About the F1 Resource Restriction Agreement

[FoxHound]

Odd that a series of meetings can take place over a couple of years regarding costs, and the common denominator was a team constantly walking out of meetings due to "no possible agreement of spending or resources"

I would challenge the assertion that just one team had objections. Regarding Horner's objections I fully agree that restrictions on chassis constructors only without restrictions on power train manufacturers cannot work or would unfairly distort competition.

You agree with Horner?

Ok let's have a look at what's happened in the last 3 years.

Engines are frozen, with no real development possibilities. Chassis restrictions apply to everyone and are not a performance differentiator due to the rules. Leaving aerodynamics as the real performance differentiator.
Why would Horner be moaning when it is Red Bull who clearly have the advantage against the manufacturer backed teams?

It is sound biting, deflecting attention and pure politicking. Nothing wrong with that. it's his job. Taking it as gospel is a bit far fetched dont you think WB?

[WhiteBlue]

Sometimes you make me smile. Cash cows commonly refer to mature businesses which are big revenue generators opposed to growing companies, start ups or other portfolio items that are being invested into. I fail to see how the legal structures of Ferrari and Red Bull parent companies would influence their ability or willingness to shape their budget in the way to suit your theory.
The primary indicator for a businesses ability to invest into itself - this is what spending development money is for an F1 team - is always the size of the free cash flow. Ferrari Gestione Sportiva in that regard is better positioned than Red Bull Racing/Red Bull Technologies. They simply have the cash where RBR/RBT first has to go and get it from Salzburg in exchange for the advertising value equivalent they are generating. Mind you the AVE generated by RBR/RBT is huge but we don't know if it is recognized in the Red Bull GmbH balance as fair value at arms length in the way AVE is defined by FOM. Further you would have to question that RB GmbH is willing to reimburse their team at full rate or only pro rata. Your perception of the comparable budgetary powers of the RB and Ferrari teams is pretty much ass to face. The team you consider has to ask for money has it all in it's pockets already and the team you consider rich beyond all means actually has to get it from it's parent company because it has little direct revenues compared to it's competitor.

But all this perception really has not much to do with the reality. The reality is that both teams have the capability to spend much more than they do now. And how is Motezemolo's call for cost control fitting that reality? Quite simple really. Mentezemolo obviously enjoyed a period of high profits while the engine freeze and the RRA have led to a big reduction in spending. Now that the engines are exceeding $100m in development cost per manufacturer and the RRA has reached it's end of contract date there is the immediate perspective to loose those nice profits in the not so distant future. So he calls for cost control. What he does not say is that this cost control is only supposed to apply to selected areas that are not so interesting for Ferrari. They certainly do have no intention to limit spending on power trains.

So the old disagreement is still there. Both contenders in principle agree with cost control. But they want it implemented in a way that preserves their respective competitive advantages and competencies. They are mutually exclusive. Red Bull excel in aerodynamics and chassis packaging and Ferrari believe they are good in the engine and energy recovery segment. The fans that do not acknowledge that both contenders drive their own selfish strategies are blinkered by fanboism. Tifosi generally tend to turn a blind eye to the less inspiring actions of their team. I hope that here on F1technical we can objectively look at facts in a bipartisan way.

[bhall]

Point of order: the "Gestione Sportiva" is but a division of Ferrari SpA, which is the legal entity entered into the FIA Formula One World Championship and is the signatory to the Resource Restriction Agreement. This is NOT analogous to the relationship between Red Bull GmbH, Red Bull Racing Ltd, and Red Bull Technology Ltd, all separate companies of which only one, Red Bull Racing Ltd, is subject to the rules and regulations defined by the FIA and the RRA (whatever those are).

I only present this as an attempt to prevent the traditional Bavarian snowball of untruth from reaching its usual proportions.

That is all.

[WhiteBlue]

So how do you know that Ferrari SpA is signatory to the RRA. AFAIK the RRA is secret and nobody ever published a list of signatories. Just a little question to prevent the usual avalanche.

[bhall]

That's a valid question, and one for which I do not have an answer. But, since Ferrari SpA is the legal entrant to the FIA Formula One World Championship, as published by the FIA, one is left little choice but to assume Ferrari SpA was also the signatory to the Resource Restriction Agreement. I've emphasized that last bit to highlight the nature of the RRA as an agreement between teams, and I can't imagine any team being silly enough to allow other signatories to be anything other than the lawful entities entered into the Championship. Any other solution would render completely impotent an agreement that was already mostly toothless.

That seems sensible enough, don't you think?

[gato azul]

Fiat losing millions of euros, along with Chrysler...and Ferrari burning and extra 100 million + to race Red bull?

Chrysler is not doing that bad right now.
Chrysler profits surge 80%

you keep saying that RBR/RBT "burns" money, but yet, if you see their increase in turnover and spending, you will see
that it remains more or less constant, meaning they are able to fund their increased spending/budget out of their operational
cashflow.
As long as they keep winning it's a sound business, compared to MGP at the moment.

