About the F1 Resource Restriction Agreement

[FoxHound]

Particular audits would be conducted with legal entities and their suppliers on request of competitors. If a team or engine manufacturer is introducing suspicious amounts of innovations, updates or new parts the competitors are the first to realize that. They have a pretty good feeling how much it costs and would blow the whistle probably more often than not.

This is a recipe for disaster. Every race we will have whistle blowers pointing fingers at each other.

And on which planet would suppliers open their books "on request from competitors"? That will never happen, and even if it does, what's to say the books opened haven't been fiddled?

[bhall]

Once in a while we may be allowed to use our own head based on the published opinion of the teams and the FiA.
[...]

The problem is that this kind of stuff flies over everyone's head, and that's by design. If business practices were easily understood, there would be no corruption, because we'd all know what's going on all the time. Common sense tells us that's just not the case.

I can appreciate that you think a budget cap can work. I can also understand why teams would ask for budgetary restrictions to be put in place. But, just because some people want it to happen doesn't mean it actually can happen. The real world has a peculiar habit of being, well, real.

I've asked you repeatedly for any legal ways and means that could support a comprehensive budget cap. The reason why you haven't given me any answers on that front is because they don't exist. Liability issues alone will preclude ~90% of all "legal entities" from agreeing to the protocols your idea requires; jurisdictional loopholes mean there will always be a place to hide anything anyone wants to have hidden; and creative accounting practices can all but ensure the combined cost of every car on the grid is no more than a buck-fifty.

This game has been played out for centuries, and business always wins.

Look around. It's in the news every day.

[WhiteBlue]

Fine, I respect your opinion. Reasonable people will from time to time disagree over such issues. I think we are at a point where we should stop the debate and wait what will happen. Sooner or later there will be reports how the cost control plan progresses. We can simply wait and see who is closer to reality with his opinion.

[WhiteBlue]

And on which planet would suppliers open their books "on request from competitors"? That will never happen, and even if it does, what's to say the books opened haven't been fiddled?

The books will have to be open for the neutral FiA installed audits if you want to supply an F1 team. It is the same for all teams if cost control is agreed by budget caps. The information would not be disclosed to the competitors. Of course there could be cheating. We have seen Briatore cheat in crash gate and McLaren use confidential information from Ferrari. Those things can happen, but they have been stepped upon and there will be no repeat performance. Same thing applies to budget control. Somebody will cheat and be caught. He will be "shot" for the benefit of other who will learn the lesson.

[bhall]

The books will have to be open for the neutral FiA installed audits if you want to supply an F1 team.
[...]

That's the very notion you scoffed at yesterday when I called it a license. You know that, right?

If this thing goes through, I suggest we all keep the FIA in our daily prayers, mantras and whatnot. They're going to need all the help they can get when they're suddenly tasked with auditing companies worth several trillion dollars in market capitalization. They're sure as hell going to need to be a lot better with that than Charlie Whiting is with wing deflection tests, because big business has scores of Adrian Neweys on its side.

[WhiteBlue]

The books will have to be open for the neutral FiA installed audits if you want to supply an F1 team.[...]

That's the very notion you scoffed at yesterday when I called it a license. You know that, right?

No, it isn't. If you confuse the a primary controlled licensee with a contractor you have not understood the system that the FiA is likely to introduce. There is in fact a vast difference between a controlled entity with an Fia competition license and a supplier which might get investigated on an occasional basis.

If this thing goes through, I suggest we all keep the FIA in our daily prayers, mantras and whatnot. They're going to need all the help they can get when they're suddenly tasked with auditing companies worth several trillion dollars in market capitalization. They're sure as hell going to need to be a lot better with that than Charlie Whiting is with wing deflection tests, because big business has scores of Adrian Neweys on its side.

Another misconception IMO! If you have a suspicion that a deal between the Boing aircraft corporation and lets say Caterham wasn't conducted at arms length you don't have to audit the whole of the Boing corporation. You just need the paperwork related to that one or similar transactions. That's a massive difference. I get the feeling that you paint a potential auditing scheme in the darkest possible colours to escape the reality. Todt has said that the FiA is confident that they can do it. That is enough for me to assume that it can be done. The man is no dummy. He has directed Ferrari to twelve F1 world championships unless I'm very much mistaken.

[bhall]

First off, this...

Once in a while we may be allowed to use our own head based on the published opinion of the teams and the FiA.
[...]

...can't coexist with...

Todt has said that the FiA is confident that they can do it. That is enough for me to assume that it can be done.
[...]

...that. We can either think for ourselves or we can allow someone else to do it for us. We can't, however, do both. Logic's a real bitch sometimes.

Second, if Boeing and Caterham were ever accused of violating the FIA's budget cap, each company would absolutely, beyond the shadow of any doubt, have to be audited from top to bottom. One doesn't "...just need the paperwork related to that one or similar transactions," because those are the very documents accusations of impropriety would assume are fraudulent.

"Your Honor, I didn't steal the car."
But, you were clearly videotaped when you stole the car.
"No, I wasn't."
Good enough for me. Case dismissed.

Third, may I please be your accountant? I won't charge you a nickel for my services, and your money will be in good hands. I promise.

[WhiteBlue]

I will only add that I do not agree with your view on both counts. There seem to be no purpose to a deeper discussion. Lets wait and see how things develop. We can pick the issue up when more news brake.

