The demise of Super Aguri and one interesting read

Yesterday, May 6, 2008 saw the first demise of an F1 team since the popular British Arrows team closed shop forever in 2002.

But unlike Arrows, who spent two decades gracing the F1 grid, while famously introducing some interesting designs into the sport, including their brave attempt at running an independent in-house engine programme towards the end of the team's life, Super Aguri lasted just two and a half years.

And those two years were spent struggling to line up on the starting grid.The team ceased all F1 operations effective yesterday and owner Aguri Suzuki was quoted by http://www.formula1.com/, explaining, among others the relation of a breach of contract by sponsors, oil and gas company SS United, to the reasons why the team had run into financial difficulties since last year.

That is despite being backed, and infamously branded by critics as the Honda b-team.How contrasting fortunes can be in F1.

The Super Aguri demise comes days after I got my hands on the June, 2008 inaugural
edition of the Sports Pro magazine, a new monthly sports financial magazine published in the UK.

Besides an insight into the success of Nike founder Phil Knight, which was the cover story on the man who is unrivalled as the richest man in sport, having amassed a fortune of over USD$10 billion, there is a special report on finances in F1.

Interestingly, the report carries a rather detailed breakdown into the 2008 budgets of all 11 F1 teams, concluding that the depreciation of 1.4 percent in the total budgets of teams alone, from USD$3.139 billion in 2007 to just USD$3.096 billion this year, as projecting F1 into "as uncertain a state as it has ever been".
That's a drop of USD$46 million. Honda, Super Aguri's so-called big brother, has replaced McLaren as the team with the biggest budget, no thanks to the spygate scandal that resulted in the latter being fined USD$100 million. Honda's total budget, for your information is a whalloping USD$422.35 million! That's 13.64% of the overall budget of teams put together. Interestingly too, the magazine's report seemed to reflect on Super Aguri's demise as impending, rather than speculation and described the team's budget for the year (well below USD$100 million) as negligible.

Also, if you'd have thought world champions Ferrari or McLaren would be second and third with Honda occupying the top budget ranking, you'd have been so wrong.

BMW-Sauber's USD$412 million, of which USD$356 million is in cold, hard cash, is second highest, thanks also to national oil company Petronas' ranking as the highest paying non-title sponsor or team owner in the sport with a USD$42 million contribution.
BMW-Sauber's budget is 97.55% of Honda's, with BMW being the biggest contributor with USD$220 million. Even that, only ranks the team owner as the fourth biggest of the 192 sponsors associated with teams in the sport, after Honda (USD$340m), Toyota Motor Corp. (USD$315m) and Red Bull (USD$279m).
Petronas' USD$42 million makes them the 11th biggest sponsor in the sport.


Air Asia's USD$2.75 million deal with the Williams team ranks them joint-60th with sports attire company Fila, who support Honda, and global courier service FedEx, who have their logo on the McLarens of Lewis Hamilton and Heiki Kovalainen.

My poor favourite team Renault has only the sixth biggest budget in F1 with a measley USD$189.5 million, according to the Sports Pro special report. Super Aguri was not even featured individually in the team-by-team budget analysis.

A significant change F1 had, if I read the report right, was the entrance of India's colourful billionaire Vijay Mallya as team owner. His USD$46 million, channeled via three of his companies - Kingfisher (USD$40m), The Dalmore (USD$3m) and Royal Challenge (USD$3m) saved the former Spyker team from collapse and eventually developed into an Indian national project, aptly renamed the Force India F1 Team.

A similar change, or rather one that mirrors the BMW takeover at Sauber and Honda's buying out of David Richards' BAR team several years ago, is said to be in the pipeline, and McLaren is at the centre of it with Mercedes looking to take over Ron Dennis' 15% stake and the equal amount held by Saudi tycoon Mansour Ojjeh.

The outlook for F1, according to the report, seems bleak as the sport faces an impending financial crisis brought about by an overall mixture of sponsorship downturn and a fluctuating and unstable US dollar.

Which probably substantiates further the sport's powerbrokers' - the FIA and Bernie Ecclestone's - intentions of introducing budget caps, which initally were thought as mere efforts to level the playing field. But those familiar with the Max and Bernie combination, would tend to believe that the sport's future isn't too much in danger. Not as much as that of small-budget teams like Toro Rosso and Mallya's Force India, as Aguri Suzuki may attest to. I believe that soon even the likes of Williams will come under pressure.

In case nobody realised, F1 is already well and truly THE big boys' game. It isn't anymore a game for teams run mainly on passion and desire. It is no longer a game for those without the backing of manufacturers, or teams that aren't owned by manufacturers. Even McLaren is going down, so is Williams. It is inevitable. It isn't good and neither is it bad. It's just happening.


I'd like to note down more on this... soon..


Note - Current exchange rate: USD$1 = RM3.15