This article was originally written for BellaOnline, but is republished here for posterity.

With the global economic downturn at the forefront of everyone’s minds, I thought it would be worth taking a look at how it might affect Formula 1.

Cost-Cutting

The FIA have been advocating dramatic cost-cutting for a long time now, but it has suddenly become of prime concern. In the last few months, we’ve seen FOTA organised to come up with some measures that Max Mosley would approve of, whilst the FIA President has come up with standard engines and standard KERS as possible solutions. Personally, it feels like a knee-jerk reaction. We’ve long been saying that if you restrict spending in one area, teams will invest those funds on another area of the car. If serious cost-cutting is the way to go, perhaps they need to rethink that budget caps idea.

Sponsorship

One of the main worries with the current financial crisis is that sponsorship may falter. When money becomes tight, one of the first things that suffers is the advertising department, and that is where a lot of teams money comes from. More and more, we’re seeing big sponsors coming in and getting heavily involved – ING, for example, are the title sponsor of Renault, and also have a lot of hoardings around various circuits. If they decided to pull out of the sport, it would be a big financial hit across many of the different factions.

Independent Teams

With that in mind, it’s the independent teams who will suffer first. The manufacturers have the infrastructure to keep their teams going. The Formula 1 team can act as a great research and development department, and is a high profile output for their brand. For an independent team, such as Williams, sponsorship is a much bigger part of their day to day income. As a team who solely exist to race in Formula 1, theirs is the most worrying position.

Formula 1 is an extravagant sport but that doesn’t mean it is unnecessary or that it won’t survive the credit crunch. It’s been going for well over 50 years already, and I don’t see it stopping anytime soon.

This article was originally written for BellaOnline, but is republished here for posterity.

The FIA today announced they were opening the tender for third parties to submit their standard engine designs. It had been an idea that was floating around as part of the extreme cost cutting measures Max Mosley wants to introduce, however, the FIA have gone ahead an opened the tender without any further announcements.

The statement from F1's governing body confirmed that the process was underway, and they then had to clarify what the idea entailed. From 2010, the engines used in every Formula 1 car will be from a standard design, supplied by a third party (although that could be one of the current manufacturers). The actual engines can be provided by the supplier, or they can provide the designs so that teams can build their own within the required specifications.

The idea has not gone down well with fans already, but we really need to hear what the manufacturer's think about it. The FOTA will be discussing the situation in Shanghai this weekend, and presumably the manufacturers (Toyota, Honda, Ferrari, Renault and BMW) will not be impressed. One of the big reasons for being involved with Formula 1 in the first place is as a marketing campaign to prove that there cars are good. If the engine is made by just one manufacturer, then it wouldn't make sense for the others to remain in the sport.

Martin Whitmarsh, CEO of McLaren, has already admitted that it's a worrying time for the sport. However, Patrick Head of Williams said it wasn't surprising to see the FIA introduce a shocking regulation simply to spur the teams into action. It's been known for things like this to be announced, and then backtracked on when Max Mosley gets what he is actually after.

Bernie Ecclestone says he doesn't believe the manufacturers will leave the sport, as they can still build the engines themselves, even if they come from standard designs. For now, it is wait and see. We will need some reaction from the teams themselves, and they will obviously need to discuss the situation with the FIA. Let's hope they can come to an agreement that safeguards the future of the sport.

The usual process of including guest posts on a blog is for the owner to ask some of their favourite writers to come up with a piece or two to be featured. As you well know, Sidepodcast likes to do things a different way. The Facebook Group has plenty of fascinating discussions going on, and we want to bring those to the main site. The idea is for you guys to write your opinions and entries over on the group, and then we pick the best ones for feature over here on Sidepodcast. Sort of self-selecting guest bloggers, if you will. If you want to get your name in bright lights, just join the group and get writing. We read everything and everyone will be considered.

The first blog entry comes courtesy of Dan Brunell, our guest blogger guinea pig, and focuses on the plight of Super Aguri and what it means for the future of F1.

As “me” and Christine have so eloquently pointed out, Super Aguri is in serious trouble. If they last the year it will be an achievement. If they get someone to buy them it would be a miracle. However, is their slow demise a sign of things to come in F1?

It’s an understatement to say that F1 is an expensive sport. Advertising arrangements with some teams are in the tens of millions of pounds. Manufacturers themselves pour in hundreds of millions of pounds. The strong economy of the last few years have allowed many auto manufacturers and companies to spend their efforts in F1. However, as the economy goes from bull to bear and wallets get tightened; their hefty spending on F1 might be one of the first things to go from the ledger sheet.

We have already seen Toyota, Honda, and Renault question their financial commitment to F1. Many grands prix are having a hard time finding proper sponsorship to pay the amounts demanded by Formula One Management. Plus, F1's own corporate hospitality and advertising business is $3 million in the red for last year. Add to this the uncertainty of F1 beyond Bernie and Max and this adds up to some troubling waters ahead. The last time the sport looked this uncertain financially, there was a massive turnover and upheaval in the sport due to the loss of cigarette advertising. The loss of several of the manufacturers and primary sponsors could have a similar, even more pronounced, effect.

In my view, there is a lot that F1 can continue to offer for advertisers and people involved. For Pete's sake, their estimate world audience for F1 is 6 billion people! However, unless F1 lowers its costs across the board and lower their expectations from advertisers and manufacturers, the long-term finances of Formula One looks very bleak. After all, for all the riches and egos in F1… these people still have to live on a budget and within their means. If Bernie and the F1 conglomerate which he leads continues to ask high prices of everyone involved in F1, the teams, races, and ultimately advertisers will go on to more effective advertising vehicles that are less costly. If F1 starts hemorrhaging advertisers, manufacturers, and sponsors, then the sport is in major trouble.