Budget caps

[Knock-on]

This is getting silly now. If you can guarentee a rule that will will be abused by one and all, this is it.

http://www.autosport.com/news/report.php/id/73455

[Tallgeese]

This is getting silly now. If you can guarentee a rule that will will be abused by one and all, this is it.

http://www.autosport.com/news/report.php/id/73455


Could never work as intended. Every constructor has different cost-structures & of course efficiencies differ as a result. For instance, it's not as easy as 'cap it at USD 150 million each' but ultimately every constructor will try to optimise that sum & even restructure to do so. Yet even then one can argue that (say) Renault or Williams may manage limited resources more efficiently than the bigger or smaller teams.

I say that regulations should be organised in such a way that cost structures are truly reflected in smaller budgets.

[ArrowsFA1]

This sounds like one of those debating society topics:
"The idea that each team should have the same amount of money, so that success is simply a function of intellectual ability, has great appeal."

Perhaps of more interest is that Max would "like to discuss this further with FOTA". I think that's significant in terms of FOTA's press conference taking place in a few days time.

[Mark]

There will be many, many ways around this. For example any manufacturer team could for example just be claiming to be buying cheap off the shelf components from their road car division. The fact that these components cost millions to develop won't appear on the balance sheets!

[Knock-on]

There will be many, many ways around this. For example any manufacturer team could for example just be claiming to be buying cheap off the shelf components from their road car division. The fact that these components cost millions to develop won't appear on the balance sheets!

So obvious isn't it.

Or having componants being tested in other vehicles.

It was bad enough in the days of non-professional Rugby making sure players didn't receive wages. It was a case of a Kiwi or Aussie player being taken on as a "consultant" or whatever as some exorborant rate with Company car and benefits while only expecting to turn up for a board meeting once a Month.

And that was easy to police!!

[PolePosition_1]

May well be impossible to enforce, but it could work.

If all the teams agree to the cap in the first place, and the punishment for breaking this rule is incredibly harsh, I don't think the teams would gamble on breaking it as long as the FIA can actively be seen to be monitoring it.

What I find funny, is how people who believe that the teams should own F1 rather than CVC and Bernie, yet don't trust them to stick to an agreed budget cap.

[Knock-on]

May well be impossible to enforce, but it could work.

If all the teams agree to the cap in the first place, and the punishment for breaking this rule is incredibly harsh, I don't think the teams would gamble on breaking it as long as the FIA can actively be seen to be monitoring it.

What I find funny, is how people who believe that the teams should own F1 rather than CVC and Bernie, yet don't trust them to stick to an agreed budget cap.

I wouldn't trust them to tie their shoe laces :D

You have to remember PP that a budget cap is very easy to stick to. Profit and loss on a spread sheet.

However, development that goes into outside development is impossible to gauge. For example, if Mercedes sell their engines to McLaren for £10k a pop, what's wrong with that?

I would say the potential to bend the rules makes the intention a mockery.

[PolePosition_1]

Definately, I'm not doubting its impossibility of enforcing it.

But I think if they are actively seen to be chasing down any expenditure F1 related within their different companies, and with the prospect of a huge fine, I do think it has potential to work.

[Rollo]

So what happens in the case of SpA Ferrari? They do not make a distinction between the books of the F1 team and the road going division, with good reason - there aren't any. People employed by Ferrari are employed by... Ferrari.

They are NOT a manufacturer but a race team that happens to sell motor cars. I would wager that it would impossible to separate costs out of the group. How do you pro rata electricity, wages, and council rates?
Accounting is to a degree a legal fiction and if the FIA sets a cap, then you'll merely see several set of accounts that all arrive at the same outcome.

"The idea that each team should have the same amount of money, so that success is simply a function of intellectual ability, has great appeal," said Mosley. "If properly enforced, it would be a very fair system. Indeed one view is that having much more money than a rival team is just as unfair as having a bigger engine."
- Max Mosley

How does this fit in with the fact that TV revenues have been apportioned out on a less than equal basis for 25+ years? Doesn't this mean that the FIA actually brought this about in the first place?
I refer again to the famous racial discrimination case of Pot vs Kettle, which as a result people are allowed to make utterly ironic and hypocritical statements without fear of a tarnished reputation.

