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McLaren expect their revenues to fall by more than a third as a result of the global economic crisis, according to the Formula One team's boss and co-owner Ron Dennis.

"Our budgets come from the advertising budgets of the companies that support us, and inevitably advertising budgets get slashed or at least are significantly trimmed in times of economic strife," Dennis told the Observer.

"We know we have to reduce our costs to cater for the inevitable downturn in income that is coming in 2010 and 2011," he added in an interview that the Sunday paper said took place before Honda announced that they were pulling out of the sport.

"We predict that our turnover will drop from £280 million a year to as low as £175m," said Dennis.

McLaren are 40 per cent owned by Mercedes with 30 per cent in the hands of Bahrain's state-owned Mumtalakat holding company and the remainder shared equally between Dennis and Saudi business partner Mansour Ojjeh.

Their main sponsors are telecoms giant Vodafone and Spanish bank Santander.

The team won their first Formula One title since 1999 this season, with Britain's Lewis Hamilton becoming the sport's youngest world champion at the age of 23.

McLaren are the second most successful Formula One team after Ferrari in terms of races and titles won but they also own a group of companies and Dennis has said he wants to diversify their activities further.

"If you look back in history, you see clear examples of teams that have stayed unique to Formula One that have just failed," he told reporters in Brazil in November. "You cannot sustain a Formula One team indefinitely, you need to diversify."

Mercedes motorsport head Norbert Haug said on Friday that Formula One teams must cut costs by at least 50 percent over the next two years.

However he said Mercedes' own financial position remained solid.

"Mercedes-Benz's contribution is cost-efficient, the resonance in the media and in the public which last season and Lewis Hamilton's win generated was worth many times our financial investment," he said.

Reuters