FIA president Max Mosley has been warning for several months that manufacturers could leave the sport unless drastic cost cutting measures were made. On Friday morning his fears were realised when Honda announced they were quitting the sport.
Autosport.com heard from Mosley in the wake of the announcement when he spoke to a select few media about his reaction to the news, his feelings on the future and why the sport's long term future remains positive.
Q. What is your reaction to the news that Honda are withdrawing from Formula One?
Max Mosley: "It is very sad because obviously there are a lot of jobs, they are a key player in the sport and they have been for many years.
"I must say it was not totally unexpected. I had been expecting one of the major manufacturers to stop for some time, even before the current situation the costs were completely out of control. Now it is difficult to imagine how any manufacturer could stay in unless we make substantial reductions in costs."
Q. Are you expecting any other manufacturers to follow suit, with Honda's decision perhaps starting a domino effect?
MM: "We've had no specific information, but unless we can demonstrate to the directors of these big companies that the costs are coming right down, I don't doubt they will start to discuss the possibility."
Q. Is this a wake up call that the big manufacturers need?
MM: "I think it is, there is no doubt. The teams, to be fair to them, had a meeting yesterday in which they discussed a lot of cost cutting. They (also) had a previous one and they are certainly making an effort, but the question in my mind is whether they are attacking this in a sufficient root and branch way.
"I am hoping to have a meeting with all the FOTA teams in the next days, and then we will discuss that. I don't think there is any doubt now that there is a real sense of urgency."
Q. If another team does pull out and we are reduced to 16 cars on the grid, does the sport then lose some credibility?
MM: "I think it would start to be very difficult at that point. But provided there was a powertrain available, an engine and a gearbox, I think it quite likely that one of the old style F1 entrepreneurs will buy the remnants of one of these teams, providing they can do so on reasonable terms.
"I think everything depends on having a powertrain available. If we can achieve that, then we may get a shift in ownership of one or two teams, but I don't think we will lose a team. In the end the assets are all there, it is just a question of if we can use them."
Q. Nick Fry has said there are three parties expressing an interest in buying Honda. Are you aware of anything?
MM: "I don't know of anybody, but I do know a lot of people who would potentially be interested. But the first question they are going to ask is 'what are the terms?' The second question is 'where would I get my engine and gearbox from?' That is the reason we sent this letter out today, because we want to have an engine and gearbox available should it be necessary."
Q. Does more need to be done for next year to help bring down costs, prior to the 2010 major reductions?
MM: "They (the teams) made a whole lot of steps yesterday to reduce costs further, but 2009 is very difficult because in so many respects, the die is cast. The moment where we can make really massive reductions is from 2010, but we have to get through 2009 first.
"I believe the teams have already done a lot and we can probably do more - I think we keep 2009 under control, but the real rationalisation of F1 cannot now happen until 2010. But it can happen then."
Q. Will 2009 therefore be a difficult season for F1 - to keep teams on the grid and to keep the sport moving along?
MM: "It could be difficult because nobody knows how serious the world financial crisis is going to be. It affects everybody, it doesn't just affect the teams, it affects the ability of people to go to the races, it affects the ability of the organisers to pay a fee, it affects corporate hospitality, it even affects the television viewers in various ways.
"It is difficult to predict, but in a way we are at the mercy of the overall situation - but what we must do is make sure we do everything possible to ensure we have done every step we can to get our costs under control. That is all we can do, and then hope for the best.
Q. The global recession has been a key player in Honda's demise. Have the FIA's regulation changes also played a part - especially with KERS being so expensive in the short term despite the good reasons for introducing it?
MM: "You have to see these things in proportion. The top teams' budgets are in the order of £200 million. The number of employees is between 700 and 1000. I don't think anybody is spending more than $10-15 million on their KERS systems, so you are talking about less than ten per cent of the budget.
"Obviously if you cut costs then you have to look at everything - but the first place you go if you want to cut costs is the gearbox. It is a complete waste of money and costs more than KERS. The wind tunnels and aerodynamics are a complete waste of money and cost more than KERS. There are a whole package of things - there is not one issue that can solve the problem it has to be done as a package."
Q. Does F1 need these gizmos? Bernie Ecclestone has talked this morning saying the average man in the street does not want to see these things - he just wants to see cars racing?
MM: "You need the technology that everyone can understand. KERS is a very good example of that. It is recovering the energy when the car brakes and using it again, and that is directly relevant to the road.
"Everyone understands that if they can use the energy they buy at the petrol station two or three or four times, rather than once, which happens now, they would have an advantage.
"But the gizmos that are a complete waste of time are the really sophisticated gearboxes that nobody sees and nobody knows about, except the gearbox man who prepares it and maintains it.
"It's the same thing with the engine and the aero - whether there is a little twist on the front wing, nobody knows. KERS is something that everybody understands. The aerodynamics, the gearbox, the ultra high-revving engines, the lightweight components, those things nobody can understand.
"I will give you one example. The suspension on one F1 car costs something in the order of £5 million to £10 million just to maintain because of the material. If it was made of steel, just like it was a couple of years ago, it would make absolutely no difference in the grandstand and would cost a few thousand a year rather than a few million.
"The brake ducts on the cars, they cost a fortune because they are very, very sophisticated. Nobody knows anything about that, and nobody could tell you which brake duct belonged to which car - only ten people in the world could tell you that.
