2010 regulation row on £40m budget cap

[gridwalker]

... so what other sensitive information do they need to hide so preciously?

Salaries are sensitive information. As we know, information leaks on a very regular basis (the recent MP's expenses debacle in the UK is proof enough of that) and knowing what your opponents are paying their design team would be very useful information to a headhunter.

Sponsorship income is also sensitive, should your competitors wish to undercut you.

Knowing your rival's expenditure on assorted developments could be useful, as forensic accounting would require a breakdown part by part & you'd be able to see what kind of technology is being purhased. With sufficient information, you'd be able to work out exactly what kind of components are being used.

Without knowing how secure the data provided to the FIA would be (and having worked in IT & for the UK Home Office, my experience working with sensitive data leads me to be highly cynical regarding information security), the teams are being asked to hand over an awful lot of information to a body they have no reason to trust.

[Michiba]

The rules are not in FAvor of new teams... the existing teams have every opp to join the cap and would have to adhere to the same rules... the cap is merely an incentive for new teams to join in as opposed to the norm of existing teams folding. The rules might actualy favor the existing teams who join the cap, Ferrari already have their own test track and would be able to use it unlimited... what new team can say that?

I thought the costings are based on market rates, so even if it doesn't literally cost ferrari that much, their use of the track for testing would still be 'costed' under the proposed rules.

I don't want to even pretend to understand all the politics behind the arguments, but I don't see Ferrari pulling out next year. Part of me is actually starting to think that all this is just a ruse to get more interest in F1

[spacepig]

the Budget caps are an FIA insurance policy against all the manufacturers leaving and decimating the sport...

Congratulations, you're apparently one of the only people who gets it. Toyota just posted their first annual loss ever. Their results in F1 have been mostly embarassing, and their arch rival just left the series. Fiat lost half a billion dollars in the first quarter, and is about to spend billions on a (batshit insane) purchase of Chrysler. Renault lost over a billion dollars in the second half of last year and just took a $6 billion dollar bailout. BMW lost $200 million in the first quarter. Daimler lost almost $2 billion in the 4th quarter last year. Who am I missing? I'm sure Red Bull is still selling lots of caffeinated sugar water, so maybe they are OK.

The downturn in the auto industry is far deeper than it is in the economy at large, and it will last far longer. There is enormous pressure to cut costs at every auto maker, and that pressure is coming from people like elected officials who have authorized unpopular bailouts, and union leaders who have had to sell unpopular wage and benefit cuts to their members. Those people, and their constituents, don't give a flying F about racing. Talking about gradual budget reductions and consensus at this point is like the captain of the Titanic talking about reducing speed after they've hit the iceberg and water is pouring in the side of the ship. F1 is going to lose multiple manufacturers in the next year or two regardless of what the FIA does about the cap.

The FIA, to its credit, is actually doing something to insure the sport doesn't collapse when all the manufacturers pull out, as they've done so many times before, and as any fool can see they are about to do again. The cap level they are talking about can be more or less self-financed by TV revenues and relatively modest sponsorship levels. And if the manufacturers want to hang around and knock a few hundred million off their annual expenditures at a time when they could certainly use the extra money, they are welcome to stay.

I get it, nobody likes change. But change is coming whether anyone likes it or not. The question is whether it comes in a managed, controlled way, or in chaotic shitstorm that ruins the sport for years.

[djos]

FFS, no team is opposed to the Cap, they are opposed to a 2 tier F1 series and would like a graduated tighning of the Cap to the same levels as what Max has rammed thru.

[andartop]

FFS, no team is opposed to the Cap, they are opposed to a 2 tier F1 series and would like a graduated tighning of the Cap to the same levels as what Max has rammed thru.

This has been pointed out again and again but it seems some people just don't get it, or don't want to get it..

Another major issue for the teams, which has also been pointed out again, is the way FIA decides and implements major rule changes every now and then. Islam and spacepig talk about manufacturers leaving, but don't you think these rule changes every year might actually be the reason we ended up in this situation in the first place?

On the one hand FIA claims they want to cut costs, so enforce stupid rules about engines and gearboxes having to last for 5 or 10 races, and on the other hand we have tire changes/no tire changes, refuelling/no refuelling, slicks/no slicks, TC/no TC, launch control/no launch control, movable aero/no movable aero.. you get the picture. They can't even decide on a simple qualifying format for god sake, and have to change it EVERY year!!!

Had there been some bloody STABILITY in the rules, the costs might have never reached that high, as the teams would follow a gradual design evolution path for their cars: having to redesign everything from scratch every year is surely more expensive. Or AT LEAST, they would have the option to go back a step and use maybe last year's car with minor tweaks (the Super Aguri experiment proved that would be feasible) to save some money in the middle of a financial crisis, instead of being forced to pull out.