[K-Pu]

This is what happens when you deal with unbelieveable big amounts of money. Huuuuge piles of cash which make them fail think clearly about the sport..

Sorry, I was daydreaming...

[PolePosition_1]

So what happens in the case of SpA Ferrari? They do not make a distinction between the books of the F1 team and the road going division, with good reason - there aren't any. People employed by Ferrari are employed by... Ferrari.

They are NOT a manufacturer but a race team that happens to sell motor cars. I would wager that it would impossible to separate costs out of the group. How do you pro rata electricity, wages, and council rates?
Accounting is to a degree a legal fiction and if the FIA sets a cap, then you'll merely see several set of accounts that all arrive at the same outcome.

"The idea that each team should have the same amount of money, so that success is simply a function of intellectual ability, has great appeal," said Mosley. "If properly enforced, it would be a very fair system. Indeed one view is that having much more money than a rival team is just as unfair as having a bigger engine."
- Max Mosley

How does this fit in with the fact that TV revenues have been apportioned out on a less than equal basis for 25+ years? Doesn't this mean that the FIA actually brought this about in the first place?
I refer again to the famous racial discrimination case of Pot vs Kettle, which as a result people are allowed to make utterly ironic and hypocritical statements without fear of a tarnished reputation.

I'd be highly suprised if the whole of Ferrari finances come under one name.

Its more than likely that Ferrari will be split up into many different subsidary companies, as per the norm in all normal companies.

Again I stress it is near impossible to enforce, but as I say, I do believe it could work with incredibly harsh fines for being caught and visible sign of FIA searching through accounts.

And the team obviously agreeing to it in the first place.

[Big Ben]

A new rule everybody will break (if they can get the money of course). If technical rules can be so ambigous sometimes why do they have to get into accounting?

it would be great if they made them share their suppliers. So McLaren's I don't know what costs 10 bucks. let them all have it at 10 bucks then :laugh:

[Garry Walker]

Budget caps in F1 is a really bright idea. Because it can be policed 100% and surely there is no way around it. Yep. Brilliant idea Maxie.

[Knock-on]

Budget caps in F1 is a really bright idea. Because it can be policed 100% and surely there is no way around it. Yep. Brilliant idea Maxie.

Methinks this might be that sarcasm thingy I've heard so much about :laugh:

[Rollo]

I'd be highly suprised if the whole of Ferrari finances come under one name. Its more than likely that Ferrari will be split up into many different subsidary companies, as per the norm in all normal companies.

The reason why I suspect that it isn't is two fold:
1. Being an SpA, Ferrari is roughly the equivalent to a private Limited company in the UK. Being one of these there probably aren't a lot of shares actually in the company. It would make sense for a small number of people to control it.
2.The factory itself is not terribly big. In fact in all honesty I think that the Yorkshire Tea Factory in Harrogate is bigger... and the fact that on the tour of the place they're at pains to tell you that it's one organisation.

Of course it could have changed since 2003 when I went on the tour and this is Wild Mass Guessing, but it's educated Wild Mass Guessing.

[Tallgeese]

Budget caps do not provide the right solution. Imagine if that was the case for football (soccer) & how that would impact on everything. Likewise, Ferrari (for example) owns six tracks & does not pay the royalties required to test on a particular track (although they do have to maintain it themselves) & even make some profit out of it. For example, when Italian F3000 or British F3 races or others are held they do get some decent revenue. Does that go into the budget as well? I like the idea that every squad should have its 'home track' (even if it's just for testing) that must host an F3, GP2 or F3000 or some other series if they want to make extra money.

[Tallgeese]

I say find ways to make F1 cost-effective. Start by insisting that each chassis should last x2 seasons!

[V12]

I'm in two minds over this. While in practice it is virtually unpoliceable, in theory, if we accept that the whole cost-cutting thing isn't going to go away any time soon (at least until the economy picks up), then a budget cap is by far and away the lesser of two evils compared to the dreaded alternative (standard parts). Don't see how it can be enforced though...

