About the F1 Resource Restriction Agreement

[WhiteBlue]

The reality is F1 is expensive. It will continue to be expensive and any motion to try artificially reduce budgets will only ever hamper midfield and lower rung teams.Why? Their definition of the budget caps will be adhered to literally by those that have an interest in not spending...Williams Lotus etc.
But those that can spend more, will spend more in such a wonderfully creative way it will make the Lehman Brothers scandal look infantile.
If you can at least open your mind to these possibilities, and that every single realm of performance enhancement, including financial, will be ruthlessly exploited to the nth degree.

Well I guess I can't follow your logic. So you advocate no cost control at all. What will stop manufacturer teams to speed $200m or more on their engine development? And what would stop them to charge their customer teams $60m per annum to have more cash to burn? In an open market economy that is very likely to happen. We have seen such things before and I'm pretty sure all teams except perhaps Ferrari and Red Bull would hate to see it happen again. The mid grid teams will simply go bust over such engine bills.

[Cam]

The reality is F1 is expensive. It will continue to be expensive and any motion to try artificially reduce budgets will only ever hamper midfield and lower rung teams.Why? Their definition of the budget caps will be adhered to literally by those that have an interest in not spending...Williams Lotus etc.
But those that can spend more, will spend more in such a wonderfully creative way it will make the Lehman Brothers scandal look infantile.
If you can at least open your mind to these possibilities, and that every single realm of performance enhancement, including financial, will be ruthlessly exploited to the nth degree.

Well I guess I can't follow your logic. So you advocate no cost control at all. What will stop manufacturer teams to speed $200m or more on their engine development? And what would stop them to charge their customer teams $60m per annum to have more cash to burn? In an open market economy that is very likely to happen. We have seen such things before and I'm pretty sure all teams except perhaps Ferrari and Red Bull would hate to see it happen again. The mid grid teams will simply go bust over such engine bills.

There is no way of restricting resources. Zero. F1 will IMO continue to be driven by cost excess and will either eventually die due to lack of teams being able to afford it or die due to lack of fans when they all switch off as it's become GP2 thanks to restrictive regs. Nothing lasts forever. MIght as well let them go for it and enjoy the excess for the next couple of years before we all switch to FE.

[Miguel]

It's pretty clear to me that RBR has done the F1 equivalent of the double Irish. One may even link their rise to the top with the enforcing of the RRA (that ends up affecting other teams more). To make matters worse, the link between RBR and STR is strong and known. While the shared chassis loophole has thankfully been closed (double testing mileage? check!), the fact that one team is in effect running a drivers training during the races, and affecting the result at that, makes me angry.

If the FIA allows such a blatant conflict of interest to continue, how can we expect it to enforce rigurous but fair financial scrutineering? Bloody hell, creative financing is like PR spin, but with tangible and real improvement, and there are some masters out there...

[WhiteBlue]

IMO F1 can be happy that Red Bull picked up the defunct Minardi team and properly funded it. It is by no means a novelty that one owner has multiple teams. Briatore did that in the 90ties and not as good as Red Bull do. Some of the tactics we see between RBR and STR have been employed by other teams and their customers as well. Particularly Ferrari have been known to give firm instructions about race tactics to customer teams. I remember very well that Jean Todt went to see other team principals during a race with instructions what to do and not to do. As I have emphasised in this thread RBR's budget isn't much different from their closest rival and still very much smaller than Ferraris resources and expenditure some years ago. RBR has never been as big as Ferrari and McLaren used to be in terms of resources and budgets. The fact that both competitors simultaneously left FOTA over budget issues is further proof to the fact that they are not much different in tactics and expenditure, even if we don't trust Jean Todt on the issue. In my opinion Red Bull's supposed financial superiority has a lot to do with hype and less with actual facts.

[Miguel]

"Other teams did this a while back" is not a serious defending argument. Do you remember the outrage a few months ago when Perez went off in Malaysia? What would have happened if Karthikeyan had been a Ferrari driver after that GP or the US GP a few weeks ago? Is it fine that a Hamilton had to race the Toro Rossos in Barcelona and Vettel didn't have to in Abu Dhabi? Is it fine that, had there been an investigation on the yellow flags in Brazil, Vergne could have argued that it wasn't an overtake, because he let Vettel by?

