Kate Walker explores the impact Thursday's referendum result could have on Formula One -- a sport that is largely based in the UK, but one with strong connections to the rest of Europe
The immediate impact of Brexit can be felt in the value of the pound, which reached its highest level in 2016 this week, when it looked like Britain would vote to remain in the EU. Since the referendum result was announced, the value of the pound has fallen to a thirty-year low of $1.33, FTSE futures have dropped by eight percent, and US stock index futures have also slumped.
For Formula One, the initial impact of Brexit will be felt as early as next week, when the travelling circus turns up in Austria to find that everything costs a little bit more than had been budgeted for: hotels, meals out, supplies such as groceries that are bought locally by the teams... No one item will make the difference between wealth and ruin, but the travel costs borne by teams, media, and other F1 personnel - many of whom are self-employed - will stealthily creep up and cutbacks will have to be made.
Longer-term, as Brexit will not happen overnight, much remains to be seen regarding the nature of individual deals struck with European governments over the movement of goods and people. It is highly unlikely that the UK will not retain some form of ESTA-like system with Europe, allowing for visa-free travel of up to three or six months in duration, but securing foreign talent for specialised roles -- such as those found in the paddock -- will require a substantial amount of paperwork and added costs for work visas.
The impact of added administrative tasks should not be undervalued, as added processes make for added time which itself leads to added costs. While these added costs are certainly felt at the team level, with several outfits currently in the red or very close to the margins, it will also have an impact on individuals working -- or hoping to work -- in the sport.
For Britons seeking employment with Ferrari, Sauber, or Toro Rosso, for example, the need to secure a visa makes them a less attractive candidate when compared with an identically-skilled EU passport holder. There is a chance that, in the more junior roles particularly, the F1 talent pool in the UK starts to become more homogenous as teams stop 'hiring out' for anything other than high-profile jobs.
Similarly, there will be additional paperwork to be done surrounding the movement of all the teams' freight. While the teams are used to completing endless rounds of customs forms during the flyaway rounds, Brexit means the whole calendar will need paperwork.
Economically, the pessimistic prognosis of imminent financial collapse for the pound and in turn the UK is one that has been largely shared by the watching business world, the bulk of which urged the UK to remain in the European Union.
If the UK does suffer financially in the wake of Brexit, it may make more economic sense for those teams able to do so to relocate to Europe, creating a new motorsport hub. Mercedes are both German and English, and could choose to base themselves (and the relocated Brixworth engine facility) around Stuttgart. Renault (currently in Enstone) have Viry-Chatillon; Red Bull (Milton Keynes) could choose Austria or Faenza, with Toro Rosso.
Motorsport currently represents big business in the UK. The industry employs more than 40,000 people and is estimated to bring around £9 billion a year into the economy. Formula One is but a part of a wider industry that shares knowledge and technology with other fields, from aerospace and automotive through to military and manufacturing. If Brexit has the negative financial consequences that many anticipate, the collapse of smaller players will make itself felt up the supply chain, and there is no knowing where the ripples might stop.
In the run-up to the referendum, no team principal would comment on the potential impact of Brexit on their team or the sport as a whole, with all saying that they did not comment on politics. In that light, it is unlikely that we will see much said on the record now that the deed has been done.
Despite their committed silence on the subject, the effects of Brexit -- both immediate and long term -- will play out over the course of the next Concorde Agreement discussions. Depending on the impact of Brexit upon the pound, it is highly likely that FOM payments -- traditionally made in dollars -- will be the focus of much negotiation.