Formula 1 Insight

Meetings in Brackley and Geneva

No doubt we all chuckled at the news that Honda's F1 team have cancelled its usual media lunch in an effort to cut down on expenses. Coming on the heels of the revelation that Honda spent more than any other team in 2008, this sounded a bit like a multi-national corporation saving money by rationing the paper clips. The fact that the team's Christmas dinner for staff has also been vetoed, makes the problem seem a good deal more serious, however. Companies are a bit more worried about costs when it becomes necessary to forget such extras - the happiness of employees is as important to a team's future as finances, after all.

Honda F1 team
Honda F1 team

Now it seems that an important meeting will take place at the Brackley team headquarters today. Rumor has it that the aim is to reduce expenditure in a big way and redundancies have been mentioned. Matters have obviously come to a head and the Honda F1 operation is likely to be severely cut back as a result.

This is the clearest indication that the economic climate is beginning to have practical effects within F1. When a large manufacturing company like Honda has to slim down its team budget, reality has invaded cloud cuckoo land. It is especially relevant that it should be Honda feeling the pinch; as one of the big spenders on staff and research (but with very little to show for it), the team has had a rude awakening over the last few days.

Meanwhile, another meeting will be taking place in Geneva, with representatives of FOTA discussing the matter of cost-cutting (amongst other things) with the FIA. With Honda's troubles fresh in our memories, it is impossible not to think that some matters on the Geneva agenda, medals and qualifying systems, for instance, are highly irrelevant in the present economic climate. But suggestions for cost-cutting strategies are said to be the priority of the meeting, at least.

Whether any of the proposals will be sufficient or swift enough to deal with the coming crisis remains to be seen. Most of the suggested changes will not take effect until 2010 at the earliest and new regulations for the coming season (KERS and redesigned aerodynamics, for examples) have already committed the teams to additional expenditure in 2009. Yet the credit crunch is here now and already banks are being propped up by governments as they experience the full effect of the downturn.

It all makes it pretty clear that the governing body of the sport cannot react quickly enough to changes in the world economy. Although there has been talk of reducing costs for a long time, measures can only be taken at the appropriate times - at the end of a season, that is, when the regulations can be altered. So it is quite possible that, by the time any agreement made in Geneva begins to have an effect on F1 budgets, the crisis will already have passed and such drastic measures be no longer necessary.

The example of Honda gives us a blueprint for how these things really work. Reality decides just how much a team can afford to spend, not regulation. If this season's regulations stayed in force, teams would have to cut their cloth according to the resources available; some would find it hard going while others would find a way to spend the money anyway. And the likelihood is that it would be the same teams at the front using their more extensive budgets to advantage, while the usual stragglers struggle in their wake. It has always been so and, although throwing money at an F1 team will not guarantee success, it is generally the better-funded teams that do well.

So I wonder whether all this panic over costs is really achieving anything at all. The danger is that, by the time the economic climate eases, we may find that the sport has been so radically altered as to be unrecognizable. Standard engines will create a spec series and we have enough of those already. It is a major part of F1's appeal that the teams are involved in a design and engineering competition, not just a driver's championship, and without this, the sport will not be worth watching at all. Once that happens, survival of the sport becomes irrelevant.

I suppose that I am suggesting that everything be left pretty much as it is; let reality sort out how the teams will cope with decreased funding. It sounds like an irresponsible strategy but it will be what happens anyway, as demonstrated by Honda. The important thing is that F1 survive as a sport still capable of attracting the interest of millions of fans. That is the essential ingredient to the success of F1, not its relevance to road car technology or how much it can bend itself to appease the green lobby.

As with most things, I think it's a case of the less meddling by officials, the better.


While I agree with you that mandating cost reduction is a futile exercise (you indicated teams' budgets will dictate cost reduction more than any rule), I disagree on the point that F1 need not be road relevant or ecological.

I believe adding rules to make F1 more road relevant and/or ecologically "mainstream" is a good thing, and it has some precedent in F1. There was a time when displacement was restricted to 1.5L. I don't know the history of the development of that regulation, but those were some of the most interesting F1 cars. I think the mistake being made today is the level of specificity in F1 regulations.

A broad stroke like restricting displacement creates a more interesting engineering challenge than dictating the inclusion of a KERS device that only produces a certain amount of energy for an extremely brief number of seconds per lap. The broad stroke of today's F1 might be something like restricting the amount of fuel per race and opening KERS technology. I imagine watching teams struggle with the inclusion of open KERS technology would be akin to watching the early days of turbo when the engineers were wrestling with turbo lag.

I think the FIA is making the mistake of trying to tackle both cost and relevance at the same time.
Date Added: 04/12/2008


It all makes it pretty clear that the governing body of the sport cannot react quickly enough to changes in the world economy.