The day will come when an STR crashes into a championship contender that's not a Red Bull. And then all hell will break loose.

[bhall]

[...]
In my opinion Red Bull's supposed financial superiority has a lot to do with hype and less with actual facts.

Yeah, and you also think a budget cap can work.

Meanwhile, in the real world...

Zuverlässige Daten über die Finanzen der Rennställe liefert nur das britische «Companies House», eine Handelskammer, bei der die in England ansässigen Teams die Bilanzen vorlegen müssen. 2011 sind dort die Umsätze der Firmen Red Bull Racing und Red Bull Technology gestiegen, auf zusammen 585 Millionen Franken. Die Grenzen der Unternehmen sind fliessend, der reine Renn-Etat wird mit 250 Millionen Franken angegeben, das sind gut 70 Millionen mehr als bei Mercedes und fast das Doppelte des Williams-Teams. Horners Gehalt als Direktor beider Unternehmen wird auf drei Millionen taxiert, das Durchschnittsgehalt der Formel-1-Mitarbeiter liegt bei etwa 130 000 Franken.

Reliable data on the finances of the racing stables supplies only the British "Companies House", a chamber of commerce in which the UK-based teams must submit their budgets. 2011 where the turnover of the company Red Bull Racing and Red Bull Technology has risen to 585 million francs [US $630 million] together. The boundaries of the company are fluid, the pure racing budget is given as 250 million francs [US $268.9 million], which is about 70 million [US $75.3 million] more than at Mercedes and almost double the Williams team. Horner's salary as director of both companies is estimated at three million, the average salary of the Formula-1-employees is about 130 000 francs.

You were saying?

[FoxHound]

Would red bull not be better off dusting down the Apollo programme and sending man to the moon?
Or better still, mars!

Those figures make for some sober reading.

[FoxHound]

@WB

Please can you show me where there is appetite at Mercedes, Renault or Ferrari to get embroiled in a war of financial attrition?
Renault is on its knees, French government cash keeps it up and running.
Ferrari cannot spend 500million a year, and have never done so.
Mercedes are in the midst of a huge cost cutting programme in spite of record sales.
Their per unit profit lags well behind BMW and Audi. Using up 500million of their hard earned is not going to happen.

Or maybe you propose the trio of manufacturers create an energy drinks firm complete with 3rd party technology centres.
Hell they could even do it jointly.

[Cam]

Agreed FoxHound, which is why I'm a strong advocate to use that cash for everyone else's benefit - consumers need to be able to benefit from the F1 tech. To spend that much cash for a trophy and not actually produce anything is abhorrent, especially in this financial climate. Don't get me wrong, I'm happy to see teams spend that amount of cash, but use it also to better mankind - then no-one can argue it's 'too much'.

[WhiteBlue]

[...]
In my opinion Red Bull's supposed financial superiority has a lot to do with hype and less with actual facts.

Yeah, and you also think a budget cap can work.

Meanwhile, in the real world...

Zuverlässige Daten über die Finanzen der Rennställe liefert nur das britische «Companies House», eine Handelskammer, bei der die in England ansässigen Teams die Bilanzen vorlegen müssen. 2011 sind dort die Umsätze der Firmen Red Bull Racing und Red Bull Technology gestiegen, auf zusammen 585 Millionen Franken. Die Grenzen der Unternehmen sind fliessend, der reine Renn-Etat wird mit 250 Millionen Franken angegeben, das sind gut 70 Millionen mehr als bei Mercedes und fast das Doppelte des Williams-Teams. Horners Gehalt als Direktor beider Unternehmen wird auf drei Millionen taxiert, das Durchschnittsgehalt der Formel-1-Mitarbeiter liegt bei etwa 130 000 Franken.

Reliable data on the finances of the racing stables supplies only the British "Companies House", a chamber of commerce in which the UK-based teams must submit their budgets. 2011 where the turnover of the company Red Bull Racing and Red Bull Technology has risen to 585 million francs [US $630 million] together. The boundaries of the company are fluid, the pure racing budget is given as 250 million francs [US $268.9 million], which is about 70 million [US $75.3 million] more than at Mercedes and almost double the Williams team. Horner's salary as director of both companies is estimated at three million, the average salary of the Formula-1-employees is about 130 000 francs.

