I'm glad you agree to that point. Let us keep that in mind. The key to doing it with the right approach is by splitting cost in different blocks. There are design and development cost on one side and production and service cost on the other. Both would be separately accounted for.SeijaKessen wrote:You can implement cost controls on the engines.
I would cap the sales price at between 2-4 times the production and service cost. That is approximately what the customer teams pay today and perhaps a little bit more initially. Obviously the excess of the cost would be there to cover for a moderate return on development cost for independent power train suppliers. Over three years this cap would gradually be reduced to the lower range which would reflect the minimum ongoing development cost.
I would set the sales cap high enough that a company like Cosworth which budgeted engine development at € 20m would recover on their cost by supplying two or three customers. That obviously would not be the kind of money Renault would pour into their F1 engine development. But that is not a question under consideration here. Renault have in the past used F1 to promote their core roads car business and so they would write their excess cost off as another form of sponsorship.But, you run the risk of causing companies like Renault and Cosworth to pack up and pull out if they are losing money on every engine they build. Really, would would the incentive be to supply engines at a loss?
But there is still the need to put a total cap on development cost or resources. You simply have to do it in order to stop the manufacturing teams to start a cost race and run away with a competitive advantage that is unsuitable to the business model. It is ok if Merc and Ferrari or potential future players like Bentley, Ford or Honda gain a relatively small advantage from using their own engines in their teams. Rich works teams do that currently with the chassis. So why should they be stopped to do it with the engines. But the advantage must be relatively small. If the smallest player can initially spend € 20m I would cap the development budget at three times of what he can afford. The ongoing development cost would be limited in just the same way.
The cost issue can be solved as I have shown, but the question is: Would all players agree to some limits that will let their competitors stay in business, competition and keep it sustainable? That is really the question which will have to be answered by the F1 commission. They have the ultimate responsibility to work out something that will keep F1 sustainable and entertaining while keeping it relevant and innovative. It will not be easy and the jury is still out over the question. Personally I'm inclined to believe that they will eventually find a compromise and that we will see the new engines on the grid.F1 will still be using V8 engines come 2014 because the financial considerations are what really matter.