Plus, this adds a great deal of uncertainty, which would put off potential new entries from even considering taking the risk to invest in F1. I mean, think about it from a business point of view: what are the two things you need to know before you decide to invest in anything? a)potential benefit, b)potential risk. If b) outweighs a) you don't have to be a genius in economics to figure it out..

And yes, we 've seen that before, it's called WRC and it used to be a great championship before the FIA started experimenting with rule changes: hadn't they messed up everything, we could have had Citroen, Peugeot, Ford, Subaru, Mitsubishi, Seat, Skoda and maybe Suzuki, Fiat, VW, Opel or even Toyota battling it out, and trust me, it would have been much more spectacular to follow than F1 could ever dream.. instead we now have Citroen and Ford running 2 and 3 teams respectively.. Would a budget cap lure in new entries? Potentially yes, but if in order to achieve this you end up with 2WD, 1600cc, 250HP cars it's simply not WRC anymore..

[snowmansion]

If all the tech regulations are the same there's is no problem.
Only point is that they are afraid to let too many employees go. If we compare a scuderia ferrari or Toyota with 1000 of people working for the F60 you have to start cutting on these expenditures. That's the pitfall. But hey maybe they can save million by lowering salaries for drivers..

[WhiteBlue]

the Budget caps are an FIA insurance policy against all the manufacturers leaving and decimating the sport...

Congratulations, you're apparently one of the only people who gets it. Toyota just posted their first annual loss ever. Their results in F1 have been mostly embarassing, and their arch rival just left the series. Fiat lost half a billion dollars in the first quarter, and is about to spend billions on a (batshit insane) purchase of Chrysler. Renault lost over a billion dollars in the second half of last year and just took a $6 billion dollar bailout. BMW lost $200 million in the first quarter. Daimler lost almost $2 billion in the 4th quarter last year. Who am I missing? I'm sure Red Bull is still selling lots of caffeinated sugar water, so maybe they are OK.

The downturn in the auto industry is far deeper than it is in the economy at large, and it will last far longer. There is enormous pressure to cut costs at every auto maker, and that pressure is coming from people like elected officials who have authorized unpopular bailouts, and union leaders who have had to sell unpopular wage and benefit cuts to their members. Those people, and their constituents, don't give a flying F about racing. Talking about gradual budget reductions and consensus at this point is like the captain of the Titanic talking about reducing speed after they've hit the iceberg and water is pouring in the side of the ship. F1 is going to lose multiple manufacturers in the next year or two regardless of what the FIA does about the cap.

The FIA, to its credit, is actually doing something to insure the sport doesn't collapse when all the manufacturers pull out, as they've done so many times before, and as any fool can see they are about to do again. The cap level they are talking about can be more or less self-financed by TV revenues and relatively modest sponsorship levels. And if the manufacturers want to hang around and knock a few hundred million off their annual expenditures at a time when they could certainly use the extra money, they are welcome to stay.

I get it, nobody likes change. But change is coming whether anyone likes it or not. The question is whether it comes in a managed, controlled way, or in chaotic shitstorm that ruins the sport for years.

=D> =D> =D> welcome space pig. You have put it rather drasticly but that makes it easier for some to understand.

There are no valid arguments against a drastic cost cap of a magnitude that is currently discussed (100 mil$ all included).

New entrants have to be found as manufacturer based teams will be lost without doubt.

Budget controls can be secret as a privat forensic firm will be found which gets the approval of all teams. If they are big they will not risk their reputation by leaking secrets.

Employment in the industry will be shattered anyway when the big manufacturer pull out will happen. It is better to give them opportunity to shift the engineeres to other projects and keep them in F1.

A two tier championship has never been the goal, it is simply the vehicle to get a budget cap approved without violating Ferrari's "special priviledges".

[WhiteBlue]

...Had there been some bloody STABILITY in the rules, the costs might have never reached that high, as the teams would follow a gradual design evolution path for their cars: having to redesign everything from scratch every year is surely more expensive. Or AT LEAST, they would have the option to go back a step and use maybe last year's car with minor tweaks (the Super Aguri experiment proved that would be feasible) to save some money in the middle of a financial crisis, instead of being forced to pull out.....

That theory is easily proved wrong. Whatever the rules are history will show that race teams have allways spend their last penny and some more to buy competitiveness. That is their very nature. They want to win and even if they break the company for doing it. The simple truth is that there is no alternative to a budget cap. The other truth is that FOTA could not decide by themselves to implement it. They have been asked for the umptieth time since the crisis broke more than a year ago. They will never comply because the big teams will not give up their capability to outspend the smaller teams. Isn't it obvious that Ferrari and Red Bull and Toyota are the richest teams in the near future. They are all bankrolled by extremely rich and still successfull corporations and billionaires. Ferrari claim that they have not lost money so far in the down turn. Toyota have seen reduced profits but they are the biggest auto maker and they still make profit. Red Bull is still making money with their drinks. So isn't it obvious why they fight the budget cap? They protect their right to outspend their rivals.