You were saying?

So what? You cannot just add the two figures to arrive at the consolidated figure. We know that the Red Bll budget is somewhere at 250m. So is Ferrari's and McLaren's. What is the point of comparing it with Williams? And why do we think that Horner's salary is essential? Focus on the issue! Red Bull are not financially different to their main rival despite all the hype. IMO the main point is to prevent budgets to spiral into 2006 dimensions and not a witch hunt for a particular team.

[WhiteBlue]

@WB
Please can you show me where there is appetite at Mercedes, Renault or Ferrari to get embroiled in a war of financial attrition?
Renault is on its knees, French government cash keeps it up and running.
Ferrari cannot spend 500million a year, and have never done so...

Nobody is talking about 500m but 450 is a historic figure that has been reached by Ferrari and can easily be reached again. Ferrari have much greater revenues and profits than they did six years ago and they can easily up the ante when and if Red Bull want to play Monopoly. I believe that both rivals should not go that way. As you quite rightly say teams like Mercedes, Lotus and McLaren will probably not have the means to compete on that level. It would not be good to have an eternal competition between just two proponents with every body else at the side lines watching.

[Cam]

It would not be good to have an eternal competition between just two proponents with every body else at the side lines watching.

WB - isn't that exactly what F1 has been for the last... say.... ever years? It's always been Ferrari + 1, with everyone else cycling in turn over the years to be the +1. To say it would not be good would be dismissing the last... say... ever years?

[bhall]

So what? You cannot just add the two figures to arrive at the consolidated figure. We know that the Red Bll budget is somewhere at 250m. So is Ferrari's and McLaren's. What is the point of comparing it with Williams? And why do we think that Horner's salary is essential? Focus on the issue! Red Bull are not financially different to their main rival despite all the hype. IMO the main point is to prevent budgets to spiral into 2006 dimensions and not a witch hunt for a particular team.

Umm, I think you've missed the forest for the trees. Red Bull spent $630,000,000 on F1 last year. Repeat: Red Bull spent $630,000,000 on F1 last year. Here it is again in black and white:

Reliable data on the finances of the racing stables supplies only the British "Companies House", a chamber of commerce in which the UK-based teams must submit their budgets. 2011 where the turnover of the company Red Bull Racing and Red Bull Technology has risen to 585 million francs [US $630 million] together. The boundaries of the company are fluid, the pure racing budget is given as 250 million francs [US $268.9 million]...

“Well if you look at the way the English accounts are presented, you’re looking at the gross turnover of each entity, whether it be Red Bull Technology or Red Bull Racing. Within the RRA we’ve complied fully with the RRA within Red Bull Racing, which is the entrant to the Formula 1 World Championship. Red Bull Technology is a supplier to Red Bull Racing…”

I don't care what Christian Horner makes. I don't even care how Red Bull's expenditures compare to Williams. My area of concern is the fact that Red Bull spent nearly $1,000,000 per point when it amassed a ginormous pile of them last year and dominated the sport.

Now, I know you're going to argue with me over this. I'll tell you right now that unless you're able to submit something more specific and credible than what I've just shared with the class, I'm going to ignore your argument. Francly - get it? - I'm tired of proving you wrong and wrong and wrong and wrong.

Here's a little something to jog your memory before you dive into the deep, deep blue.

[...]
There will be no question about second side entities like Red Bull technologies in a future FiA system.
[...]

If that's not an issue, why is it an issue? Once more, with feeling: $630,000,000.

(Oh, and before you get all huffy, please know that I'm only following your playbook, champ. I tried gentle, and gentle didn't work.)

For everyone else, this thing is really quite simple: Formula One can either cut costs, or Formula One can play with expanded technology. It can't do both.

The only parameter that will ever be under firm FIA control is the car. They can control how it's constructed and the materials therein, because they can literally put hands on the car and inspect it inch by inch. Those of us who reside on planet Earth know that such is the very essence of "control."

