McLaren team principal Andreas Seidl believes the financial impact of the coronavirus pandemic must act as a wake-up call for Formula One.
The spread of COVID-19 has put Formula One on hold, with the possibility that the season will be abandoned if racing does not resume by October. Even a reduced calendar would represent a significant loss of earnings for the sport, which survives on income from race fees, broadcast rights and sponsorship deals.
In order to deal with the financial impact of the coronavirus, all teams have closed their factories and some, including McLaren, have made use of job-protection schemes, such as the U.K. government’s furlough policy.
However, McLaren believes F1 needs to wake up to the reality of the situation and take more drastic measures, such as lowering next year’s budget cap to $100 million. The budget cap will be a new initiative in F1 next year and was originally set at $175 million. But ahead of another meeting of F1 stakeholders on Thursday, Seidl said the sport needed to take bigger steps to protect teams.
« I think the crisis we’re in now is the final wake-up call for a sport which was unhealthy before and not sustainable and has now reached a point where we need big changes and drastic changes as well, » he said. « As we communicated, for us the most important thing is we simply make the next big step on the budget cap.
« We think it’s absolutely important now with all the financial losses we will face this year — the magnitude of it still being unknown because so far we don’t actually know when we can go back racing. I think it’s important to first of all combine with all the other measures like freezing the cars and so on to survive this year, and then it’s also important for our shareholders to show them that the losses you make this year we can somehow compensate them over the next few years.
« Of course we would like to see the budget cap as low as possible, we have put out also the number of $100 million which is something we would be in favour of. At the same time, we understand that obviously it’s a discussion that involves a lot of different parties and a lot of different teams with different sizes at the moment. So we’re looking forward to the next meeting which we have tomorrow afternoon and then hopefully we come to some big decisions soon. »
Ferrari has made clear that it is against a drastically reduced budget cap and has even proposed two different tiers for different sized teams. But Seidl warned that smaller teams will be at risk as a result of lost revenues, and even though the budget cap would not impact spending this year, it would ease the burden on all teams as they look to recover from losses in 2020.
« It’s not just a fear [that we might lose teams], I think it’s a reality, » he said. « There is a big risk we could lose teams through this crisis. Again, so far we don’t know what the income will be this year, we don’t know when we get back to racing again.
« Of course, we all hope we can do as many race as possible and this is why we appreciate the leadership here from [FIA president] Jean Todt — it’s important now to make big decisions and make another big step in terms of the level of the budget cap for the future, which doesn’t help us for this year — for this year we need other short-term measures like freezing the cars etc to save costs — but at least then it gives an outlook to everyone taking part in Formula One that the sport will be a lot more sustainable and healthy in the future for the teams to survive this crisis. »
When will F1 return to racing?
Asked when F1 might be able to return to racing, Seild said it was not a straightforward decision and that the sport should be wary of trying to rush the decision before it is seen as socially acceptable to hold large sporting events.
« Obviously, it’s a very difficult topic and it will be depending on a lot of different aspects, » he added. « The most important thing is to protect our people, so definitely can’t go back to racing until we definitely know that our people are safe.
« Then I think it will simply depend on the guidelines of our home counties, first of all — travel guidelines, the guidelines we get for our daily life — because we need to see if that allows us to travel out and back into our home countries. Then I think we have to simply wait what the different countries are deciding, whether races can happen.
« We also need to see what the promoters are deciding, because especially with changes of dates for a lot of races, the promoters need to be up for it and it needs to make sense from a commercial point of view for the promoters and Formula One.
« And then also what I think is an important point is the public acceptance of events happening again. Because I think it’s important that we only go back to go racing once we have certainty when it comes down to protective equipment, to the number of tests for people, that this is all in place and available to people that actually need it, and that we are not the ones burning these tests or this material just to go back racing.
« I think there’s a big desire from people — from the public, from the fans — that especially in these lockdown situations we are all in at the moment that sporting events are happening again, even if it’s just on TV. But again, there are a lot of different aspects that need to be considered. »
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