"Then you look at the wheel nuts. One of the teams is using 1000 wheel nuts per year, but they only use them once because they are ultra light, and they cost $1200 USD each as they come from California. It is completely unnecessary and nobody gets any benefit from that at all. There are endless examples like that, so in a sense Bernie is right.
"But KERS is just fundamental because apart from being understood by the public, when the sponsors say to you, how can you be involved in F1? It uses a lot of fuel and is a conspicuous consumption of energy, we can say F1 is developing a new system that is much more efficient and lighter than the current road car systems to recover and reuse energy.
"KERS would be the last thing I would abolish if I was abolishing things. I would start with the things that make no difference.
Q. If you look at the two Japanese manufacturers you would probably not have chosen Honda as the one to withdraw. There are Red Bull with two teams and questions about how long he can keep sustaining both of those. Before long, you could be at 14 cars on the grid. What happens then?
MM: "That is a good question because the first thing in the old days is you would say to the teams that you have to run three cars each. But they would probably reply today that they cannot do that.
"What I am trying to do is something completely different, which is to say to the teams we have to get the costs down to get to the point where you can run on the money you get from FOM, on minimal sponsorship, and then one of the big car companies or Red Bull would not have to put their hand in the pocket.
"At the moment, it is difficult and if it starts to get down to 14 cars or fewer then you have a serious problem."
Q. Do you expect races to follow suit - we have already lost the French and Canadian Grands Prix?
MM: "I think some of the races may be in difficultly, particularly in Europe, because the fee has gone up each year but they have been insulated from the increased fee because it was paid in dollars and the dollar has been weak for the past five years against the Euro.
"Now that has completely reversed, and the dollar has become more expensive in Euro terms, their fee in their own currencies has gone up dramatically. So I think we may find some of them in difficulty. That is a matter for Bernie, he has to make sure there are enough races on the calendar."
Q. After what we have seen with Honda, what is your feeling on the short term and long term future of F1?
MM: "I am very optimistic about the medium and long term future, if we have a route and branch revision of the costs. We've got a complete programme we would like to put through, but we have to get the teams to agree to most of it. If we do that then the costs will come down to the point where the whole thing will be viable. If we don't do that, then I am not optimistic."
Q. Have you seen FOTA's latest proposals to reduce costs, and are you optimistic they will achieve the aims to cut costs?
MM: "I've been informed about meeting yesterday in some details and I've seen the proposals from earlier meetings. I don't think that yet goes far enough, but I don't think FOTA would say they have finished the process.
"Much more needs to be done for 2009 but as I said that is very difficult. Much, much more needs to be done for 2010. We need to have a radical revision of the whole thing - we have got to get the costs down not by 10 or 20 per cent, but down to 10 or 20 per cent of what they are now - in that sort of region."
Q. So a team on a £200 million budget now will be expected to run for £30 million in 2010?
MM: "Exactly. I would expect a team to be able to run in the 30-40 million pound bracket. If we can do that, then a combination of what they get from television and central rights, and what they can get from sponsors, should make the teams viable without huge subsidies either from the car industry or billionaires. But without that, I don't really see where the money is coming from.
"The thing you have to remember is this: We can get the costs down to the region we are talking about and it can be done without the man in the grandstand or on television noticing any difference at all. If you look at the letter I sent out this morning - the gearbox will cost 10 per cent of what existing gearboxes cost, and the only difference is it will be about 5kg heavier. But if everybody is using the same one it doesn't matter. When everyone is competing it does matter and they spend a fortune getting there.
"If you go into the detail, it is completely mad what goes on at the moment. Huge sums of money are spent to gain the tiniest advantage - and it is that we have got to stop. We can make all these changes and no one will notice.
"There are very few businesses in the current economic crisis where you could take out 80 per cent of the costs without the customers noticing anything."
Q. Have you had any reaction from teams regarding your standard engine proposal this morning, and do you expect four to sign up by next Thursday?
MM: "I've had positive reaction from three different teams but whether they will be in a position to sign up we will have to see. Also, we may have a meeting of everybody between now and then."
Q. How are negotiations between the FIA and FOTA going?
MM: "There is a very, very good dialogue going on. I was late for this call because I was on the telephone to Mr. (Luca) di Montezemolo. We speak regularly, and both of us are absolutely determined to solve the problem, and I am optimistic that together we can."
Q. Has today been bad for F1's image?
MM: "I don't think so. I don't think it will affect F1's image as long as we don't lose any more, but also as long as we can replace them. That is what is important."
Q. Are there replacements out there? Are there any other manufacturers out there?
MM: "I think there are at least two manufacturers who would have been in F1 some time ago were it not for the outrageous costs."
Q. Could you see those two entering in 2010?
MM: "It's possible. If we get the costs down to the region I am talking about then what you might call the old style F1 entrepreneurs, the kind who have been squeezed out over the last few years, will start to come back.
"The only reason why you haven't got some of the classic old people, without mentioning any names, is that they simply cannot find the money at the moment. They couldn't even in the good times, it wasn't possible - the only people who could were billionaires or car companies."
Q. You've talked about a budget cap in the past. Does it get closer after what happened today with Honda?
MM: "I think we've moved beyond the idea of capping. We've moved into the area where we are looking at allowing certain parts of the car to be developed and be a performance differentiator, and not allowing others.
"Once you do that, then you are looking at very small areas and you can police it very effectively. Then we start to get into the detail of what I am going to talk to the teams about. But it is completely doable - we've given it a great deal of thought and we know how to do it. It is a question of getting everybody on board."