F1’s authorities "are coming under fierce attack for failing to curtail spiralling costs amid a financial crisis in the sport which has left two teams on the brink of collapse," according to Daniel Johnson of the London TELEGRAPH. The FIA "pledged to introduce a cost cap and has angered the sport’s smallest outfits with its failure to push it through." It faced opposition from F1 CEO Bernie Ecclestone "as well as the biggest teams, including Red Bull and Ferrari," who spend around £140M ($225M) a year. FIA President Jean Todt said before this season began that “a lot of teams will die” if nothing meaningful is done to curb F1’s "massive budgets." The Frenchman’s prediction, "also made by several of the smaller squads who operate on a shoestring budget, appears to be coming true with the demise of Caterham and Marussia." While F1’s four smallest independent teams -- Caterham, Force India, Marussia and Sauber -- were frustrated with the big spenders' opposition to a cost cap, "it has been the FIA which has come in for the severest criticism." An insider said, "The FIA and Jean Todt have sold themselves to Bernie Ecclestone and have given up running Formula One" (TELEGRAPH, 10/26). In London, Paul Weaver wrote Ecclestone "has been told he must make a better job of selling Formula One by leading figures hosting this Sunday’s US Grand Prix in Texas." Pressure "is mounting" on Ecclestone to "make amends," with the message from official Austin race ambassador Mario Andretti and Circuit of the Americas co-Founder Bobby Epstein that F1 needs to “loosen up a bit” and “make the sport about personalities." F1 "has had no coherent leadership in the past year while Ecclestone, who will be 84 on Tuesday, fought bribery allegations in London and Munich courts." Now, "against a background of spiralling costs, unequal payments to teams, falling crowds and TV audiences, as well as declining sponsorship and no agreement about capping costs, the sport has reached the point of no return" (GUARDIAN, 10/27). In Austin, Marty Toohey wrote "just how much is an F1 track really worth?" It "is not merely a question for F1 aficionados and playboy investors, according to an American-Statesman analysis done with the assistance of London-based Formula Money, an independent annual financial guide to the sport." Lawyers "will begin arguing in Austin courts this spring" about the taxable value of Austin’s F1 track, Circuit of the Americas. Millions of property tax dollars "are at stake." One thing "is clear from the dispute and from similar situations in other parts of the world: Formula One tracks are dicey investments." They face such bizarre financial realities that "they appear to lose most of their value the moment construction is finished" -- complicating the task of figuring out how much track owners should pay in taxes. Formula Money editor Christian Sylt said the underlying economics "call into question why investors would agree to fund construction." He added, "Maybe investors are not always aware of this destruction in value before they commit their money to a project ... which costs around 20 times more than it will be worth" (AMERICAN STATESMAN, 10/25).