[F1boat]

http://i158.photobucket.com/albums/t114/Darth_Sparhawk/Various%20Fantasy/not-classified/picard-facepalm.jpg

[Knock-on]

This is madness yet again.

You will end up with a 2 tier formula because Ferrari, McLaren etc wouldn't be able to work this.

For example, Ferrari wouldn't be able to use their test track unless they split from the group and hired them back. Then, you would have to say they need to hire them at an exclusive rate and not on a shared basis as the other teams do. Otherwise they will have to declare that the track is part of their 30m budget and all costs associated.

What about if teams sell componants to other teams? If McLaren Merc sell engines, can they gather the development cost back?

Then you will have the prospect of an uncapped team being blitzed on the straight by capped teams with unrestricted engines :crazy:

Elvis has finally left the building.

This is crazy.

[V12]

OK then, scratch my previous comment, which was made a bit prematurely after just seeing the brief news item with "More details to follow..." at the bottom.

Now those details have followed, let's see where we are...

So this budget cap is apparently "optional", with teams using an unlimited budget restricted technically, but teams which are voluntarily capping themselves still have to use a standard underbody?

And just how are they going to get the balancing act between the two sets of options right without teams on either side of the fence crying foul, unfair, etc?

This is going to get very messy, very quickly, and it hasn't been thought through. Like the points system this strikes me as some ridiculous compromise between two ideas when it would be better to go with one or the other (or perhaps acknowledging that the big teams will always spend their way to success, focus instead on allowing smaller teams just to compete, albeit at the back initially, and allow market forces to correct themselves, but I digress).

Actually, F1boat put it better than I did:


http://i158.photobucket.com/albums/t114/Darth_Sparhawk/Various%20Fantasy/not-classified/picard-facepalm.jpg

[Knock-on]

http://www.gigacrate.com/Blog/wp-content/uploads/2008/12/doh.gif

Perhaps this needs a bit of editing?

http://images.paraorkut.com/img/funnypics/images/c/cant_fix_stupid-12939.jpg

[the bro]

Two words I find amazing in this announcement.

Movable wings.


"To enable these cars to compete with those from teams which are not subject to cost constraints, the cost-capped cars will be allowed greater technical freedom.

The principal technical freedoms allowed are as follows:

1. A more aerodynamically efficient (but standard) under body.
2. Movable wings.
3. An engine which is not subject to a rev limit or a development freeze."


http://www.fia.com/en-GB/mediacentre/pressreleases/wmsc/2009/Pages/wmsc_170309.aspx

[ChrisS]

If say Force India and Brawn GP sign up as cost capped teams how will they benefit from an engine which is not subject to a rev limit or a development freeze if McLaren doesn't sign up? same for Williams and Toyota, STR and Ferrari, Red Bull and Renault

[ArrowsFA1]

Two words I find amazing in this announcement.

Movable wings.
Just one was required for me:

Voluntary.

Oh, and this bit: "the FIA has stated that it will tweak the regulations to ensure those with restricted finances will be just as competitive as those spending unlimited amounts of money".

So the arbitary implementation and application of regulations continues :crazy: :rolleyes:

[Rusty Spanner]

Standard Max negotiating tactic number 1 - Propose something you know is unacceptable then compromise your way back to what you really wanted.

Standard Max negotiating tactic number 2 - If the teams ever appear to be united, split then so they are less of a threat.

This budget cap I think fits both tactic 1 and 2. FOTA has been showing a far too united front for Max, it undermines him every time a rule design by FOTA is implemented.

[jens]

30M per year? That sounds way too little... It's something similar to Minardi's budget and they couldn't do even proper development work with it. We are entering the stagnation era of F1... 30M € sounds like a sum that with a good will may cover the salaries of a top team's workforce. :p :

More development freedom with 30M? I'm sorry, but how are they supposed to develop if they've got no money? :p :

[Giuseppe F1]

How about how this will affect fan access to F1 and F1 events - for example, BMW's Pit Lane Park, or Renault's F1 Roadshow.....?