A sound statement that I agree with. As a "simple man", I have understood the economic climate has not looked particularly rosy for about 18-24 months or so. I'm no expert on the subject, and to be fair, I doubt Mosley is either. But in his position and with his power, the cost-cutting procedures could have been pushed through earlier. Of course, maybe reality doesn't work like that, but it isn't exactly rocket science; think about it, make a decision, implement the decision. And depending the particular measure, it may not even have to wait until the season has closed.

Regarding the Honda team cancelling Christmas (almost), I was listening to an interesting radio show this morning (BBC Solent, approx. 9am) which discussed companies and their tightening of belts around the time of year when employees like to enjoy a little more than usual. Many people phoned into the show saying that while the accounts must be closely watched, the morale of those working hard in the face of possible redundancy should be rewarded. The over-riding message was one of condemnation to those companies cancelling end-of-year parties and similar extravagances. Especially as UK-based companies receive tax-free allowance of £150/employee. It's quite complicated, but it generally works in the employees and employers favour to a degree. So shame on you Honda!

And your penultimate and ultimate paragraphs sums up exactly how I feel about the way the sport is being handled at the moment. I cannot add any more other than applause.
Date Added: 04/12/2008

Marc: I agree that the FIA is trying to solve too many conflicting problems at the same time. We cannot have new technologies introduced into the sport and expect costs to go down as well - research and development cost money.

As to the relevance of F1 to road cars, there has always been a flow both ways, as you say. The hard work put into F1 turbos in the late seventies and eighties, for instance, brought them to a point of reliability where they could be used on production cars. But legislating for such influence is a waste of time, I feel. F1 is way behind in the development of KERS and will have little to contribute to road cars as a result, especially as Max is now proposing a standard KERS system to save costs.

The matter of energy conservation is relevant to the sport as it has to live in the real world. But the FIA's view of the future in this field is very limited; they should be looking at alternative fuels, not ways to keep the gasoline-powered internal combustion engine for a few more years. If F1 engineers are genuinely at the peak of their profession, they need to be working at the cutting edge of technology, not wasting time in projects to save a few litres of petrol.

And I agree with you, too, about decreasing the capacity of engines. The 1.5 litre formula came about because there were too few entries for the old 2.5 litre F1 - the FIA merely upgraded F2 to be the premier formula, knowing that there were plenty of F2 designs knocking about. Although the 1.5 formula was disliked by those who loved the huge monsters of old, it did introduce a multitude of new teams to F1 and the pace of innovation increased too. The first half of the sixties saw some of the best racing ever and I, for one, loved those little race cars - simple and clean, they were the epitome of the rear-engined F1 car.
Date Added: 04/12/2008

Ollie: Thank you. My fear with getting the FIA to react to outside influences more quickly is the kind of change Mosley tends to think of. If he had his way, F1 would already be a spec formula and that is one thing I could not bear!

The science of keeping employees happy is an undeveloped one, I think. I have worked for companies that instituted both the cost-cutting measures mentioned (the "saving" on paper clips and cancellation of the staff Christmas dinner) and I can say that all they achieve is disgruntlement amongst the employees and very little real saving of money. Reality has a way of sorting these things out, however, and the companies that do not pay attention to it soon go to the wall.
Date Added: 04/12/2008

Steven Roy
It lookes like we are starting to see something many have predicted for years. Car manufacturers have always come into F1 when times were good and disappeared like snow as soon as the temperature got too hot. Honda are simply the first to react this time. Credit Suisse have announced that they will make 11% of their employees redundant which may affect their sponsorship of BMW.

Of course Max is responsible for aggressively recruiting manufacturers to the detriment of the traditional F1 teams. As a result if the manufacturers start to drop out F1 could suffer seriously - potentially terminally - this time.

The reason for KERS and the other nonsense is to lock in the car manufacturers. Racing is not now and never has been road relevant. There may be some crossover of technology from time to time but there have been as many road technologies that have been picked up by racing as vice versa.

I wonder how happy Frank Williams is now that he did not sell to a manufacturer.
Date Added: 04/12/2008

Steven Roy

According to Pitpass Honda is talking to two potential buyers and if a deal cannot be tied up before the start of the season the team will close.
Date Added: 04/12/2008

And they don't mes about when they do get out, Steven! If the Pitpass is correct, no one saw that one coming. But it's the kind of thing that happens when a big company has bad results and has to make economies somewhere.
Date Added: 04/12/2008

I love the headlines that are specific to this story (so far)... "Honda To Withdraw From F1 By March 2009" "Honda Looking To Sell F1 Team By Christmas?"
F1Fanatic: "Speculation Around Honda’s F1 Future"
BlogF1 (myself): "Is HondaF1 About To Be Put Up For Sale?"

...Pitpass, you jump the gun like a horse with a scorched bottom on the day of the Grand National.

Sorry, I'll stop moaning about Pitpass's lack of composure (and sense). Pardon the intrusion.
Date Added: 04/12/2008

I'll give Pitpass this, though, Ollie: they are frequently first with the news. Perhaps that's because they don't wait for confirmation but they sure are quick!
Date Added: 04/12/2008

Dave Spurr
If they really are looking to sell up then if anyone is in the market to buy a team right now (the odds of which are probably quite short) then with all their 2008 efforts pretty much focused on 2009 and with Ross Brawn on board (assuming he wants to continue with the buyers) they are probably a good deal, much better than when the for sale signs go up at Torro Rosso.

