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Formula 1 team bosses are ringing the alarm bells about the potential effect on the sport of the growing climate of global economic gloom, further exacerbated by the terrorist attacks in New York and Washington. Some are going so far as to say that certain teams may disappear altogether.

While the tragic events in the U.S. did not help the current situation, teams had already begun to brace themselves for hard times during the summer as a sluggish world economy was already a factor for existing and potential sponsorship deals, in particular those in the technology sector.

"The economic downturn, particularly in the United States, is going to have significant ramifications for sponsorship in formula1 in the short term," Jordan's Head of Marketing, Mark Gallagher, said in mid-August. Since then, it is rumoured that high profile sponsors have decided to abandon the sport in the face of mounting pressure on company profits and massive employee lay-offs. Benetton's title sponsor last season, Marconi, for example, is widely believed to be pulling out of the sport next year although no official confirmation has come from either the company or the team.

Another high profile company and Williams sponsor, Nortel Networks, confirmed at the Japanese GP that it was not renewing its commitment to the Grove team and other companies, particularly in the technology sector, are expected to follow suit.

"We have suffered a sever downturn in the market and none of our business sponsorship will be renewed," said a Nortel spokesperson. In fact, the head of marketing at the team Nortel sponsored, Williams, had been expecting such a result several months ago. "It wouldn't surprise me if those companies -Lucent, Marconi and Nortel - scaled down or even withdrew from Formula 1," Jim Wright said in late summer of this year.

Teams will also be hit hard by the fact that several deals that we almost signed prior to the events in the U.S. are now off the table or are being totally re-evaluated. "We've got sponsors who were on the brink of commitment and they have pulled back and are re-evaluating where and how to spend the money," UK magazine Autosport quoted McLaren boss, Ron Dennis, as saying.

Such a gloomy scenario is now prompting some team bosses to say that certain outfits may not be back for the 2002 season and that the issue of cutting the ever upward-spiralling costs of the sport must be addressed. "Some teams will go under," believes Craig Pollock, boss and part shareholder of the British American Racing team.

But just how cost cutting will be achieved in a sport that is notorious for seldom achieving unanimity in decision making, remains a key question and one that has no easy answers.

"Cutting costs should be a target, but it needs to be a unanimous decision and that is not easy to achieve," Lauda told Autosport magazine.

Although a number of ideas have been put forth to reduce expenditure, namely to limit testing, reduce driver aids and standardise certain parts, teams have not been able to agree on what measures to take as different interests are served by taking different steps.

Another key issue in this whole dilemma are the car manufacturers, as they have grown increasingly concerned at the high costs and small return of the sport in terms of the television revenue the teams receive. In the current economic climate, with manufacturers cutting down production and staff levels, it may be impossible to maintain the commitment to the sport. "It would take just one or two manufacturers to pull out at the moment to leave the sport in quite big trouble," believes Jordan's Commercial Director, Ian Phillips.

With some of the top team budgets reaching in excess of US$300 million per season and the current global economic situation, it is probably reasonable to expect that something will be done, although in the short term, this seems unlikely.