FIA study shows Formula 1 costs could be halved

A study commissioned by the FIA, the sport’s governing body, reportedly shows that costs in Formula 1could be halved without hurting the socalled show.

With Caterham and Marussia ailing and even better-funded midfielders struggling financially, it emerged on Tuesday that New York-based McKinsey and Company, a multinational consulting firm, recently examined the finances of nine F1 teams at the behest of the governing body.

In its findings, revealed by Germany’s Auto Motor und Sport, McKinsey has proposed new cost-cutting measures that could help teams like Force India, Sauber and Lotus – with budgets in the range of $120-$200 million – to survive and thrive.

Focusing on a $120m per year team, McKinsey reportedly found that almost $30 million – a quarter – is spent on the engine alone, but that a 25 per cent cost reduction would be feasible.

The study also found that 35 per cent of the design and production process, 15 per cent of the grand prix activities and 20 per cent of testing costs could be slashed.

“Then teams like Sauber, Force India, Toro Rosso and Williams could be funded solely from the distributions from the commercial rights holder,” reported correspondent Michael Schmidt.