Will Fiat be forced to pull plug on Ferrari?

Ferrari is sticking to its guns in F1 politics at the moment, having negotiated itself a very favorable deal with Formula One Management for the period 2008-2012. The problem is that none of the other teams want any part of the same deal. Ferrari has long had its budget topped up by Fiat – the majority shareholder in the team – but things are becoming more difficult all the time.

Fiat's shares were suspended in trading yesterday on the Italian stock exchange after they dropped more that 10% in value. The shares were trading at their lowest level in nearly 20 years. The sudden fall in value came as European investors digested the latest results from General Motors, allied to the weak car market in Europe and fears about Fiat's cash flow. There were fears that GM might miss its final payment to Fiat of $718m which is due at the end of May, following their decision in February to dissolve their joint ventures and annul a deal for GM to buy Fiat.

If all goes to plan by September Fiat will come under the control of lending banks when a $1.5bn loan will be converted into equity. And, as F1 has discovered in recent times, banks are interested in money rather than making sure that sporting adventures operate properly. Grandprix.com