Business Plans and Uncertainty

June 29, 2009

One of the main reasons for the row between the FIA and FOTA were the plans to make it easier for new teams to enter F1. This was central to Max Mosley’s approach, as F1’s more recent reliance on the funding and support of the car manufacturers was seeming less and less sustainable as the global car industry was decimated in the economic downturn.

However it is now becoming less likely that we will see any new teams on the grid at the start of 2010. First we have all ten of the 2009 teams all now confirmed for 2010 and it can be certain that each one will be fighting hard to secure any possible sponsors or investors considering F1. Second the goal posts are still moving, or as Manor’s John Booth described it to Autosport: “Every time you think you’ve got it sorted out it all changes again, it’s like walking on quicksand.”. The three new entrants – Campos, USF1 and Manor all developed their business plans based on the FIA’s £40 million budget cap and a scenario where they could be instantly competitive by using free revving engines (the current teams engines being restricted to 2009 levels) and movable aerodynamic devices (essentially allowing them to increase top speeds) all of this meant potentially a one or two second advantage for a fraction of the budget – you can now see why the FOTA teams were so opposed to this scenario.

But now FOTA and the FIA have reached agreement, the level of budget cap remains undefined (other than saying it will return to the expenditure levels of the early 1990s) and all teams will be racing to the same regulations. This means that those investors who were presented with a scenario which saw them potentially beating teams like Ferrari and McLaren are now having to have their expectations revised to fighting it out for last place, with the funding levels from the commercial rights holder (Bernie Ecclestone) still to be defined. It all really is walking on quicksand, and of course the longer the uncertainty goes on the more difficult it will be for the new teams to get all their infrastructure and funding in place, so we may well see some entries deferred until 2011 and beyond.

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