I'd imagine these activities fall on the F1 accounts/balance sheet.


Would be amongst the easiest elements to cut, depriving F1 fans of great initiatives by the teams part for increased fan access.

Well done Maxie!!

[jjanicke]

let's set the enforcement piece aside and just assume it's possible to police the spend.

I like the idea, because as I read it the teams have 2 options.

1. unrestricted budget, with heavy technical restrictions
2. restricted budget, with technical freedom

This could be very interesting.

[Valve Bounce]

30M per year? That sounds way too little... It's something similar to Minardi's budget and they couldn't do even proper development work with it. We are entering the stagnation era of F1... 30M € sounds like a sum that with a good will may cover the salaries of a top team's workforce. :p :

More development freedom with 30M? I'm sorry, but how are they supposed to develop if they've got no money? :p :

Just made me think : is the 30M Euro sufficient to put the cars on the grid for the races? When you add up the cost of flying all that equipment and personnel and trucking the rest of the gear, there can't be that much left over for feeding the team, let alone using anything towards technical freedom.

[jso1985]

as I'm just too p***ed off after reading the new points system here I can just laugh and roll on the floor too! :rotflmao:

This will never work in a fair way! period, end of discussion

[PolePosition_1]

The reason why I suspect that it isn't is two fold:
1. Being an SpA, Ferrari is roughly the equivalent to a private Limited company in the UK. Being one of these there probably aren't a lot of shares actually in the company. It would make sense for a small number of people to control it.
2.The factory itself is not terribly big. In fact in all honesty I think that the Yorkshire Tea Factory in Harrogate is bigger... and the fact that on the tour of the place they're at pains to tell you that it's one organisation.

Of course it could have changed since 2003 when I went on the tour and this is Wild Mass Guessing, but it's educated Wild Mass Guessing.

I work for a finance company who specialise in all records registered to Companies House, which is a legal obligation. And alone in the UK Ferrari have 3 different subsidaries.

[Knock-on]

This will never work in a fair way! period, end of discussion

Agreed. It's just a way of Max splitting FOTA

Lets look at the basics. Some teams sign up for the cap and some don't and lets assume that the teams that do, actually stick to the budget. (why have I got pictures of Fairies and La La land in my mind?)

The FIA will allow development that ensures there is equality of success between the two camps.

However, part of that success will be the superior performance of the capped teams because the cars must be faster to counteract the defecit of class of their drivers. Lets face it, no top flight driver is going to race for a couple of hundred grand a year, no team principal will ditch his corporate jet and no chief designer worth his salt is going to build a car on the back of a fag packet.

So, you either all have the budget cap (unenforceable) or the cream of F1 will move to another series.

Sod the points system. This is a real disaster in the making. I cannot see this becoming a reality and if it does, it really will be the end of F1 as we know it.

[Dave B]

It's a nice enough theory, to give the more frugal teams some technical freedom.

Just a shame that in the real world it's totally unworkable for all the reasons given above.

Equivalency formulae simply do not work in motorsport. In the BTCC recently there's been no end of whinging about the ballast allowances of BTC versus S2000 machinery; in the WTCC there's a feeling that diesel cars get cut too much slack.

The moment a budget F1 car wins a race there'll be a clamour that they've been given too much advantage. However when a "premium" car wins, the budget teams will complain that too much money has been spent. This is a lose-lose situation for everybody.

Seriously, Max, go and spend more time in your dungeon and leave motorsport alone.

[Somebody]

I wouldn't trust them to tie their shoe laces :D

You have to remember PP that a budget cap is very easy to stick to. Profit and loss on a spread sheet.

However, development that goes into outside development is impossible to gauge. For example, if Mercedes sell their engines to McLaren for £10k a pop, what's wrong with that?

I would say the potential to bend the rules makes the intention a mockery.

From seeing what Maxamillion has said, I think the intention is for the FIA to tell a team how much something is costing them towards their budget...

[Dave B]

Yes, according to Max if a component is free or subsided the FIA will count its full actual cost.

