The cost-saving measures implemented by Formula 1 and the FIA could help the sport to overcome the financial challenges posed by the coronavirus outbreak, but the financial loss will be still significant, says Ferrari CEO Louis Camilleri.
Following the coronavirus outbreak that has put Formula 1 in lockdown, the Commercial Rights Holder and the governing body have implemented a set of measures that aim to ease the financial pressure on teams. The sport has agreed to the retention of the current chassis for the 2021 season while the technical regulation overhaul for next season has been delayed until 2022. The controversial cost cap will be introduced in the coming season as planned with discussions ongoing about bringing down the budget limit even further.
During a conference call with investors, Louis Camilleri stressed that the cost-cutting measures Formula 1 has already implemented and plans to introducein the future are the right ones that could ensure the economic well-being of the sport.
“There has been significant progress on numerous measures to freeze various components and hence reduce costs going forward. [There has also been] substantial progress on a cost ceiling and its perimeter effective as of 2021, which will hopefully be put to bed in the near future.”
“It remains our hope that such ceiling will render Formula 1 more economically sustainable for all participants while ensuring that it remains the premier racing championship globally and the source of significant advances in automotive innovation and technology.”
According to the Ferrari CEO, the sport will generate significantly less income which is not only down to the reduction of races in 2020, but also due to the fact that at least the initial grands prix could be staged behind closed doors, depriving the promoters of their biggest income.
“Formula 1 is undoubtedly the activity that will adversely affect our results in 2020 in the harshest manner,” warned the Egyptian.
“It is also the one that is by far the hardest to predict. The original calendar provided for 22 races. The FIA and the Formula One Group now predict a maximum of 18 races, many without fans. This clearly implies a drastic reduction in the revenues that are generated by the commercial rights holder, as well as sponsorship fees: our two primary sources of revenue."
Camilleri is confident that the financial hit will only affect the 2020 business while next season could generate the usual income, bringing the teams’ budget back to the normal level. „The hit to revenue essentially goes down to the bottom line, with some minor offsets. It’s a big hit. The good news is it’s confined to this year, hopefully.”