2010 regulation row on £40m budget cap

[Ciro Pabón]

Bill, welcome to the forum. Sorry for the late welcome. Perhaps the end game is still developing and hasn't reached the compromise stage?

Didn't the team ownership pass over for a nominal amount anyway? Honda wouldn't just give the team away with a big wad of cash.

I think that Honda paid a hefty amount (several tens of millions, I'm not sure about the amount) to the "new administration", because that was the less expensive way to deal with contractual commitments toward Button.

As Timbo points out, FOTA seems to be walking the path of "direct intervention" on cost, instead of a general cap. Funny, as that's not the point.

Besides, gcdugas shows us that FOTA has born. It used to be a club of friends, now is becoming the entry point for F1. That has "wow-ed" me since it was announced, because it's a profound change in the policy. I don't know if the phrase "they may only be accepted as a whole" is a prelude to "teams may only be accepted if they're members of FOTA". Williams has shown it is not necessary, but also Williams showed his hand before time, and you have to wonder who pressured them. Anyway, it's a first step for FOTA.

Legal considerations or not, I agree with donskar about the "cake" issue being what's at stake. Chaparral theory is interesting but I say let's wait and see.

I provided a bit of light amusement, nothing more...

... if by amusement you understand to read a thread every few hours, like it or not, then I'm amused: not much.

You know what Garfield the Cat phrase I quote frequently when I find that some attempts at humour from our honourable members are less than successful: "Let your words be sweet, in case you have to swallow them".

Anyway, here is a transcript of the news here, to remind myself of what Ferrari sees as essential:

The rules of governance that have contributed to the development of Formula 1 over the last 25 years have been disregarded, as have the binding contractual obligations between Ferrari and the FIA itself regarding the stability of the regulations.

- 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 1

are the priorities for the future.

So, it's the same rules for all teams "or bust".

[Ogami musashi]

I'm so disapointed by FOTA approach. They pretend to be on fan side but instead of having a clever way to have controlled costs and technical freedom, they just push to have even more restrictive regulations, more standardisation just to be able to have their expenditure free and to be competitive by ressources advantage.

So sad.

Now i wouldn't be to bothered if FIA won and that the budget cap is put in place next year.

[djos]

I'm so disapointed by FOTA approach. They pretend to be on fan side but instead of having a clever way to have controlled costs and technical freedom, they just push to have even more restrictive regulations, more standardisation just to be able to have their expenditure free and to be competitive by ressources advantage.

So sad.

Now i wouldn't be to bothered if FIA won and that the budget cap is put in place next year.

If you want to watch Racing with teams spending 30Mil per year go watch Indy Car or Nascar Racing instead!

Teams in F1 should be spending 100Mil per year otherwise it just isn't F1 imo.

[WhiteBlue]

I agree with Ogami musashi here. What is the point of keeping cost down if you still allow unlimited spending. You allow new entrants to participate and throw away their money to make up the numbers.

The budget cap ins't all about cost control. It is equally about preventing the fat cats to buy their way to championships. All the talk about objections to two tiers was just to distract from the main issue. Ferrari and Toyota do not want a budget cap full stop.

If Ferrari were serious about the same rules for all teams why did they have a contract with special priviledges in the first place?

[djos]

I agree with Ogami musashi here. What is the point of keeping cost down if you still allow unlimited spending. You allow new entrants to participate and throw away their money to make up the numbers.

The budget cap ins't all about cost control. It is equally about preventing the fat cats to buy their way to championships. All the talk about objections to two tiers was just to distract from the main issue. Ferrari and Toyota do not want a budget cap full stop.

If Ferrari were serious about the same rules for all teams why did they have a contract with special priviledges in the first place?

Youd think that Toyota would want a budget cap cause their 400mil per year budget sure as hell hasn't helped them so far - RedBull spend half that on 2 teams and still beat them to Winning Grands Prix!

[Ogami musashi]

If you want to watch Racing with teams spending 30Mil per year go watch Indy Car or Nascar Racing instead!

Teams in F1 should be spending 100Mil per year otherwise it just isn't F1 imo.