A good rule of thumb: If one can touch it, one might be able to control it. If one can't touch it, however, control then relies completely upon obedience, and that's not always reliable, especially in competitions where the lone objective is to exploit the rules better than everyone else exploits the rules.

With hands-on control, the FIA can use market data and precedent to specify various materials and constructions that it suspects will cost $X. That's effective cost control, and it's the only solution that's ever worked. It also inherently restricts technology.

So, the question for F1 now is the same one it's always been: What are you? Are you the "pinnacle of motorsport," comprised of evolving state-of-the-art equipment? Or are you a semi-spec series with global appeal?

The answer, of course, probably lands somewhere in the middle. The only "wrong" answers are the ones left unspoken.

[FoxHound]

Nobody is talking about 500m but 450 is a historic figure that has been reached by Ferrari and can easily be reached again. Ferrari have much greater revenues and profits than they did six years ago and they can easily up the ante when and if Red Bull want to play Monopoly. I believe that both rivals should not go that way. As you quite rightly say teams like Mercedes, Lotus and McLaren will probably not have the means to compete on that level. It would not be good to have an eternal competition between just two proponents with every body else at the side lines watching.

WB, I'm not being pedantic here....But Ferrari themselves did not spend the 400million you are suggesting they did historically.
FIAT may have contributed but they are an anaemic shadow of their former selves. Worse than Renault.
Another way I will put this to you, is that just to match Red Bull, Ferrari would have to have near 30% profit margins per car sold.
They turned over 2.2 Billion in 2011, a record for Ferrari. I'm going to guess that their profits where between 400 and 600 million before taxes, and annuity to investors.
Once this has been extracted, you are looking at 200 million or so.

Compare this to Red Bull....Twice the turnover, at around 4.6 billion and their profit margins are unbelievable.

Put simply, Red Bull have cash to burn. A resource restriction does not favour them, and this is a reason we do not have a workable solution today.
Red Bull have the appetite to go out and spend 600 million a season no matter what. With this sort of clout, It's very easy to see why Red Bull have won the last 3 years on the bounce. They hoover up the best brains and then give them a blank cheque to Keep Calm and Carry On.

Red Bull have given you those lovely sounding PR releases which you have fallen hook line and sinker for. They have ZERO interest in ending this spend, as I guarantee you it will coincide with their downfall should it happen.
Which is why Red Bull have said ALL accounts from subsidiaries of teams like Daimler, Ferrari Spa etc all show their accounts and spends in minutiae(to see where its all going) .... Because it will never happen! And Because it's an ingenious attempt at making themselves look like they care while burning 600 million dollars in the background.

Like Bhall said, you cant see the wood for the trees on this particular topic.

[FoxHound]

With a 600 million budget....anything is possible.

Zuverlässige Daten über die Finanzen der Rennställe liefert nur das britische «Companies House», eine Handelskammer, bei der die in England ansässigen Teams die Bilanzen vorlegen müssen. 2011 sind dort die Umsätze der Firmen Red Bull Racing und Red Bull Technology gestiegen, auf zusammen 585 Millionen Franken. Die Grenzen der Unternehmen sind fliessend, der reine Renn-Etat wird mit 250 Millionen Franken angegeben, das sind gut 70 Millionen mehr als bei Mercedes und fast das Doppelte des Williams-Teams. Horners Gehalt als Direktor beider Unternehmen wird auf drei Millionen taxiert, das Durchschnittsgehalt der Formel-1-Mitarbeiter liegt bei etwa 130 000 Franken.

Reliable data on the finances of the racing stables supplies only the British "Companies House", a chamber of commerce in which the UK-based teams must submit their budgets. 2011 where the turnover of the company Red Bull Racing and Red Bull Technology has risen to 585 million francs [US $630 million] together. The boundaries of the company are fluid, the pure racing budget is given as 250 million francs [US $268.9 million], which is about 70 million [US $75.3 million] more than at Mercedes and almost double the Williams team. Horner's salary as director of both companies is estimated at three million, the average salary of the Formula-1-employees is about 130 000 francs.

http://www.f1technical.net/forum/viewto ... =1#p398465