £2k
Wheel-nuts £800

http://www.telegraph.co.uk/sport/motorsport/formulaone/3659982/Formula-One-crisis-meeting-in-Monaco-will-thrash-out-cost-cutting-proposals-Formula-One.html

TheStig

[cosworth151]

£800 for a set of 4 wheel nuts? These teams must have the same procurement system as the Pentagon!

[Steven Roy]

Every time you read an F1 price list it just looks more and more stupid.