How they will calculate that is anybody's guess. How much should Mercedes engines cost Brawn, for example, if they weren't subsidised? Is it simply the sum of the parts plus the labour costs? Or do they have an intrinsic value beyond that?

[Dave B]

From Andrew Benson's blog (http://www.bbc.co.uk/blogs/andrewbenson/2009/03/when_bernie_ecclestone_first_p.html):


Mosley insists his "forensic accountants" can divine how much money a team is spending. But one insider told BBC Sport on Wednesday: "We don't publish our accounts until a year later - and even our own accounts department can't tell me how much we spend."

[veeten]

FOTA may be 'forced' to accept the new realities, as manufacturers might take a liking to the FIA's new rules.

http://www.grandprix.com/ns/ns21253.html

[V12]

Interesting article. I say it again, if it was possible to enforce a budget cap, then I'd be all for it, providing a) it was applied equally and unconditionally across all entrants and b) that there were NO further "cost-cutting" restrictions such as standard parts.

But a) it would be a total minefield and a nightmare to enforce, and b) the FIA's current proposal, with some sort of "equivalency" formula between budget cap and no budget cap, and the fact that from what I've read budget capped teams will still be restricted and standardised in some way, makes the whole thing utterly pointless.

[Big Ben]

too ridiculous to even talk about it.

[Knock-on]

FOTA may be 'forced' to accept the new realities, as manufacturers might take a liking to the FIA's new rules.

http://www.grandprix.com/ns/ns21253.html


Well, they may but what about the actual teams?

Lets take the drivers. Kimi is on about £30m. Do you think he will drop his wages 99% to £300k for the love of F1 or get the first Easyjet flight across the pond?

[Robinho]

max really is a masochist, his ass is going to look like mince when the teams have finished with him on this one, and he likes it.

this is no way to run any organisation, let alone one fo the largest sports in the world - change the rules to something random and ridiculous to get the ordinarily controversial look like a good deal. i hope this time he has bitten off more than he can chew (if he can fit anything in his gob other than a gag) and Fota wins - and to clarify i'm quite uneasy about the teams having all the power in F1, but it seems to be far better than this pair of senile f**kwits

[Knock-on]

max really is a masochist, his ass is going to look like mince when the teams have finished with him on this one, and he likes it.

this is no way to run any organisation, let alone one fo the largest sports in the world - change the rules to something random and ridiculous to get the ordinarily controversial look like a good deal. i hope this time he has bitten off more than he can chew (if he can fit anything in his gob other than a gag) and Fota wins - and to clarify i'm quite uneasy about the teams having all the power in F1, but it seems to be far better than this pair of senile f**kwits


Ohhhh, get her :kiss: ;)

Never heard you so animated old fruit :D

We'll have a heated discussion at the party :wave:

[Robinho]

We'll have a heated discussion at the party :wave:

for which you need to email me details etc as i've forgotten pretty much every detail of the phonecall!

[veeten]

Well, they may but what about the actual teams?

Lets take the drivers. Kimi is on about £30m. Do you think he will drop his wages 99% to £300k for the love of F1 or get the first Easyjet flight across the pond?

to where?

IndyCar is not much of an alternative, as most of these drivers have no experience in doing a 500 mile oval or superspeedway, as most here are quite quick to point up. The same deals apply as opposed to sponsorship/payment, where it is the two-way street between recognition of the driver to many and the what the company manufacturrs/sells in this market.

NASCAR? No chance...

It's not the 'tea & crumpets' set. Them boys play rough. And, you have to get used to doing a bit more 'meet and greet' with the fans as while they may not outwardly look the most sophisticated, they are the most intuitive when it comes to how drivers interact.

ALMS? Grand Am? Not even close...

Too few chances to make a big effort, and not enough money to make it worth the effort.

And let's remember one thing, these drivers get the majority of their money from the sponsors rather than the teams. Soon enough, they might start talking about downsizing their contracts for '10 and beyond, meaning the drivers will be hard pressed to get some kind of negotiation out of the teams. All that money you were getting the last 3-5 years is drying up now. Get used to less...