Seems you missed my point. The problem is not the value..the problem is technical freedom.

Regulations are tighter and tighter and all FOTA offers is to tighten them even more.

And just after that they speak about that bloody "F1 D.N.A".


I support the idea of budget cap just for that: spending is capped and technical freedom is increased.

Nothing to see with indycar obviously.

[djos]

Seems you missed my point. The problem is not the value..the problem is technical freedom.

Regulations are tighter and tighter and all FOTA offers is to tighten them even more.

And just after that they speak about that bloody "F1 D.N.A".


I support the idea of budget cap just for that: spending is capped and technical freedom is increased.

Nothing to see with indycar obviously.

No I dont think I did, seriously how much good is more Technical freedom going to be when you've only got 30mil to spend?

The Aussie V8 Supercars have virtually no technical freedom at all (even brake discs & pads are regulated), next to no testing and 5.0ltr Iron-block pushrod V8's with 650hp and the top teams still manage to spend 10mil each per year (thank God the racing is still awesome!).

In the F1 context, imo for technical freedom to really mean anything I reckon 80-100mil per year is needed but i'd settle for 60mil.

[gcdugas]

Q: How much is a Rembrandt worth?
A: As much as someone is willing to pay for it.


How much is the F1 crown worth? AS much as the competitors are willing to spend chasing it. The technical regs are another matter. With more freedom that allow innovation etc. and the cars will vary greatly (six-wheels, V12s, v8s, servo-valves, Bishop valves, wider tract, narrower tract, AWD, CVT, low profile tires and suspension travel, higher profile tires and less suspension travel etc.) With tighter regs the money will still be spent but it will involve more refinement (winglets and mirror mounts etc.) and less innovation. The money will be spent in accordance with the amount of value the participants place upon the prize of winning. If F1 is dumbed down or over regulated and the cache/prestige is gone, then the title will carry little weight and fewer entrants will care about it. It will be reduced to IndyCar levels. That is the danger.

The regs need to be free for more road-car related innovations to happen and the costs need to be voluntarily limited among the participants according to free market principles. These are two separate issues.

The third issue is that of governance. The teams should determine the rules. The FIA should be the referee and nothing else. FOM should promote the sport and the teams should get prize money and appearance money. The FIA under Max simply cannot restrain themselves to stay within their proper domain. It is not just F1. Just look at what they have done to WRC. Manufacturers have left in droves. It is now a sport in decline after years of increase. Why can't Max simply administer something? Why must he disregard all written documents about governance and dictate things unilaterally? It is his personal psychological short comings that are the root of all of this. If some incompetent boob mismanaged things, he would be tossed because of his short comings and replaced. The problem with Max is that he is a competent and shrewd megalomaniac and tossing him doesn't happen without a prolonged and bloody fight. Replacing a military dictator is harder than replacing a buffoon and that is where we are at. If Max could stay within his bounds he would be great. Sadly he cannot.

[WhiteBlue]

The teams have clearly demonstrated that they cannot regulate themselves inside guidelines set by the FIA. They had every opportunity to come up with a budget cap regulation that would satisfy new entrants. They failed to comply with the guideline and that triggered the budget cap definition by the FIA. That budget cap is by no means arbitrary but carefully designed to provide a framework suitable for the most high tech open wheel racing series.

There is no sensible theory why F1 teams should spend what they are spending now. The established budgets are a result of the policy of entry barriers and the accumulated wealth of a few teams. It is clear even for FOTA that those budget levels must come down in oder to prevent more economic failures of teams.

What FOTA fails to recognize is the connection between unlimited spending of the rich teams and the lack of competitiveness of new entrants. It would do no good if the average budget would come down to say 100 million $ (equivalent to the FIA cap) while a top team keeps spending 300 million $. It would not attract the new entrants that F1 needs to fill the empty slots.

Unless FOTA embraces the budget cap at a level consistent with suitable new entrant acceptance they are not capable of self regulation and should not be left to their own regulations. It would only ruin F1.

[Ciro Pabón]

Well, freedom of innovation implies a budget cap.

