US dollar-Euro rate continues to hit the F1 teams

The ever-weakening US dollar is hurting the Formula 1 teams more and more as it sinks in value against the Euro. The dollar is now worth only 1.33 compared to almost parity in January 2003. The 30% slide in the value of the dollar has had an enormous effect in sponsorship deals, particularly those of the biggest teams which have huge long-term deals with companies negotiated in US dollars. If one considers that there are some sponsors in the sport putting in as much as $80m a year, the teams involved could have lost as much as $20m in sponsorship value just from the exchange rates. Most of the teams have to pay out in Euros or Sterling. There are fears that the strong Euro will now affect the European economy in 2005 which could affect some of the other F1 sponsorships which could be chopped if companies begin to feel the pinch. The weak dollar makes it more expensive for Asian and European exporters to sell their goods in the US. There are also fears that unless the Bush Government in the United States acts the US dollar will probably continue to fall to $1.40 and perhaps even before. In an effort to avoid problems with currency fluctuations the F1 teams are now doing deals in different currencies so as to spread the risk.

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