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Renault Latest to Question Formula One Investment

Posted by: Mark Scott on November 05

What’s going on with Formula One? Only a day after Toyota pulled out of the world’s most lucrative motor sport, French auto giant Renault is also thinking about pulling the plug. According to media reports, the company’s board met on Nov. 4 to discuss the F1 team’s future. No decision has yet been announced, but the future doesn’t look too rosy.

Just look at Renault’s financial position. It posted a $4 billion loss in the first-half of the year, with global revenues falling almost 24% to $23.7 billion. That came after the French auto giant reportedly forked out $394 million last season on its Formula One team, according to Formula Money, which tracks the sport’s finances.

Faced with such losses, it’s easy to see why Renault may balk at paying multi-million dollar sums for a place at motor sport’s top table. A high-profile scandal involving Flavio Briatore, Renault’s former F1 chief, who ordered one of the team’s drivers to crash on purpose also hasn’t helped.

Interestingly, Ferrari, one of Renault's competitors, takes another view. In a candid statement on its Web Site, the Italian automaker blames, the FIA, F1's governing body, not the economic crisis, for forcing companies out of the sport. Part of the statement reads:

"The reality is that this gradual defection from the F1 fold has more to do with a war waged against the major car manufacturers by those who managed Formula 1 over the past few years, than the result of any economic crisis."

That relates to cutbacks being forced through by the FIA. F1's governing body had tried to cap annual costs at $66 million, which led automakers to threaten to set up a rival championship. In a compromise, teams now will bring costs down to "early 1990s levels within two years."

Here's a list of the highest spending teams (based on sponsorship, supplier deals, prize money, team ownership contributions, tyre provisions, supply of customer energines -- Source: Formula Money).

2008 F1 Season (latest figures available):

1) Toyota ($445.6 million) -- leaving F1
2) McLaren ($433.3 million)
3) Ferrari ($414.9 million)
4) Honda ($398.1 million) -- has left F1
5) Renault ($393.8 million) -- could leave F1
6) BMW Sauber ($366.8 million) -- has left F1

Reader Comments

herault

November 5, 2009 08:56 AM

In this era of economic austerity plastering high-performance cars around a circuit for two hours at speeds in excess of 200 mph is now seen as pure self-indulgence.
Its just happens that F1 has lost its way as the world grapples with lower corporate profits.
The trouble is that for every winner there are too many losers....what car mfg can justify this extravageance. Short answer: NONE
Cheerio: BERNIE...we cant afford you!

Gary

November 5, 2009 09:54 AM

Compared to MotoGP, F1 is just boring.

Tom

November 5, 2009 11:26 AM

F1 ALWAYS has been a high priced sport. While many claim it's the pinnacle of motorsport, its fan base has declined massively over the past three or four years, as promoters have been forced to pay ever higher fees to the promoter. The US F1 race fell victim to the promoter's greed in '07, and he won't return here unless bribed by an outlandish sum of money to his pockets. Herault is right: we can't afford Bernie. Nobody can unless the government steps in. I don't like bailing out the automakers in the US, but I WON'T bail out a race!

Christian van Schayk

November 5, 2009 12:14 PM

F1 derives its prestige from technological excellence. In today's environment cutting edge technology is about doing more with less -- energy, pollution, etc. It's imperative that F1 rewrite its rules to make the sport exciting and relevant.

GM Daughter

November 5, 2009 05:36 PM

Isn't auto racing supposed to be about developing the next generation of automotive performance technology? I don't like NASCAR because they drive around in technologically handicapped cars. I say put the best drivers in the best tech and see what happens.

Dimzo

November 5, 2009 11:19 PM

We could see Chinese car companies on the grid next season. Chery F1?

Charly - Florida

November 11, 2009 07:24 AM

Why are you suprised at the escalating costs in F-1? Every aspect of living is costing more. To try to pull expenses back to "early 1990's" levels is an exercise in stupidity. To do so all components of the venue would also have to drop their prices equally. Can you see any food company cutting shelf prices, gasoline back to 1990 prices, cars, furniture, water, etc. Nice thought and it probably makes for good media fodder, but totally unrealistic. F-1 will succeed only as long as the fans are willing to pay to support the races. NASCAR attendance is falling dramatically, partly of course, due to the cookie-cutter cars and boring roundy roundy races, but attending a race costs big bucks. I do believe I heard as much as $500 a seat at one race this year...not sure but maybe Brazil. Ridiculous! Wake up Bernie, your days are numbered.

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