The full transcipt of the letter is below:- 

Dear Luca

COST CUTTING

Following Charlie's email of 3 January, I feel it may be useful to set out the current position as we see it.

A few general points

First, even before the current crisis, Formula One was not viable. Costs have been so high that we have had vacancies in the Championship for some time. Secondly, it is impossible to cut costs substantially without significant change. Inevitably, cherished projects, facilities and sadly even people have to go. Thirdly, the fact of having recently invested in an expensive facility is not an argument for retaining it. That money has been spent. It's gone. What we have to avoid is forcing others to spend the same money in order to keep up. Fourthly, there is no rational argument to support the continued use in Formula One of expensive technologies which have no relevance outside the sport and are unknown (and thus of no interest) to the general public.

SPECIFICS

2009

The changes to the 2009 Regulations agreed at the December 10 meeting will help a lot. We need detailed proposals on some aspects, particularly the 8 hour/5 day restriction on wind tunnel use (which we understand was agreed among the teams) if we are to enforce this as a regulation, but much is already in place.

We are ready to agree further cost-saving measures for 2009 if these have the agreement of all the teams.

2010

The really big changes come in 2010.

Engine

- The rev limit will be reduced to 17,000 for 2010 and thereafter;
- retuning will be limited to, at most, trumpets and injectors (position only), except that Cosworth, having missed out on the last retune, will be allowed to make general changes within a limited budget;
- engines remain completely frozen until 2013, as already agreed;
- testing will be limited to 15,000km per year, Friday testing included.

On this basis, Cosworth will be able to supply competitive engines from 2010 for well under €5m per season per team, including all on-track support, provided they have firm orders to supply at least three teams within the next week or two;

The present regulations will remain in force, so there will be no interference with any existing arrangement for the supply of engines. Furthermore, the reduction to 17,000 rpm will allow additional cost savings for current engine suppliers.

Transmission

We intend to make it a condition of entry to the 2010 Championship that a team has made an arrangement with XR for the supply of the standard gearbox in accordance with XR's tender. We appreciate that some teams would like to continue with their current arrangements and/or use standard internals, but the fully standard gearbox is an obvious way to save very significant sums without affecting any useful aspect of Formula One. In order to eliminate the difficulties of the interaction of the casing with the underbody, we will also require a standard underbody. Again, this will have no impact on the spectacle but will save even more money and eliminate certain scrutineering problems.

Chassis

We will shortly produce a list of chassis parts and systems which, from 2010 onwards, will be the only elements of the chassis which can be developed. All remaining chassis elements will be either standard or frozen. We wish to develop this list in consultation with FOTA but it must be understood that it will involve a radical curtailment of R&D in respect of the chassis and hence a very significant reduction in costs. If carefully thought through, it should also reduce the need for the use of wind tunnels, CFD and simulators.

Race Weekend

We should like FOTA to make proposals to reduce further the costs of the race weekend, always on the basis that priority should be given to cost savings in areas which are invisible to the public and have no safety implications.

KERS

No team is obliged to fit KERS. It is also open to the teams to agree on a standard system or, indeed, to agree not to fit it at all. We are increasingly of the view that the use of chemical storage (in particular batteries) should be prohibited in Formula One owing to the unsuitability of the batteries currently available. There are at least two mechanical or electro-mechanical systems under development for Formula One and there may be others as well as hydraulic systems. Formula One would benefit from systems with more capacity than the present 400KJ, 60KW, (for example maxima of: 2MJ stored, 150KW in, 100KW out) but still very small and very light, as is essential in Formula One. These figures are theoretically possible with mechanical devices, but not feasible in the foreseeable future using batteries and/or capacitors. Such non-chemical devices, if successfully developed, would have a very significant impact on road transport and other applications.

This is a subject we should like to explore in depth with FOTA. In particular we should like to examine how Formula One's outstanding engineering capacity could be used to develop KERS without incurring significant costs for the teams.

Tyres

Apparently a lot of money is currently being spent on achieving a weight distribution which gets the best possible performance from current tyre widths. We should like to discuss with FOTA a possible change in the front-to-rear width ratio with a view to eliminating this problem. At the same time we should like to examine with Bridgestone and FOTA the possibility of introducing compounds which will not produce "marbles".

Budget Capping

We understand that this is once again being discussed within FOTA. The idea that each team should have the same amount of money, so that success is simply a function of intellectual ability, has great appeal. If properly enforced, it would be a very fair system. Indeed one view is that having much more money than a rival team is just as unfair as having a bigger engine. We should like to discuss this further with FOTA. It may be that in present circumstances, a voluntary cap would work because no manufacturer whose board has signed off the agreed amount would be likely to allow secret additional expenditure, while independent teams would probably not have access to the necessary cash.

The "Show"

The main complaint from race fans is the lack of overtaking and wheel-to-wheel racing. Changes to the aerodynamics rules have been proposed by a group of top experts from the teams and will take effect in 2009. It remains to be seen whether these plus an extra 80 bhp from KERS will help overtaking. There are also proposals for changes to the sporting regulations such as wholly or partially reversed grids, allocating leading grid places by lot, giving the World Championship to the driver with most wins and so on. Arguably, however, none of these deals with the problem that once the faster car gets past, it tends to drive away. So none of these proposals is conducive to close, wheel-to-wheel racing.

We intend to seek FOTA's help to investigate the use of moveable aerodynamic devices. If sufficiently radical, these could give a car following another car a performance advantage by virtue of being behind. In a primitive way, this was the case in the 1960s, when a car would get a "tow" and lose lift and thus be faster in the wake of another car. The result was wheel-to-wheel racing at the so-called slip-streaming circuits, for example pre-chicane Monza. Using modern technology, moveable aero devices could be used to give a car more downforce and less drag whenever it was in turbulent air. This would produce wheel-to-wheel racing on all types of circuit. It would, however, require significant (possibly automatic) moveable aero devices.

The Future

As already mentioned, the financial barriers to entry were already too high before the current world financial crisis. We had a Championship dependent on the willingness of world's car industry to continue spending vast sums on Formula One racing and the few remaining independent teams (with one exception) entirely reliant on the generosity of their billionaire owners. In current circumstances, it would be crazy to assume this can continue. Costs must be reduced to a point where a well-run independent team can operate profitably with just the FOM money and very moderate sponsorship. This is the only way to safeguard the Championship and allow new teams to enter to fill the gaps as well as replace those leaving.

The FIA itself would not be financially disadvantaged by a collapse of Formula One, but it would suffer in other ways. And, in any event, we believe we have a duty to do whatever is necessary to preserve the Championship for the competitors, the commercial rights holder and motor sport generally. We are therefore prepared to act radically. We hope that, notwithstanding the changes which must now be made, all teams which are still in business in 2010 will enter. But as already stated, we will be ready to recognise an independent series should some teams prefer to go their own way.

We hope for FOTA's support in the actions we take and for your unstinted help in reaching the decisions which have yet to be made.

With best wishes

Yours sincerely

Max Mosley

cc: All Formula One Team Principals

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