In this Friday July 12, 1996 file photo standing under the smiling portrait of himself, Formula 1 Ferrari driver Michael Schumacher, right, discusses matters with Ferrari President Luca Di Montezemolo, left in the Ferrari garage at Silverstone racetrack in England. The Ferrari team said Tuesday, May 12, 2009 it won’t enter its cars in next season’s Formula One championship unless the sport’s governing body revokes its new budget cap. Ferrari, which has been involved in all 60 seasons of motor racing premier’s championship, said the new FIA guidelines were arbitrary and would set up a double standard. It said equal rules for everyone are necessary for the sport to continue. "The same rules for all teams, stability of regulations, the continuity of the FOTA’s endeavours to methodically and progressively reduce costs, and governance of Formula One are priorities for the futures," Ferrari said in a statement after a board meeting. (AP Photo/Jacqueline Arzt, File)

Ferrari, Formula One motor racing’s most iconic team, will leave the sport at the end of this season unless plans for a budget cap next year are abandoned, the Italian team said.

The Scuderia, as Ferrari are known, are not alone. Toyota and Red Bull, who also own Ferrari-powered Toro Rosso, have already threatened not to enter next year’s championship unless the new rules published by the sport’s governing body, the FIA, are changed.

"If the regulations adopted for 2010 will not change, then Ferrari does not intend to enter its cars in the next Formula One World Championship," a statement from the Maranello-based team said.

The FIA, headed by Max Mosley, wants to introduce an optional £40 million budget cap next year to encourage new teams to enter the top level of international motor sport.

The plan would allow capped teams to operate with far greater technical freedom than those continuing with unlimited budgets.

Ferrari’s president, Luca di Montezemolo, who is also head of the Formula One Teams’ Association, has warned that the proposed changes will create a two-tier championship that could be "fundamentally unfair and perhaps even biased".

The Ferrari board backed his stance at a meeting at Maranello.

"For the first time ever in Formula One, the 2010 season will see the introduction of two different sets of regulations based on arbitrary technical rules and economic parameters," the statement added.

"The board considers that if this is the regulatory framework for Formula One in the future, then the reasons underlying Ferrari’s uninterrupted participation in the world championship over the last 60 years... would come to a close."

The FIA has set a deadline of May 29 for teams wishing to compete in 2010 to submit entries and state whether they want a budget cap.

Ferrari have been in Formula One since the first championship race in 1950, and they and the Monaco Grand Prix have long been seen as the most valuable elements in Formula One’s brand. As the sport pursues new markets in the Middle and Far East, Ferrari are a crucial part of the show, a fact which is not lost on the sport’s commercial rights holder, Bernie Ecclestone.

Ferrari have been champions eight times in the past 10 years. They have struggled this season, however, and are seventh in the constructors’ standings after five races. The sport has been turned upside down by a raft of new technical rules and cost cuts to help beat the recession.

The Italian team have threatened to withdraw in the past, most recently in October last year after Mosley proposed a standard engine for all teams. Ferrari have always manufactured their own engines.

Mosley said recently that he was locked in a power struggle that he intended to win. "The sport could survive without Ferrari," he said. "It would be very, very sad to lose Ferrari. It is the Italian national team."

Ecclestone made clear last weekend that he was not prepared to let that happen. "Formula One is Ferrari and Ferrari is Formula One, it’s just a marriage made in heaven," he said.

The Ferrari board also said it was disappointed about the way the FIA was taking decisions of such a serious nature.

"The rules of governance that have contributed to the development of Formula One over the last 25 years have been disregarded," the statement added.

Why so special?

Ferrari race in Italy’s official motor racing colour, red. They are effectively the national team and inspire limitless devotion from their fans, the tifosi.

The Scuderia, for whom Michael Schumacher won five consecutive world titles, are the only team to have contested every world championship since the title was inaugurated in 1950.

Ferrari are Formula One’s best known international brand, the Manchester United of motorsport. They are widely followed in F1’s crucial new markets in the Middle East and Far East.

Fans who adore Ferrari like to see them win. Fans who hate Ferrari like to see them lose. There is little middle ground.

Ferrari’s road cars visibly benefit from F1 expertise. If they win on Sunday, they sell on Monday. But only to the very rich.