F1 financial crisis

Hi all

This is an interesting article I read recently on F1 and how the financial crisis actually affects F1. This is a more interesting approach to economics and even though this article might not be applied to our syllabus, it would also be useful to understand the extent to which the economic crisis has affected the various sectors in the economy.
Thanks.

Ferris


Mosley warns of F1 financial crisis

LONDON: Formula One will only survive for one more year unless drastic spending cuts are implemented, FIA president Max Mosley warned on Tuesday.
Mosley, who is to stand down next year, said the sport's future was under threat because of the rising costs of running a team, and he highlighted the fate of the Super Aguri team.
The Japanese outfit dropped out of the championship after the Spanish Grand Prix due to a lack of funds - and Mosley fears at least two more teams may also have to withdraw from the championship.
"I think it would put the sport in an unsustainable position if we lost two more teams," Mosley told BBC Sport.
"At the moment we have 20 cars competing and if we lost two teams we'd have 16 and then it would cease to be a credible grid.
"Some of the manufacturers are already having difficulty if you look at their share prices."
Mosley insisted the sport could not afford to survive on billionaires' handouts and must become more cost-effective if it is to survive - regardless of the current financial climate.
"This hasn't been prompted by the credit crunch. This is something I have been campaigning for for two or three years.
"It had become apparent long before the present economic difficulties that Formula One is unsustainable.
"If we can't get this sorted out by 2010 we will be in serious difficulty. We can survive through 2009, but I'm not to sure about after."
He added: "You cannot run a business like that when the outgoings are two to three times what's coming in. It now depends on billionaires subsidizing teams."
Mosley said simple cost-cutting measures would help the sport survive, even with the enormous financial clout that Ferrari, McLaren and BMW are able to wield over their competitors.
"There are various things we can do. The most obvious one would be to reduce the cost of the car," he said.
"The engine and gearbox costs about 25 million pounds ($44 million) a year and that could be done for probably 5 percent of that cost without anyone in the grandstand noticing at all.
"We have various means of making sure the big spenders don't spend so much, but that would mean some draconian measures."

Source: http://www2.chinadaily.com.cn/sports/2008-10/09/content_7090169.htm

Linked articles:http://edition.cnn.com/2008/SPORT/10/03/economy.formula.one/index.html