However we mustn't forget that Honda haven't run any sponser livery for the past 2 years, so they probably don't have any large on-going sponsership deals to bring to the table.

It would be an awful shame if they did pull out, because as I said 2009 seems like it could be a good year for them and poor old Button might have all his loyalty shoved back in his face.

Surely, as you say, this situation (even if it's not true - or at least as bad as some reports are saying) should focus FOTA's and the FIA's discussions away from the sillyness of medals & qualifying and back to the core problems:

* Losing races off the calendar
* Not even share of the money going to teams
* Losing teams
* Silly flip/flopping of regulations by the FIA (homologise engines/equalise engines - bring in KERS/scale down KERS) - surely every team has spent more this year developing for the 2009 regs than they have for the past few with realtively stable regs.

Everyone knew that having the sport dependent on manufacturers was a bad idea and maybe it's now panning out that way. Here's hoping for a Williams revival in 2009 to show everyone that an independent can still perform in F1.
Date Added: 05/12/2008

It seems that any buyer could pick up the team for a song at the moment, so eager are Honda to get out of F1. the asking price may not be the real problem, however; if the running costs are too high for Honda to want to continue, very few prospective buyers will be able to afford them. So it comes down to sponsorship, just at a time when it is hardest to get. Grandprix reckon there is a possibility of funding from a couple of middle eastern investment companies - the only place where there is still a bit of money floating around.

As you say, if selling Honda F1 is going to be difficult, imagine how impossible a sale of STR is going to be. At least Honda has complete construction facilities.

There are worries about knock-on effects, too, with many commentators saying that Toyota is likely to drop out, now that their main competitor has departed. And if they go, what of Renault? It is all looking a bit desperate for the sport at the moment...
Date Added: 05/12/2008

Now we know that Honda have indeed pulled out of F1 I am worried that Max will now push through his plans to introduce standard engines and gearboxes, although I imagine if he did this the manufacturer teams would just leave and create their own series. It would however cause chaos. It just proves how little Max and Bernie actually Understand the sport side of F1. Max speaks of cutting costs and yet introduces Kerrs which has probably cost each team a small fortune to develop (apart from Toyota and ironically Honda who both produce road cars with very similar systems).

Date Added: 05/12/2008

It's happening already, Lee - Max has put his proposal on the table in response to Honda's withdrawal. There has been some watering down, it seems (supply of the contracted standard engine will be for four teams although the price will come down if more teams take it), but that still means some manufacturers will be using a power plant that is not there own design. Somehow, I doubt that they'll like that!

I have not had time to inspect the proposal fully but it looks like the usual complex mess that loses sight of the original intent. And that means more regulation changes while Max tries to get it to work...
Date Added: 05/12/2008

Nick Goodspeed
I think Honda's departure is only the beginning. Ecclestone and Mosley have made such a mess of things over the last 10 years that virtually no one is happy. Add to that the global economic climate and things are bound to get worse. Car manufacturers know where they sell most cars. Now with GM and Chrysler on the verge of bankruptcy (Ford probably not far behind) it is even more important to the Asian and European manufacturers to be in N. America. I'll bet you'll see Honda spending more in the USA.
Mosley and Ecclestone will soon bail out. They have never had F1 interests at the forefront of their imbecilic acts. Then again, what is one to expect from imbeciles?
Date Added: 05/12/2008

Alianora La Canta
Clive, the "four teams" is the mimimum to get the guaranteed price. According to the press release, if fewer teams take up the offer, the price will simply vary according to the team. The FIA also reserves the right not to proceed with the plan if fewer than four teams agree to take the engines. That's not going to bother the manufacturers, but since there are only two non-manufacturer teams guaranteed to be contractually able to take the supply (Red Bull and Williams - Force India will be with Mercedes in 2010 and I don't know when Toro Rosso's Ferrari deal ends), it could have a major effect on those who need it most. Williams may struggle to get through 2009, so there is a theoretical possibility that only Red Bull will take the customer engine. At which point the Renault supply it already has may prove to be cheaper and better-performing.

To make it worse, he said he'd be making manufacturers sell engines for €10m ($12.7195m) by 2004 as a cost-cutting measure. That he did not force the manufacturers to do so looks like a mistake, especially since he could have helped more than one team survive with such a measure. To their credit, the new engines will only be €8.39m, but that assumes four teams are in a position to accept the offer.

Suddenly the proposals look like psuedopolitical window-dressing, designed to make the FIA look good while really not doing anything actually beneficial. This simply allows the FIA to pass the buck in the event of the scheme's inevitable failure. But then what do you expect when the FIA attempts to solve a problem that is largely out of its hands?
Date Added: 06/12/2008

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