[FoxHound]

Deeper discussion and waiting will not solve the intrinsic flaw in your argument WB.

F1 is about competition and "interpretation" of law. We know how this translates in what we see. Flexing wings where flexing bodywork is banned, and exhaust blown diffusers (coanda) that circumvent legislation by clever interpretation.
Your proposal will be another development ground, but one that will suck the life out of F1.
Accountants and lawyers will be the winners in this, surely you can see that??

[bhall]

The reason why I'm so adamant about this is because there will be no news to break. That's the whole point. It's so easy to cheat a budget cap that when - not if - it happens, we'll never know about it, because that's how cheating works. No team will ever announce to the world: "Hey, everybody! Look at all the --- we're getting away with!"

You may think this is a mere difference of opinion, but it's really not. I'm trying to tell you that 2 + 2 = 4, and you keep telling me that 2 + 2 = purple.

[WhiteBlue]

Deeper discussion and waiting will not solve the intrinsic flaw in your argument WB.

F1 is about competition and "interpretation" of law. We know how this translates in what we see. Flexing wings where flexing bodywork is banned, and exhaust blown diffusers (coanda) that circumvent legislation by clever interpretation.
Your proposal will be another development ground, but one that will suck the life out of F1.
Accountants and lawyers will be the winners in this, surely you can see that??

What we are discussing here is the selection of a lesser evil. F1 has several options:
1. Immediately freeze the new engines in 2014 and keep trying with chassis RRA as FOTA did
2. Introduce budget caps as announced by Mr. Todt (that's what I support)
3. Do nothing and start another cost race as in 2001-2008 (I suspect that is what you support)

I simply have a different opinion about the way ahead. If I have forgotten an option please correct me. Unless you specify how you intend to address the problem of half the grid becoming non viable we have no basis for a discussion.

The reason why I'm so adamant about this is because there will be no news to break. That's the whole point. It's so easy to cheat a budget cap that when - not if - it happens, we'll never know about it, because that's how cheating works. No team will ever announce to the world: "Hey, everybody! Look at all the --- we're getting away with!"

Needless to say that I disagree. I fully expect further information when and if the strategy working group have dealt with the issue of cost control. I cannot see what that has to do with methods of detecting cheating. I expect that will be covered by whistle blowers and competitors complaint.

You may think this is a mere difference of opinion, but it's really not. I'm trying to tell you that 2 + 2 = 4, and you keep telling me that 2 + 2 = purple.

That is a particularly patronizing and provocative statement. I would prefer if you refrain from comments of that nature. They are not helpful to the debate.

[bhall]

This isn't a debate. This is a lesson you refuse to learn. I'm trying to teach you something here, because I've grown weary of seeing legitimate debates derailed elsewhere with phrases like "sensible cost controls" and "robust sanctions," concepts you've somehow managed to convince yourself are absolute. This fallacy must end, for it's toxic to rational discourse.

I've asked you to provide sources for your claims, and you have not. Instead, you've pointed to "likely" scenarios of your own creation.

I've asked you to provide legal justification for the actions you've proposed, and you have not. Anyone who would put forth the ideas you've proposed should realize that such issues are paramount to any discussion of this nature. You can't talk about "whistle blowers" without mentioning confidentiality agreements and liability. You can't talk about "licenses" and "licensees" without mentioning contract law. You can't talk about any of this without mentioning treaty law, private international law, banking regulations, or tax havens, because F1 is a global sport spread across dozens of jurisdictions. And you can't just gloss over those topics with generalities, either. Law is very specific for a reason.

Point blank: Can you cite even a single source here for the framework of your proposal? Or a single legal precedent? In other words, can you point to anything at all other than what you merely think is true?

If all you've got is just a repeat of...

[...] trust [Bernie Ecclestone] to have it all figured out.

or

[...] cheaters will be discovered and severely punished.

or

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

or

There is no need to actually audit those companies unless there is a claim of cheating. In such a case their contracts with the team would actually empower the FiA to investigate them. But you can bet your fortune that they will behave. None of those companies is in F1 to have their reputation tainted. I'm not saying this out of my own imagination. Have a look at Jean Todt's latest comments. He said that the FiA is confident that it can control the team's budget by employing international auditors. Do you think Todt is a fool?

or

[...] you don't have to audit the whole of the Boing corporation. You just need the paperwork related to that one or similar transactions.

...I submit you've got nothing at all. Those are but variations of "because I said so," an argument that's never held water for anyone other than religious devotees.

[WhiteBlue]

bhallg2k, don't expect any reply from me. All is said.

[bhall]

[FoxHound]

What we are discussing here is the selection of a lesser evil. F1 has several options:
1. Immediately freeze the new engines in 2014 and keep trying with chassis RRA as FOTA did

You are saying that F1 should implement a freeze on engine right on inception of a new engine formula?
WB, did you not think of the can of worms should 1 engine maker have a big advantage over the rest, or a more likely one that one maker is left behind?

You would need to rewrite the rules to allow equilibrium. Something both Renault and Red Bull have benefited from in the past.

2. Introduce budget caps as announced by Mr. Todt (that's what I support)

And the financially adept will run rings around this budget cap that Ben and Myself have tried to point out to you.

3. Do nothing and start another cost race as in 2001-2008 (I suspect that is what you support)

You suspected incorrectly.
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.