About the F1 Resource Restriction Agreement

[bhall]

[...]
So where is the $600m or so which you claim RBR is spending to win the WDC and WCC?
[...]

First off, I didn't claim a thing; a newspaper did. I only shared the article.

Second, why are you under the impression that I've made pejorative statements that ascribe Red Bull's success to nothing but a big budget, as your question pointedly implies? Did you miss the instances where I acknowledged the complete legality of everything we've discussed here? Or where I more or less said that the very nature of Formula One dictates that teams try to find and exploit more loopholes than their competitors? Such is the nature of the beast.

There's no reason to get defensive if someone brings up money in regard to Red Bull Racing. It is what it is, and it will likely remain that way until Red Bull Racing loses. That is also the nature of the beast.

Welcome to relevance.

[FoxHound]

@CHT

To be clear, Red Bull racing has a budget of 250 million. Red Bull Technologies has 350 million.
The total of the 2 combined is 600 million plus per annum. The companies are indistinguishably linked, by owners and by purpose...From Horner himself. Red Bull technologies supply Red Bull. They also supply STR and Caterham, but not to the extent of 350 million dollars. Otherwise we would have an STR or Caterham on pole every other race.

To make a comparison, McLaren supply gearboxes and other components including rear suspension for Force India and other accessories for Marussia.
If we look at the most expensive component on the car, the engine which comes in at 8 million per season. McLaren applied technologies will have nowhere near this budget of 350 million to supply these teams.
As an independent, McLaren will need to make money out of the venture and therefore we can deduce that the budget is no more than 40 million, if that.

On top of this, Red Bull don't even have to pay for engines. They are supplied free of charge by Renault.

Gearbox supply is around 4 million a year, and Hydraulics cannot be much more than this.
So if we look at Caterham and STR, at 8 million a piece we are looking at 16 to maybe 20 million for those 2 teams to be covered.
Where is the other 330 million going to?

Caterham and STR both have their own factories too, so they are capable of building their own parts and are certainly not spoon fed by Red Bull technologies.

[gato azul]

I think, you massively underestimate the possibilities and the know how of the OEM's and their suppliers.
Does not even need to be "in-house", their are many external service suppliers like Bertrand, BTZ and others,
who work on both sides (road car & motorsport) for the OEM's (Manufacturers)

Not at all Gato.

Would you like to comment on your other statement made?
You know, the one that RBT's sales to Torro Rosso will not need to be shown in their companies house filing as Turnover/revenue or "Umsatz"?
And, may you state what your understanding of the term revenue/turnover/Umsatz is, and how you conclude, that it amounts to money spend, this would help to move the discussion forward, as it seems, we are not all using this term (Umsatz/Turnover) in the same context.
Thanks

BTW:
according to your "Companies House" Mercedes-Benz Grand Prix Ltd spend closer to 193 mil US$ in 2011, then the 180 mil US$ you like to claim. How come?

https://www.duedil.com/company/00787446 ... financials

[henra]

Key Financial for Redbull Technology

Employees------------------605
Turnover--------------------US$344m
Cost of Sales---------------US$296m
Gross Profit----------------US$48m
Operating Profit-----------US$6.56m

US$344m will include product (cars) and services extended to both RBR and STR, sales to other products such as gearbox, hydraulic system etc to other F1 teams

Thank you for adding some valuable detail. It is particularly interesting to look at the term 'turnover'.
Moreover I fully agree that some here seem to simply add the turnovers of both RB companies which might lead to a completely false result.

So lets lok at the business model:
Where would revenue/turnover of RBTechnology come from if not from Cross Company Sales of products/technology to RB Racing.
Or to make it more clear:
Let's assume RB Tech sells a chassis to RB Racing for 5 mio$ which cost them 4.9 mio$ to produce.
In the economic logic prevailing in some of the posts so far this would mean 5 mio$ RB Tech + 5 mio$ RB Racing =10 mio$.
In reality it has cost Red Bull 4.9 mio in total. The rest is Monkey Money.
But you will only see that in a consolidated P&L where Revenue between affiliates are considered.
So unless we get a real consolidated balance sheet and P&L from both RB companies we will simply not be able to determine the effective Budget of the two.

[raymondu999]

Caterham and STR both have their own factories too, so they are capable of building their own parts and are certainly not spoon fed by Red Bull technologies.

Caterham to my understanding has no other relation to RBT than as customer-supplier. They buy gearbox, money changes hands, thank you and good night. STR CREATES their own stuff - but does RBT do R&D work for them? What I mean by this is - to my understanding (which may be wrong) Newey is an RBT (not RBR) employee, no? Is James Key the same?

I don't think it was ever any question of whether they used RBT to play the RRA like a fiddle. And to be frank - given the way the RRA is policed (based on what we know) it's just good cost management - RBT takes the hit to ensure that RBR stays within RRA. The RRA was always a half-assed budget cap to be honest - one that was bound to spring such a situation. If I were in the same situation, and had the budget to exceed the RRA, it is quite frankly the smarter option, and something I would do as well.

But external R&D jobs aren't new in F1 though. There was Virgin and their Wirth Research tie-up, HRT and Dallara, and while I can't name any off the top of my head at this moment, probably a couple more as well. If not happening at present, then in the past at least. To memory weren't Toyota going to do the same to their stillborn 2010 car? Either sell the IP for the 2010 car, or lease it and do a customer-vendor relationship where they would supply upgrades for the year? Point being - would this really be something that the RRA has not touched on in the slightest?

Would you like to comment on your other statement made?
You know, the one that RBT's sales to Torro Rosso will not need to be shown in their companies house filing as Turnover/revenue or "Umsatz"?

