About the F1 Resource Restriction Agreement

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WhiteBlue
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Re: About the F1 Resource Restriction Agreement

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It was reported that from 2013 the voting ratios in the F1 commission and in the strategy working group will change. That is conditional to the Concord agreement actually being signed and becoming valid.

When that happens small minorities will not be able to block decisions any more. Neither Red Bull nor Ferrari disagreeing would stop the F1 commission from implementing the budget control on engines and chassis.

Hence I believe that we will see some fundamental change very soon. At the moment the 2009 CA is still valid. But from January 1st all parties that have already signed the new 2013-2020 contract will be acting according to the new conditions. I reckon that we will see some changes then.
Formula One's fundamental ethos is about success coming to those with the most ingenious engineering and best .............................. organization, not to those with the biggest budget. (Dave Richards)

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FoxHound
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Re: About the F1 Resource Restriction Agreement

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WhiteBlue wrote:Neither Red Bull nor Ferrari disagreeing would stop the F1 commission from implementing the budget control on engines and chassis.
So what use are their seats on the F1 board WB? Ceremonial?
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FoxHound
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WhiteBlue wrote:It was reported that from 2013 the voting ratios in the F1 commission and in the strategy working group will change.
How will it change? Did it report that?
WhiteBlue wrote:That is conditional to the Concord agreement actually being signed and becoming valid.
Red Bull signed. Yet we know from Horner himself they are fully opposed to the budget caps. In fact, I will go as far as to suggest that the very evidence of Red Bull signing up is a reason as to why there will be no budget cap.
WhiteBlue wrote:When that happens small minorities will not be able to block decisions any more.
This is pure speculation that you are dressing up as a fact.
As I said prior to this post, both Ferrari and Red Bull are on the F1 board. The proposal's you are suggesting "will" happen will be shot down in flames as:
The deal also includes a provision to formalise Ferrari’s role in Formula One – as the sport’s longest standing team – with a shareholding in the sport’s holding company and enable both Ferrari and Red Bull to nominate a director to sit on the company’s audit and nominations committees.
and
The process, sometimes called a ‘scorched earth’ strategy (in its most extreme forms), is designed to make the business less attractive to a takeover by either placing key assets outside the company’s holding, or adding onerous conditions to the holding company’s articles of association. Either way, Formula One becomes a stronger business (and investment) proposition if the key teams are disincentivised to leave.
Now I wonder what sort of incentives were given to RB and Ferrari....?
The sort to block budget caps is my guess.
http://skiddmark.com/2012/03/ferrari-an ... t-listing/
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gato azul
gato azul
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Re: About the F1 Resource Restriction Agreement

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FoxHound wrote: I think this conversation would also greatly benefit from a healthy dose of the reality that no matter what anyone thinks the sports needs or thinks should happen, there's probably no way to implement a strict budget cap for an international sport contested by several large multinational corporations.
.........
It seems to me that when you try to force someone to play by rules they don't like they'll usually try to find a way around them.
.........
We can talk all day until we're blue in the face about what should or should not happen.
I think it's probably smarter to talk about what can and cannot happen.
As you seem to have addressed this towards me.
Can you show, where I said a budget cap would be a workable solution?
Furthermore, the title of the thread was/is "about the RAA", bot about budget caps or other alternative ideas.
As the RRA seem to have run it's course, and some numbers emerge via the companies house fillings of some teams, we can
look back, and see, how much of an impact it had in the "real world", interdependent of what some team members stated in the press during different times in the past.
That's the only reason, I ever looked at this thread, and the only thing I'm interested to discuss, not who is to blame and who may or may not broke it, or what will may happen from here onward.
But their seems to be vivid interest in this questions, so please go ahead.
.......
I agree, and this IMHO will always be the case. Doesn't really matter if we talk technical rules, sporting or any administrative regulations. As long as there is an intention, there will be a way.
As long as (some) teams want to spend more money, they will find a way to do so. And there is a lot of evidence, that teams are still prepared to spend more money, and nobody forces them via a gun to their head to do so.
It's by choice, because they still chase the pot of gold at the end of the rainbow, and as long as this is the case, it's difficult to do something about it. IMHO
There are teams, you make money in F1. Williams for example, so it must be possible somehow.
Now, that this does not mean "winning" is a different matter, and IMHO should be considered separately.
There are different possible business models to compete/participate in F1, and as Williams show, you can participate within your means and still turn a profit.
Now, that purely participating is not enough for some, even at the low end of the grid, and that they chose to chase that pot of gold, with more and more money is a different matter.
You can always spend more money if you like, and you can always be unhappy with what you have.
But that's mainly by choice not by necessary.
If some think, that F1 is like Amazon, or any similar start up business, and that they can and should rack up xxx millions in debt, but all will come good in the end, is fair game, but does not sounds like a very sound strategy to me. (emphasis is on to me).
While, we can speak about costs, and trying to bring costs down is always on the agenda, for any serious business, we should also try to see, how much of the costs are self inflicted, and if they are all necessary.
......

I agree with the first part, but not necessary with the second.
But please go ahead, I'm sure their are others who will likely participate in this kind of discussion,
to me it's sounds like a waste of time, but that's o.k.

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WhiteBlue
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Re: About the F1 Resource Restriction Agreement

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I'm not making things up.

Source for F1 commission changes
As AUTOSPORT previously revealed, the old structure of Technical and Sporting Working Groups proposing rules through a 70 per cent majority for ratification by a 26-man F1 Commission is being revamped. Instead, a 18-strong 'Strategy Working Group' is being created - which will be made up of six team representatives (Ferrari, McLaren, Red Bull, Mercedes, Williams and the next best in the constructors'), six FIA representatives and six representatives from Formula One Management. This group will vote on rule changes that will be decided through a simple majority, and these will then be passed on to a trimmed 18-man F1 Commission.