If you don't have one, in a racing competition, what you could be is transforminmg the championship into the prize of a bidding war.

So, is F1 the "championship of the expensive parts" or is it a driver and engineering competition?

Maybe, the more spectators a series has, the more you feel the influence of the money in advertising.

If that's true, by definition, every popular championship will be pushed around by the use of more money.

Real innovation, if it exists, of the kind is asked for by some members, is, thus, relegated, to "the obscure series...", those unpopular and not tainted by money. That's the ones that people with love for innovation should follow.

Formula SAE anyone?

[donskar]

Well, freedom of innovation implies a budget cap.

If you don't have one, in a racing competition, what you could be is transforminmg the championship into the prize of a bidding war.

So, is F1 the "championship of the expensive parts" or is it a driver and engineering competition?

Maybe, the more spectators a series has, the more you feel the influence of the money in advertising.

If that's true, by definition, every popular championship will be pushed around by the use of more money.

Real innovation, if it exists, of the kind is asked for by some members, is, thus, relegated, to "the obscure series...", those unpopular and not tainted by money. That's the ones that people with love for innovation should follow.

Formula SAE anyone?

No, I think you've missed something -- or I misunderstand.

I think we can agree that

the more spectators a series has

, the more valuable it is to advertisers, and the more money that will be available. This is a simple truism of marketing: the more "eyeballs, the more money you are willing to spend to get your name/product/logo in front of them. Your term

pushed around by the use of more money

is unnecessarily negative. Money can be a good thing. In fact, more money can mean more innovation, because it can lead to more experiments, more prototypes, more "gambles" on new and unproven theories, new materials, etc, etc.

You ask,

is F1 the "championship of the expensive parts" or is it a driver and engineering competition?

It is neither. You set up a false assumption. F1 is a competition of the best drivers (who are VERY highly paid) AND the best engineers of several disciplines (who are very highly paid) AND the most advanced cars (which are very expensive to design, build, develop, and maintain.

It is not wrong for the best drivers, engineers, mechanics, managers, and marketeers to be very well paid. It is not wrong for the pinnacle of racing cars to be the most advanced.

[timbo]

Well, freedom of innovation implies a budget cap.

If you don't have one, in a racing competition, what you could be is transforminmg the championship into the prize of a bidding war.

So, is F1 the "championship of the expensive parts" or is it a driver and engineering competition?

Well, previously the system worked resonably well and tended to regulate itself, the real problem arose when the level of spending exceeded sponsor income. I mean, the idea of budget cap came from quite another background than sporting ideals.
And one can argue that there were no clear examples of victories that can be solely contributed as "money-based", yet there were examples of effective and flexible operations that beaten grands.
Another thing - on the other thread F-22 mentioned as example of technological advance, well, does it's price (equal to A380) make it any less of advance or great piece of technology?

Formula SAE anyone?

I like FSAE very much and I hope that maybe someday there would be something like pure technological competition of maybe robots and limited only by standard budgets machines. Imagine this - without safety concerns of robot cars (well only for viewers) we can probably see this show on something like Nordschleife!

BUT
that's quite different from F1 and you can make the business model of F1 teams mutate to budget-capped formula in a single year!

[Scotracer]

As a FSAE competitor (well, now former) I can say the technical freedom allowed (which is budget-capped) is brilliant. I could only wish F1 offered such as just seeing what other universities come up with at the event is equally enjoyable as the events themselves.

My car was a Aprilia Racing V-twin engine mounted to a Yamaha CVT system and many other trick bits and pieces on to a carbon spaceframe (that's right a CARBON spaceframe!).

Those uni days...how I will miss them.

[Ciro Pabón]

I don't know, timbo, donskar. At every series it is a little disappointing to find yourself being beaten by competitors with better machines. I know the feeling: when I was young I once ran an entire karting season (6 months) on a set of tyres... I didn't have the money.

If (and that's a big IF) the machine is better for the motives Scot mentions (long working hours and inspiration), then it's OK, or at least sort of OK.