The reason is the payout structure from FOM, as long as you win, it works out, it only really becomes a problem if you
don't win, and keep spending huge amounts of money, trying to "win".

[FoxHound]

I did not say RBR/RBT burns money.

I say they have money to burn. There is a big difference Gato. And well done Chrysler =D> Let's talk in a year when a couple chickens come home to roost.
All analysts are saying there is choppy waters for the Auto industry in the next 24/48 months. some saying that 2 or 3 big names could go by the wayside.
The worst off of these are Peugeot, Renault, FIAT and Chrysler.

The point of comparison here is the appetite for spending wars. FIAT and by association Ferrari, cannot justify an escalation of costs in F1 to remain competitive.
R&D budgets are sky rocketing, as are associated costs for production meaning margins are being squeezed.

If you you think Ferrari can match Red Bull in a spending war, then fair play to you.

[FoxHound]

That's a valid question, and one for which I do not have an answer. But, since Ferrari SpA is the legal entrant to the FIA Formula One World Championship, as published by the FIA, one is left little choice but to assume Ferrari SpA was also the signatory to the Resource Restriction Agreement. I've emphasized that last bit to highlight the nature of the RRA as an agreement between teams?

Meaning gestione sportiva is/was included in the resource agreement, correct?

Hence why Ferrari broke ranks to follow Red bull in not abiding by the RRA in so far as most of Red Bulls F1 operation was never adhering to it in the first place.
I'm not calling red bull cheats, merely suggesting that most of their F1 operations (RBT) need not adhere to the RRA as they are suppliers.

[bhall]

Meaning gestione sportiva is/was included in the resource agreement, correct?

[...]

If the proper legal entrants to the FIA Formula One World Championship were obliged to represent themselves for purposes of the RRA, which I have to believe was the case, yes. There is no distinction, legal or otherwise, between Ferrari SpA and Scuderia Ferrari.

That's not to say Ferrari hasn't engaged in its own bit of creative accounting. But, I've not see any allegations, and I wouldn't care if I did. This conversation seems to have gotten completely bogged down with questions about the legitimacy of one team's actions versus another, when none of that really matters here.

However, each time this discussion strays from budget caps/resource agreements, I think the fact that neither will work or has worked is underscored again and again. Our questions regarding identities, amounts, definitions, etc., don't even begin to scratch the surface of all the ways in which it's possible to defeat mandated cost controls. The powers-that-be could accomplish the same level of meaningful cost reductions/controls if they alphabetized the numbers involved by color.

[WhiteBlue]

That's a valid question, and one for which I do not have an answer. But, since Ferrari SpA is the legal entrant to the FIA Formula One World Championship, as published by the FIA, one is left little choice but to assume Ferrari SpA was also the signatory to the Resource Restriction Agreement.

That is not convincing at all. I'm pretty sure that FOTA would not attempt to cost and resource control an entity that is engaged in a $1.5bn road car business. So the most likely signatory to the 2009-2012 RRA was an entity that represented Ferrari's Gestione Sportiva or some of its parts.

[bhall]

Gestione Sportiva = Ferrari SpA

Ferrari SpA = Gestione Sportiva

They are both one and the same. To separate them is to create two companies.

The Resource Restriction Agreement only covered certain F1-related activities. We know this because we know drivers' salaries were not included. So, I think it's safe to say building road cars was also not included within the scope of the RRA.

Again, all we're doing here is proving more and more that none of this stuff has worked/will ever work. There are simply too many questions.

[WhiteBlue]

That does not fit the public sources.
http://en.wikipedia.org/wiki/Ferrari
Ferrari S.p.A. (Montezemolo) is the parent company with €2.2 bn sales of road cars as the main product according to Wikipedia.
http://en.wikipedia.org/wiki/Scuderia_F ... rrent_team
Scuderia Ferrari is the team which engages in F1 and other racing activities (Stefano Domenicali). It is also referred to by gestione sportiva in the Italian language as distinction to gestione industriale which is the road car business.
The RRA obviously would not include other sporting activities except F1 and must therefore have a sub entity of Scuderia Ferrari/gestione sportiva as signatory or one of the parent entities is signatory and restricted to a certain defined subsidiary. It would not make much sense for Christian Horner otherwise to suspect that Scuderia Ferrari have certain outsourced activities in other Ferrari departments as he does according to the BBC source some posts above.

[bhall]

WB - We'll have to agree to disagree

[WhiteBlue]

We better stop this part of the discussion until the facts are known. What is the point of having a discussion based on speculation and getting hot under the collar about it all the time?

WB & bhallg2k - We'll have to agree to disagree.

[FoxHound]

WB - We'll have to agree to disagree.