[mcdenife]

Spacepig wrote:
I get it, nobody likes change. But change is coming whether anyone likes it or not. The question is whether it comes in a managed, controlled way, or in chaotic shitstorm that ruins the sport for years.

Precisely but the FIA way is and has alway been the "chaotic Shitstorm" as you put it. The issue is not and has never been whether or not there should be spending cut. You mentioned losses in the auto industry, is it not these very same manufacturers who are suffering these losses? So why would they not want to see a spending cut? That is like preaching to the converted. If you run a business which emcompasses more than just racing then you would have to be a fool to subject your books to a body (appointed, private forensic(duh!!) or otherwise)that has proven time and again not only its incompetence, but also that it cannot be trusted with sensitive info, not to play politics, brinkmanship or whatever else takes its fancy with said info.
It is the FIA, through its inconsistencies, meddling, regular regulation changes that stiffled innovation such that mega bucks are required for the tiniest of gains. They are the ones who brought this situation about in the first place. Last year we had Kers, then it was no longer mandatory and now it seems there is going to be standard one. What about the millions already invested by the teams in developing this? So far the regulations for next year has not been finalised so teams cannot begin to design let alone build next year's cars. The FIA is not a commercial or business 'referee' but a sporting (or technical if you wish) one and should remain just that

[andartop]

...Had there been some bloody STABILITY in the rules, the costs might have never reached that high, as the teams would follow a gradual design evolution path for their cars: having to redesign everything from scratch every year is surely more expensive. Or AT LEAST, they would have the option to go back a step and use maybe last year's car with minor tweaks (the Super Aguri experiment proved that would be feasible) to save some money in the middle of a financial crisis, instead of being forced to pull out.....

That theory is easily proved wrong. Whatever the rules are history will show that race teams have allways spend their last penny and some more to buy competitiveness. That is their very nature. They want to win and even if they break the company for doing it. The simple truth is that there is no alternative to a budget cap. The other truth is that FOTA could not decide by themselves to implement it. They have been asked for the umptieth time since the crisis broke more than a year ago. They will never comply because the big teams will not give up their capability to outspend the smaller teams. Isn't it obvious that Ferrari and Red Bull and Toyota are the richest teams in the near future. They are all bankrolled by extremely rich and still successfull corporations and billionaires. Ferrari claim that they have not lost money so far in the down turn. Toyota have seen reduced profits but they are the biggest auto maker and they still make profit. Red Bull is still making money with their drinks. So isn't it obvious why they fight the budget cap? They protect their right to outspend their rivals.

Maybe you missed the first bit of my post, so apologies for re-posting it:

FFS, no team is opposed to the Cap, they are opposed to a 2 tier F1 series and would like a graduated tighning of the Cap to the same levels as what Max has rammed thru.

This has been pointed out again and again but it seems some people just don't get it, or don't want to get it..

Then, you posted this:

A two tier championship has never been the goal, it is simply the vehicle to get a budget cap approved without violating Ferrari's "special priviledges".

Which may or may not be true. HOWEVER, the Teams seem to be willing to bargain around this, so an alternative solution might be found which would satisfy all parties.

Regardless of the big teams' stubbornness to keep spending "every last penny", had there been some stability in the regulations things COULD have been different: there is only so much you can evolve a car under the same specific sets of rules until it becomes disproportionately expensive in regards to the potential gain, so if Ferrari was spending billions to get an extra 0.1" per lap, leading themselves to bankruptcy, it would still be feasible for smaller teams to keep relatively up to pace by spending much much less.. And when Ferrari eventually outspent their way out of F1 because they wouldn't afford it anymore, there would have been enough teams to keep F1 alive..

No matter who is right and who is wrong, the FACT is that we now have Ferrari, Renault, Toyota, Red Bull, Torro Rosso and possibly BMW and Merc threatening to quit for good. If you believe the FIA should just ignore them.. well, enjoy the battles between Williams, Lola and Litespeed next year: sounds like it's going to be really thrilling!

(and it might! but not quite the same, right?)

Last but not least, do you really think a championship with these teams will be viable in the long term? Do you think they will attract as many spectators and sponsors? Or will they have to reduce the budget cap to 10mil, 5mil or a couple hundred thousands in order to survive in 5-10 years' time?

[MegaHurts]

This topic's actually made me register and stop lurking, that's pretty good going.

Anyway, I think the argument about rules stability stopping excessive spending is countered by the fans wanting exciting racing/more overtaking. Stable rules for a long period of time just appears to create similar, overly sensitive cars that can't overtake.

[andartop]

I think the argument about rules stability stopping excessive spending is countered by the fans wanting exciting racing/more overtaking. Stable rules for a long period of time just appears to create similar, overly sensitive cars that can't overtake.

