Having insisted ever since the onset of the global credit crunch that Formula 1 remains in rude financial health despite all the economic uncertainty in the world, the sport's supremo Bernie Ecclestone has now admitted that he does have some concerns.
With Honda having walked away from competition back at the beginning of December – a product of falling car sales and poor on-track return for its considerable investment in F1 in recent years – there are fears other manufacturers may follow suit. Mercedes-Benz has threatened to 'consider its engagement' should what it deems to be an 'unreasonable punishment' be meted out to McLaren at today's FIA World Motor Sport Council hearing into the Melbourne 'lies' scandal, and doubts also remain over the continued future participation of rivals BMW, Renault and Toyota – especially if results are not forthcoming.
According to Pitpass
, corporate hospitality sales look like dropping by ten per cent over the course of the present year, whilst trackside advertising – which together with TV revenue and race hosting fees accounts for roughly $800 million of the sport's annual $1.1 billion income – is safe, Ecclestone contends, 'because it's all long-term deals'.
What may be in danger, however, is the money paid by race promoters – a total sum of more than $400 million in 2008. Whilst the Formula One Management (FOM) chief executive is confident the promoters themselves will not renege on their part of the agreements even in the event of poor ticket sales 'because we have the guarantees in place', fears have arisen about the security of their guarantors.
“About a year ago I'd have said that a guarantee with a bank is a guarantee because nothing is going to go wrong,” stated the 78-year-old. “When you think of all the banks that have gone under, you would have said they are gilt-edged... Although our promoters are all pretty well-guaranteed, imagine if suddenly out of the blue the guarantors were to say 'sorry'.”
F1 itself is owned by finance firm CVC, which purchased the sport back in 2006 with the aid of a $2.4 billion loan from the Royal Bank of Scotland, and Pitpass
explains that RBS has since sold the right to repayment to other investors, who receive an annual figure of $270 million from the top flight. If F1's revenues were to suddenly fall as a result of a lack of payment by race promoters, then its ability to repay its debt may also be severely compromised.
“If several race promoters were to fail to pay their sanction fees in 2009, this would be a concern,” cautioned one debt-holder.
Ecclestone, however, remains positive that even in such perilous circumstances, CVC is going nowhere, arguing that 'lots of people have approached them, [but] I don't think they are going to sell' and hinting that for him to buy up F1's debt it 'would have to be cheap'.