MARCH 8, 2004
Parry Jones calls for budget capping in F1
Richard Parry-Jones, the head of Ford's competition activities and the man who is now running negotiations for the Grand Prix World Championship (GPWC) organization is proposing to try to implement a new strategy for keeping down the costs of Formula 1.
"The cost trends in the sport are unsustainable," Parry-Jones said in Melbourne. "Other sports have successfully created ways in which costs can be capped and there is no reason that we cannot do the same in F1."
Parry-Jones said that there is now market research that shows that car companies which benefit from being in Formula 1 without winning anything and this means that the likelihood of car manufacturers deciding to get out of the sport because they are not being successful is less likely than was the case a few years ago. Parry-Jones said that Toyota had found a big increase in interest thanks to F1 and said that Jaguar had seen "a significant increase in brand awareness and sales" since the F1 programme began.
Parry-Jones said that the GPWC is currently carrying out due diligence following its memorandum of understanding with Bernie Ecclestone's SLEC in December and hopes that the process will be completed in June with a new package for everyone involved in the sport. The deal would be a compromise and would not cover all aspects of Formula 1 revenue but would significantly increase the income for the teams and there would then be room for further steps in the future, such as bringing the trackside signage, official supplier and VIP hospitality in-house. These operations are currently run by Patrick McNally's Allsport Management.
Parry-Jones said that in order to get everyone to agree to budget cap it would need to be a fairly high figure to begin with but he said that once the principle was in place the cap could be reduced. Such a system would have to be controlled by external auditors. This might help to reduce costs but it will be hard to stop anyone who wants to operate with "skunk works" operations which do expensive research and development off the balance sheet of the teams in question.
Parry-Jones said that the GPWC would also like to have a veto right in the choice of chief executive of SLEC as part of the deal.
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