[ioan]

All that money you were getting the last 3-5 years is drying up now. Get used to less...

:up: And rightly so!

Just out of interest, do Marlboro still pay the wages of the Ferrari drivers? That was the original deal between the Scuderia and Phillip Morris in the 90's.

Having somebody else pay the wages of your drivers...oh look, you've just got round the budget cap.

[Dave B]

Just out of interest, do Marlboro still pay the wages of the Ferrari drivers? That was the original deal between the Scuderia and Phillip Morris in the 90's.

Having somebody else pay the wages of your drivers...oh look, you've just got round the budget cap.

Exactly, I don't see how that would ever be enforced anyway. Let's say McLaren cut Hamilton's salary to £30K, but in a seperate and entirely co-incidental deal Vodafone pay him £5 million to cut the ribbon on their latest store opening, how would you police that?

Yet another half-arsed idea from the people who bought you KERS.

[jjanicke]

Just out of interest, do Marlboro still pay the wages of the Ferrari drivers? That was the original deal between the Scuderia and Phillip Morris in the 90's.

Having somebody else pay the wages of your drivers...oh look, you've just got round the budget cap.

My opinion is, let the sponsors pay for the drivers. The real hard cost lies in the equipment anyway, not the driver. Only a very few drivers make the mega millions, and they don't drive for the low budget teams (60%+ of the grid).

Who are these high priced guys anyway?

1. Kimi
2. Fernando
3..... ? No ones getting paid like them these day (am I missing someone? maybe Lewis but memory doesn't indicate so)

[Knock-on]

My opinion is, let the sponsors pay for the drivers. The real hard cost lies in the equipment anyway, not the driver. Only a very few drivers make the mega millions, and they don't drive for the low budget teams (60%+ of the grid).

Who are these high priced guys anyway?

1. Kimi
2. Fernando
3..... ? No ones getting paid like them these day (am I missing someone? maybe Lewis but memory doesn't indicate so)

The proposed new rules atate that the 30m shall include things like drivers and principals wages etc so getting a sponsor to pay for it will be considered breaking the rules.

However, what a driver earns from sponsorship is another thing entirely ;)

[Robinho]

what they will do is make drivers, principals etc stakeholders in the team. they will then carefully spend £30m, but bring in loads of etc sponsorship, putting the team in profit, enabling these guys to be paid a massive dividend, probably roughly equal to their current wage?

[Dave B]

Max is now saying that the teams' response to the proposals is "weak"

(link: http://www.autosport.com/news/report.php/id/73819 )

Worryingly, the article states that "all his advisors" say the cap should be higher and yet Max - unilaterally - thinks it should be as low as £25 million.

It seems that rules are decided on a one man, one vote system. And Max is that man :rolleyes:

[jjanicke]

The proposed new rules atate that the 30m shall include things like drivers and principals wages etc so getting a sponsor to pay for it will be considered breaking the rules.

However, what a driver earns from sponsorship is another thing entirely ;)

So change the rules. It's quite easy these days. ;)

[ArrowsFA1]

It seems that rules are decided on a one man, one vote system. And Max is that man :rolleyes:
The old and familiar divide and rule tactic is still very much in evidence as well:
"The complaint was that we didn't consult them. Well, we've been talking a lot to Force India and Williams, both of whom were very supportive. I've not spoken recently to [Red Bull owner Dietrich] Mateschitz but I would have thought it might appeal to him too."

[555-04Q2]

Dont some drivers get paid more than the cap limit suggested :?:

[veeten]

and look who's first to go the 'pay cut' route...

http://www.pitpass.com/fes_php/pitpass_news_item.php?fes_art_id=37295

any more like this and soon enough drivers will be 'on the dole'. ;) :p :

[Dave B]

and look who's first to go the 'pay cut' route...
Not exactly the first: Button (http://www.autosport.com/news/report.php/id/73647) got there a few weeks ago.

[Knock-on]

Button volunteered a cut from 8 to 4 million and Alonso from 26 to 20.

NP Jr cannot take a pay cut otherwise he will be below the minimum wage :D