Much of the news about Formula 1 in recent weeks has been about activity off the track as well as the exciting action on it. There has been a great deal of activity to negotiate a new Concorde Agreement. This is the overarching commercial agreement that governs Formula 1 and is made between the teams, the commercial rights holder and the regulator. The good news is that we now have a new Concorde Agreement for the period 2010 to 2012, which will bring greater stability to the sport and allow us to plan for the future with greater confidence.

One of the issues that all of the teams have been grappling with as part of the negotiations for the future is that of cost reduction; over the last number of years, the budgets of the largest teams have grown at an alarming rate and we have seen an increasing correlation between the size of a team’s budget and it’s success on the track. This has put pressure on us all and led some to reconsider whether the investment they have been making in Formula 1 is achieving a satisfactory return. I imagine that this was a factor in the decisions of both Honda and BMW to withdraw from the sport.

In response to these pressures, the key parties in Formula 1 have all taken steps to cut the cost of fielding a competitive team and so make it possible for independent teams such as AT&T Williams to continue to do well on a lower than average budget and for new teams to enter the sport. It costs a lot of money to manufacture a Formula 1 car and then costs a great deal to run it on the track. For many years we have all run thousands of kilometers in testing to validate new designs and improve reliability, but this activity has not received wide publicity and so has not been of great value to sponsors. For 2009, the teams have agreed a substantial cut in track testing, we have reduced the number of pre-season tests and limited testing to one car, whereas we had two test cars in the past, and we have virtually eliminated in-season testing. In addition, the engine manufacturers have all agreed to increase the life of their engines so that each team needs fewer engines for a season.

These changes have helped us all to reduce our costs for engines and track testing, but one of the inevitabilities of Formula 1 is that teams will spend whatever money they can raise and so cost reduction in one area often leads to a corresponding increase elsewhere. To tackle this, the teams have now agreed to a resource restrictions agreement which tries to take a more rounded approach and applies restrictions to more areas of activity. The aim of this is to ensure that the key areas of competitive differentiation, such as the use of wind tunnels and super computers for aerodynamic development and the overall cost of car production, are all controlled by appropriate limits. These include limits on the number of hours for which we can run wind tunnels, limits on the number of people we can employ and limits in the amount of money we can spend on such activities. Although this will not stop some teams having a bigger budget than others, it does mean that increasing expenditure should result in less relative competitive advantage than in the past and so it is possible for new teams to enter the sport with an expectation of having a reasonable level of performance on the track for a reasonable investment. Will it work? Well, so far we have three new teams with confirmed entries for 2010 (the first time that this has happened for many years) and they are working hard to develop their cars for next year. 2010 may be a learning year for them and so we won’t really know the impact of these changes for two or three years, but the good news is that we have these new limitations in place and an unprecedented level of cooperation between all of the competitors in Formula 1 to keep to the spirit of them.

On the track, we continue to have one of the most exciting seasons of recent years, with very small differences between teams and good evidence that we are all developing our cars at a very rapid rate. Congratulations to Force India on gaining their first points ever with a fantastic second place in Spa. I am writing this on the eve of the Italian Grand Prix at Monza where they may just go one step better. At AT&T Williams, we have been plotting our progress and see a steady reduction in the gap between our performance and that of the leading teams. We have now scored points in eight consecutive events, which is a tremendous run of form, and we have some new parts to bring to the track for forthcoming races so we continue to expect great things from our drivers in the last five races of the season.

Alex Burns 10 September 2009