Credit crunch hits Formula One


Two months ago, the blog noted that the credit crunch was starting to impact sport. Then the issue was high leverage, with the UK’s Football Association warning that the $5bn debts of the Premier League clubs were “high-risk”.

Now, its the turn of Formula One racing. Yesterday, Honda pulled out of the 2009 competition on cost grounds. And the head of its governing body, Max Mosley, said the sport was in a “desperate situation”.

With auto sales collapsing round the world, manufacturers can no longer afford the curent $220m a year cost of a F1 car. Maybe they could instead race versions of Nissan’s Pivo 2 car, recently highlighted by my blogging colleague Barbara? She says it even comes with a tax break in Japan.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. He also serves as a Global Expert for the World Economic Forum. The aim of this blog is to share ideas about the influences that may shape the chemical industry and the global economy over the next 12 – 18 months. It looks behind today’s headlines, to understand what may happen next in critical areas such as oil prices, China and Emerging Markets, currencies, autos, housing, economic growth and the environment. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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