In the end, your mechanics have been beaten by their mechanics, BUT when the rich guy comes along and beats you by using bought parts, good mechanics or not, then it's a different story.

I think that the sudden rise of Button proves that, in current F1, "it's the car, stupid!".

That's the reason why I say that money "taints" the driver championship: it's not like I'm against money in racing, dear donskar. Brawn did it "on engineering", true, but we come from years of "parts dominance".

The german guy (or the brazilian one), whose name I cannot remember, was a genius, but, how many of his results he got because he had the better car (by miles!)?

We'll never know, I guess. However, I'm sure that many of the sour commentaries I have read about his victories were rooted in that "little detail".

How would we feel if Button started to say he's the best in the world? I don't know about you, but I would have the feeling of underserved credit being taken. Same thing happened to Hamilton last year: he spoke too early.

Some times I think that modern F1 is like horse racing: the jockey is not that important, it's the horse the one that should take the credit.

Perhaps it's the McLaren car or the Ferrari car (now, the Brawn car) the one that's winning. The driver merely points "the horse" in the right direction and voilá: WDC.

On the other hand, when you have a "pure driver" championship, like, I don't know, Junior Kart series, you confront a different set of challenges.

In that kind of championships, you are heavily based on "strict regulations". And, let's face it, the engineers are not "purer" than anybody. I've repeated some times the immortal phrase of an anonymous NASCAR engineer, that sums it up:

"I know that guy is cheating! How do I know? Because I am cheating and the bastard beat me!".

Regulations enforcement is a pain in the buttocks and a temptation to mechanics. You know that those 2 cm of skirt is what makes the difference (or whatever is the critical piece that controls performance), so, why don't you try to build a 3 cm skirt and win? Maybe stewards won't notice...

So, how do FIA reach the equilibrium that Scot misses?

For starters, in the Uni you're a different person: the economic necessities are not that hard. You're in an academic enviroment. You're learning about the cars, the equations, the actual production of parts. Everything is new and smells of new car parts (on a side note, if I could sell a spray with the smell of a new car, I would be rich!).

So, a first idea is to "insulate the teams from the money". For that to work, teams could derive their entire money supply from FIA... for example. No advertisement. No more Red Bull or Marlboro investing every penny they have for ads in forcing the results of the WCC. That solution is, maybe, as naive as it can be: "socialized F1". How's that different from a budget cap?

To finish this long post, what I miss in the current proposal is that the budget cap does not include driver salaries, AFAIK. So, what you're creating is a bidding war for the best driver, once cars are "equalized".

I've heard people complaining, in "old" SAE, about the "other team" bringing in a professional driver and winning. Is that what's going to happen? In the end is kind of boring.

Let's wait and see. Research can be done in many ways. When you change the rules in a sudden, almost random way what you're researching is... the rules.

[outer_bongolia]

If you want to watch Racing with teams spending 30Mil per year go watch Indy Car or Nascar Racing instead!

Teams in F1 should be spending 100Mil per year otherwise it just isn't F1 imo.

Seems you missed my point. The problem is not the value..the problem is technical freedom.

Regulations are tighter and tighter and all FOTA offers is to tighten them even more.

And just after that they speak about that bloody "F1 D.N.A".


I support the idea of budget cap just for that: spending is capped and technical freedom is increased.

Nothing to see with indycar obviously.

Ogami, I agree with your point. And I will go even one more step forward and say tighter regulations are a reason for the spending extremes that we see.

Think of this: since everything in your design is extremely limited you need crazy amounts of simulation/wind tunnel/testing to adjust a 10cm2 area in the front wing to gain 0.1 sec/lap. This will always cost millions more than a simple, creative solution to improve the cars. If more freedom were allowed in the regulations, we would not have this problem at all.

The regulations initially were to give F1 a safer, and slightly more level playing field. But they are now virtually designing the whole car for the teams. I believe the tighter regulations are killing the creativity and the beauty of F1.

I do not understand why F1 does not come up with something that will help both big spending and small teams at the same time? Something like a reasonable budget cap and a financial punishment for exceeding it, such as having to give the as much money as you spent over the budget cap to the lowest spending teams.