I think what FoxHound means is that STR is not supplied by RBT? Not sure though. If RBT is registered with the UK companies house, and they perform any sort of transaction with STR - it would go through their UK filing.

And can someone explain what this "umsatz" is?

[FoxHound]

Umsatz = turnover.

@Gato
Here is the excerpt form the news piece provided by Bhall.

..... 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.

As they are using the word in the context of spend, I'm going by the translation.

[gato azul]

And can someone explain what this "umsatz" is?

Yes sure, it was the German term used in the original posted NZZ article.
In the initially provided translation, it was translated with revenue, but the accounting term used in the Companies House fillings is "turn over".

I just included it as it originate from the NZZ article written in German, to avoid that we spend another xx pages arguing what
a correct translation would be.
I feel that turnover and/or revenue are both usable, but turn over being the more correct translation.

None of these terms would equal to money spend (cost of sales) or budget - IMHO, and should not be used interchangeable with the other terms.

EDIT: the term used in the original translation was "turnover" not revenue - apologize

[gato azul]

Umsatz = turnover.

@Gato
Here is the excerpt form the news piece provided by Bhall.

..... 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.

As they are using the word in the context of spend, I'm going by the translation.

They don't, they just make the statement that.

- the combined turnover of both companies has risen to an estimated 630 mil US$
- that both companies are closely linked
- that the racing budget is ~270 mil US$ and higher then that of Mercedes or Williams

Nowhere, did the claim or hint at that there where 630 mil US$ spend.

[gato azul]

and what about this statement of yours:

Squadra Torro Rosso is a seperate entity and not included in the RBR or RBT companies house figures.
They're based in Italy, no need for companies house disclosure.

are you still stand by this?

[raymondu999]

I think the problem is several countries (eg USA vs UK) use the words differently. In the UK definition - aren't they both the same, aka sales? (quantity of goods sold x price sold at)

[FoxHound]

Nowhere, did the claim or hint at that there where 630 mil US$ spend.

Sorry for the intermittent gaps, Im watching Rugby

What does this mean then Gato...

turnover of the company Red Bull Racing and Red Bull Technology has risen to 585 million francs.

....?

As Squadra Torro Rosso are based in Italy, not the UK.

Companies house requirements are that if subsidiaries are external of the UK ...figures would need to be published, under their own names. So if STR where to be included it would have it's own headers in the RBT folders
But as the FIA have stipulated that STR must be stand alone, the relationship with parent company Red Bull would have to be severed. This would explain why they are treated as 2 separate entities.

[gato azul]

Nowhere, did the claim or hint at that there where 630 mil US$ spend.

Sorry for the intermittent gaps, Im watching Rugby

What does this mean then Gato...

turnover of the company Red Bull Racing and Red Bull Technology has risen to 585 million francs.

....?

As Squadra Torro Rosso are based in Italy, not the UK.

Companies house requirements are that if subsidiaries are external of the UK ...figures would need to be published, under their own names. So if STR where to be included it would have it's own headers in the RBT folders
But as the FIA have stipulated that STR must be stand alone, the relationship with parent company Red Bull would have to be severed. This would explain why they are treated as 2 separate entities.

It means exactly what it says: that both companies have a combined turnover (incoming money in cash flow terms a.k.a. sales), which has risen to 585 million swiss francs.
Seeing that RBR has just won the 2010 WCC ( remember that this figures are from 2011), it's hardly surprising that they would have higher turnover, if only from the increased payment received from FOM.


But if RBT sells his gearbox design or any other service to STR or/& Caterham it would have to show up as "turn over" (a.k.a. sales - incoming money) in RBT'S statement, independent of the location of the customer, don't you think?

Just as any sales of ECU's to Ferrari &/or Sauber would show up in the turnover statement of McLaren Applied Technologies / McLaren Electronics.

So may you explain, how you conclude that combining both turnover values (RBT & RBR) equals to money spend or budget?

[WhiteBlue]

I'm not sure I understand why it's so difficult for folks to believe that Red Bull Technology/Racing/GmbH are legally spending gobs of money on Formula One with non-RRA resources. They've found a loophole in the rules that suits them, and they're exploiting it. That's what teams are supposed to do in F1.

It is difficult for people with reason to believe in an interpretation of data that is completely based on fiction. Please show me one set of data about Red Bull Technologies that confirm any of your assertions. If they exist they simply have not been posted in this thread. The Züricher Zeitung source mentions a consolidated figure for RBR and RBT in Swiss francs. That is the only figure I have seen so far and it has no source material attached. And that figure does not match with your assertion of "gobs", whatever that is meant to be.
Btw. I do not at all deny that RBT probably do provide services in excess of the allowed amount of services of the RRA to Red Bull. It would be strange if they would not. But how much that is can nobody tell. It could be $0, $60m or $200m. You are the self styled king of quotations - at least you always demand sources for everything people post around here - so please give us robust figures for the alleged violations that can be traced to a public source.

To put things a little bit into perspective we should also cast one eye over to Maranello where Ferrari are running a group of companies with annual sales approaching $2bn - if you add the F1 and the road car business. Apparently people are very worried about cost for services to RBR hidden in some hundred million sales of RBT. I bet that the RBR people are seriously worried about service charges hidden somewhere in the $1.5bn road car business on the other side of the wall at Maranello.

[raymondu999]

But if RBT sells his gearbox design or any other service to STR or/& Caterham it would have to show up as "turn over" (a.k.a. sales - incoming money) in RBT'S statement, independent of the location of the customer, don't you think?

If I were to show up on RBT's doorstep, and buy one of their gearboxes - even THAT should show up in their accounts. It's not only independent of customer location, it's completely independent of customer identity.

[Raptor22]

Yse it is. and the sale needs to be resorded as well as the overheads that resulted in that sale, including all marketing, technical and engineering support and design required.