Welcome to the forum.

Not necessarily. That would be the effect of relying more on aerodynamics than mechanical grip.

Anyway, I never said the rules should be the same forever: minor changes could/should be implemented if necessary, to either enhance the spectacle or driver safety, increase or reduce speeds, make the cars sexier, whatever.

On the other hand, if you keep changing EVERYTHING (well, almost) EVERY single year, and then taking it BACK, then you can be sure that: a) the costs will keep increasing to unsurmountable levels, and b) it will take a fool to risk entering a championship where you need to invest a large sum to start building a car without any guarantee at all you will still be able to race that car when the season begins.. and that's exactly what we have been witnessing over the last decade!

[ESPImperium]

I predict that there will be F1 with the current line up next year, but i also expect there to be no Max Mosley there, i expect F1 guy there, i expect there to be a quick re-write of the laws for F1 and a rw-write of the by-laws of the FIA.

I expect there to be no 2 tier system in its current form. What im expecting is this.

* FIA Without Max Mosley
* To be replaced by either Jean Todt or Sir Jackie Stewart
* F1 to have KERS written out of the rules for 2010 onward as its a area that can help with cost capping by banning it.
* Current F1 teams to be granted a bigger slice of the cherry.
* Mid season testing for all, but limited to two single week sessions at Barcelona and Jerez, one pre "European season" one late "European season".
* Cost capped teams to still be allowed unlimited tunnel time and CFD time, but limited to 85% models and a specific ammount of teraflops of processing power.
* Cost capping to be closer to the £60m or £75m mark, whitch is realistic.
* Non cost capped teams to be limited to the ammount of people at a GP Weekend and at the factory, say 500 at the factory and 80-100 at the race.

Theres lost of ways that this can work.

I say increase the grid by 50% to 30 cars, but also increase the people in the points to the top 10, like this:

1st) 15pts
2nd) 12pts
3rd) 10Pts
4th) 8Pts
5th) 6Pts
6th) 5Pts
7th) 4Pts
8th) 3Pts
9th) 2Pts
10th) 1Pt

2Pts for fastest lap (Person must finish with in the points to score theese points
3Pts for most overtakes in the race (Person must finish outside the top 10 to score theese)
1Pt for pole posistion.

This is only the start of it as i have said earlier on, and i think theres to mucm more of this for later on in the season.

If i had my cost cutting hat on id also do this to the teams:

Reduce ammount of engines per driver to 6, with one more per driver for testing.
Introduce a simmilar rule to what we currently have for engines for gearboxes, but make it 3 for the season.
Make drivers use one after another, and then once finished, that engine or gearbox is sealed and held by the FIA till end of the year.
Current penaltys for any new engine and gearbox are sufficent.

Theres many ways cost cutting can be done constructivly. And theese avenues need to be explored first and then look at a budget cap, thats more realistic than the current £40m figure. And that figure should include everything, nothing excluded.

[spacepig]

FFS, no team is opposed to the Cap, they are opposed to a 2 tier F1 series and would like a graduated tighning of the Cap to the same levels as what Max has rammed thru.

You have to remember the people doing the negotiating in the press (people like Flava Flavio, Mario Thiessen, etc.) aren't the ones who sign the big checks. Renault is getting spanked by their customer team, the parent company is losing billions, and they are losing their title sponsor. This little fight gives them cover to pull out, but they would have done it either way. Do you really think Renault wants to spend more money? Same goes for everyone, except maybe Ferrari, who are still profitable as a division, even if their parent company isn't.

The "2 tier" system was necessary because the cap had to be voluntary. And the only way to make a voluntary cap effectively mandatory is to create a big technical advantage for following it.

The fact is, even if they scrap the whole idea and go with whatever cap system the teams bring to them, F1 will almost certainly lose at least 1 and perhaps as many as 4 teams next year. They absolutely need a way to bring in new entries.

[snowmansion]

In the current situation newcoming teams would not even consider going into the F1. And even if they want to join the F1, they could not even compete with the top 10. Teams that cannot spend half a billion a year have no change of being a true competitor. As said the manufactured teams want to outspend the other teams (but it is not only about outspending) it also concerns a great deal of managing and vision and having a few (one) very important mechanic/teamboss in your team. As you can see with ferrari this is not the case. How the hell dit they come up with all the mistakes this season!!? Kimi and Massa failed to qualify for q3/ Kers is not optimal/failure in refuelling/and more..
But thanks to this new budget cap i am curious what will happen if the manufactured teams will have to go with 45 million. Maybe they don't want to loose face and quit. First they need to do some restructuring within this manufactured teams who sometimes have more than 1000 employees just to keep a F60 running. It is the same as in every business, people lose their jobs thanks to the worldwide 'crisis'.