MICHELIN IS PULLING OUT OF FORMULA ONE RACING

Will End Involvement in 2006; Cites 'Profound Differences' With League

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DETROIT (AdAge.com) -- Five months after pulling its teams off the track at the U.S. Grand Prix in a dispute over rules, tire giant Michelin is retreating from Formula One racing altogether after the 2006 season.
Photo: AP
Michelin was one of two companies that supply all the tires used in Formula One racing. Now, only Bridgestone will be supplying tires -- and reaping the worldwide exposure for its brand.
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In a blistering statement attributed to Managing Partner Edouard Michelin issued from the company’s Paris headquarters, the company cited “constant changes to racing regulations without warning,” and took officials of the international motor sports circuit to task.

“This decision is the result of profound differences between Michelin’s long-standing sporting philosophy and the way Formula One is managed by the regulating authorities, which no longer provide a clear and sustainable environment to justify long-term investments,” Mr. Michelin said in the statement.

Bridgestone sole supplier
The move leaves Bridgestone as Formula One’s sole tire supplier, which Michelin said was regrettable. A tire is “a very influential component” in Formula One racing, it said, and “teams’ freedom to choose their own tires is essential.”

Michelin, which won Formula One's World Championship this year, said the decision does not mean it will abandon its 117-year commitment to all motor sports. “If F1’s ways of functioning were to be significantly modified, Michelin would not hesitate in proposing its services to the different teams once again.”

The move follows this summer’s debacle in which only six cars competed in the Formula One U.S. Grand Prix in Indianapolis after Michelin discovered a design flaw in its tires and deemed them unsafe. It asked the sports governing body to allow a change in the rules which prohibit teams from changing tires after qualifying, and also asked the Indianapolis Motor Speedway to install a chicane, or curve, that would slow speeds and make the track safer. Both requests were denied, and Michelin advised its teams not to compete, touching off a PR nightmare.

$12 million refund
In July, Michelin North America offered F1 fans who attended the June 19 race a full refund. At an average ticket price of $100, the refund cost the Paris-based tire company an estimated $12 million -- plus another $5 million that Michelin has pledged to buy them tickets to the 2006 U.S. Grand Prix.

Primary F-1 sponsors pay about $10 million a year to field a team for the 19-race season. That's about the same as sponsors pay for Nascar’s 36-race season, but F-1 sponsors get exposure in Europe, Asia and Canada as well as the U.S.

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