F1 – Is F1 Viable Without FOTA?

First we have to ask if Ferrari, RBR & STR will be part of both F1 and FOTA1 since they will most likely still be listed on the entry list when it comes out today. Look for these three teams to file breach of contract lawsuits against the FIA immediately after the entry list is posted. But let’s assume that all 8 FOTA teams will be exclusive to the new breakaway series.

Lola and N Technologies have withdrawn their entries from consideration which may be the start of a disturbing trend for the FIA. How many of these alternate potential new teams were actually viable bids?

And what about the already accepted bids of USF1, Campos and Manor, will they be able to raise the sponsorship necessary to run a budget capped team in F1 when the sport has been devalued by the departure of the FOTA teams?

Pitpass has an article up today where they point out that the 8 FOTA teams account for $2.2 billion dollars worth of investment into the sport on a yearly basis through sponsorship, team owner contributions and supplier deals. This accounts for 47 percent of all investment made into F1.

Pitpass goes on to conjecture that the owner’s of the TV rights will want to renegotiate since the value of the sport has plummeted. On top of that, circuits will want to renegotiate their sanctioning fees or outright leave the championship. Next in line would be the on-track advertising which will plummet in value, not to mention that you won’t be able to sell $4000 dollar paddock club tickets.

All of these are sources of revenue for FOM, who are already having a difficult time paying on the bond that CVC took out to purchase the sport due to the poor economy. The bond was financed on the future profitability of F1, but now those future profits have disappeared. So not only is CVC going to lose out on this as an investment vehicle, they also will probably be forced to sell the bond to someone else, or take from their own pocket to finance the bond.

F1 is in a tenuous position at best. It is no stretch of the imagination to see F1 fail in the short term or become another of the FIA’s unknown categories. Look at WRC. They are down to only a couple manufacturers and are fast becoming irrelevant in the light of competition from IRC who just added Honda to the list of competitors.

But the FIA may have a different challenge ahead of them. Bernie may be keen to point out, in a litigious fashion, that the FIA has destroyed the commercial viability of the sport by chasing off the teams in blatant opposition to the European Commission’s decision that the commercial side be kept away from the governing body.