A flurry of sponsor exits raises grave questions for F1, writes
JUSTIN HYNES
ANOTHER SEASON finale, another manufacturer exit. While Toyota's exit from the Formula One stage last week didn't have the shock value of Honda's withdrawal last year - Toyota had indicated at the start of this season it would constantly review its situation - the team's signing of F1's Concorde Agreement which bound it to race next year seemed to offer concrete hope that it was committed to the ailing sport.
Contracts in F1, though, are flimsy things, and as the team prevaricated over announcing a driver line-up for 2010 and mutually ended its customer engine deal with Williams, the portents were easy to see.
The decision is easy to understand. In 2008 Toyota lost $4.74 billion (€3.16 billion), its first operating loss since 1937. This year it's predicting a loss of $8.3 billion. Splurging some $300 million a year on what is seen in some quarters as a vanity motor racing project was unsustainable, especially in light of the fact that after 139 races the team failed to win once and landed just 13 podium finishes.
The withdrawal comes after those of Honda and BMW, along with tyre supplier Bridgestone announcing it will say farewell at the end of next season, and wavering commitment from Renault, whose chief executive Carlos Ghosn ominously revealed last week that a decision on involvement will be made by the end of the year. The big question is, what do all these factors say about the health of Formula One?
The answer of the hopeful is that F1 will move on regardless, that this is simply another example of F1's umbilical attachment to the macro-economic cycle of boom and bust.
To some degree this is true. Formula One has often mirrored events in the global economy. As recently as 2001, the events of September 11th caused seismic shifts in global markets, shockwaves felt most acutely by major sponsors, who deserted the sport in droves. In no small way the post-9/11 shudder was responsible for the collapse of two of Formula One's grid regulars, Jordan and Arrows.
Waxing and waning of involvement has been a feature of the sport since its inception under the modern formula in 1950. Maserati, Lamborghini, Peugeot, Jaguar, Honda, Renault and BMW - all have serially dipped toes in the waters at some point, before retreating when they found the economic climes too chilly.
The optimistic view is that the current switch from heavy manufacturer involvement to a more cosy era of privateers will press the reset button, and that Formula One will absorb the blows with the facility it has always done - chasing new avenues of financial support, new markets and new riches.
That optimism fails to take into account the model Formula One has established over the past 15 years. In the days of privateer dominance, the sport simply replaced like with like - one dilettante's franchise being snapped up by another playboy toying with the world's biggest slot cars.
Formula One is a different animal now. It is a sport grown cumbersome and complacent at the table of manufacturing giants. On the back of those riches it has ventured far from its viable homeland and greedily asset-stripped territories whose own late-1990s economic miracles allowed it to price core arenas out of the market.
Ever larger sponsorship deals, struck on the back of tie-ins with cachet-rich names such as BMW and Ferrari, have inflated the F1 bubble to proportions it is unlikely to sustain in its leaner new guise. This point was made viciously clear by Ferrari in response to the Toyota exit, after the FIA indulged in a traditional piece of self-aggrandisement by using the Japanese team's exit as another chance to bleat "I told you so" at the "profligate" teams which failed to heed its dire cost warnings.
"In exchange [ for Toyota], so to speak, we will now have, Manor, Lotus [ at least in name only . . .] USF1 and Campos Meta," said the Italian marque. "Can we claim that it's a case of like for like, just because the numbers sitting around the table are the same? Hardly, and we must also wait and see just how many of them will really be on the grid for the first race of next season and how many will still be there at the end of 2010."
The nub of Ferrari's argument is accurate. The new names carry none of the cachet of a grid filled with BMWs and Toyotas. Attracting the kind of budget-swelling sponsorship needed to compete in 21st-century, globe-spanning F1 has been hard enough in recent years.
In a Formula One repopulated by the kind of here-today-fail-tomorrow teams F1 swore it had got rid of after the bloated grids of the 1980s, financial confidence will be even harder to find. Less sponsorship means more failures, more failures means less faith, less faith means less fans, and less fans mean even less people for nervous sponsors to sell to.
That sounds like meltdown. It won't come to that, but hopeless optimists such as the FIA are failing to recognise the harsh realities of Toyota's exit.
The governing body has attempted to reset F1 to a 1970s paradigm by encouraging privateers over manufacturers who wanted too much control. With Toyota's exit, it has succeeded.
Formula One will continue but it will do so as a smaller, cheaper, less profitable and less popular entity. It will get worse before it gets better.