The new F1 Commission is made up of the six teams from the Strategy Group, every outfit that has scored a point in the previous championship, plus an FIA representative, an FOM representative, six promoters and an engine manufacturer. "The decision will be based on majority and not any more 70 per cent," said Todt, who thinks the new structure will be better able to react to the needs of the sport as a whole. "It will be a democratic and balanced organisation, which doesn't exist now. So for the FIA it is a plus."
Red Bull's position in the budget cap debate is not negative. They opposed various forms of chassis only budget control as long as engines were not subject to separate budget control as well.

Source
Christian Horner about cost control wrote:It needs to encompass all aspects of the car. Dealing with equivalence is always quite dangerous. Each of the teams has a different make up, different ownership. Some belong to motor manufacturers and some are independent and if you look at the things that work, like the testing, like the windtunnel hours, like the restriction in personnel, the things that you can touch and feel work quite well. But as soon as you start trading equivalence of hours versus external spend, that's where it seems to run into some difficulty. There's a willingness from all of the teams to try and contain costs, it's just the manner that you do it. And you can't exclude the engine from that with some teams producing their own engines, so it's important to look at the teams as a whole rather than cherry-picking the chassis.
Adrian Newey wrote:We all agree with budget control, we don't want to get into the arms race that happened with the manufacturers a few years ago and certainly with Red Bull we wouldn't be able to. But if we can concentrate on the things that are tangible, the windtunnel and CFD restriction works very well because you can measure it. Testing restrictions are exactly the same. But with some of the teams involved being subsidiaries of major automotive companies, it becomes a bit difficult to know exactly how their resources are split. It's about transparency, it's about having things that you can genuinely measure. As soon as you can't have that you get all of the accusation.
In the future the decision making power will be tilted more towards making progress than towards stalling every thing. If FiA and FOM are united or supported by the majority of the teams in the F1 commission they can simply go ahead with the plan by 50% majority.

It is known that Bernie wants a $250m total cap and that Todt wants some form of a cap in 2013 followed by another for engines in 2014. So with all teams supporting budget caps in some form it would be strange if they cannot find a simple minority for some form of cap in 2013.
Formula One's fundamental ethos is about success coming to those with the most ingenious engineering and best .............................. organization, not to those with the biggest budget. (Dave Richards)

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FoxHound
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Re: About the F1 Resource Restriction Agreement

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Adrian Newey wrote:We all agree with budget control


Does not equal....

WhiteBlue wrote:$250m total cap



You also quoted Newey on what they want from the manufacturers....

Adrian Newey wrote:.........It's about transparency, it's about having things that you can genuinely measure. As soon as you can't have that you get all of the accusation.
Well Red Bull are extremely well versed in the smoke and mirrors sideshow by making a complete mockery of the RRA. So How is it they will give this up, for transparency?

And why have these ceremonial seat for Ferrari and Red Bull when they have signed up for teams to outvote them in areas that will have a direct influence on their performance as a team?
The honest answer is they wouldn't. They left FOTA for a reason, and it would have to have been a very good reason in Ferrari's case.
They where offered executive seats on the F1 board, not equal to others....MORE equal than others.

Your idea of a budget cap floats near a Red Bull or Ferrari memo, it will get swatted out of sight. They will not hand over their advantage so easily, not even for an extra 10/20 million a year. We shall see very soon WB.
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WhiteBlue
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Re: About the F1 Resource Restriction Agreement

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@FH
You seem to be obsessed with this plans to give Red Bull and Ferrari seats on the FOM board. That is not going to impact on the rule making process in F1 as you may think.

The Formula 1 group have suspended their plans for going public and that probably means the board structure of the company is also not going to change any time soon. Even if there is no inquiry by the competition authorities we cannot be sure that those plans will ever happen. And even if they happen they will not have an immediate impact on the rule making.

The rules are going to be proposed by the strategy working group and will be approved by the F1 commission and the WMSC. The F1 group board composition will not change that process.
Formula One's fundamental ethos is about success coming to those with the most ingenious engineering and best .............................. organization, not to those with the biggest budget. (Dave Richards)

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FoxHound
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Re: About the F1 Resource Restriction Agreement

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gato azul wrote:As you seem to have addressed this towards me...
Not necessarily. Your post was just the logical introduction to the point I wanted to make.

@WB I'll try again then if you feel I'm obsessed about a specific issue.
WhiteBlue wrote:Red Bull's position in the budget cap debate is not negative. They opposed various forms of chassis only budget control as long as engines were not subject to separate budget control as well.
Another "unique" interpretation.
http://www.crash.net/f1/news/185552/1/e ... istic.html
The current RRA is opposed by Red Bull Racing, which has vetoed the agreement becoming part of the F1 sporting regulations and statutes and even led to Red Bull and Ferrari quitting the Formula One Teams Association (FOTA).
http://www.utsandiego.com/news/2012/nov ... e-to-home/
Cost control is an important issue, but "doing it through a budget cap is absolutely the wrong way to do it," said Horner, whose team currently leads the chase for the constructor's championship.
WhiteBlue wrote:
Adrian Newey wrote:We all agree with budget control, we don't want to get into the arms race that happened with the manufacturers a few years ago and certainly with Red Bull we wouldn't be able to. But if we can concentrate on the things that are tangible, the windtunnel and CFD restriction works very well because you can measure it. Testing restrictions are exactly the same. But with some of the teams involved being subsidiaries of major automotive companies, it becomes a bit difficult to know exactly how their resources are split. It's about transparency, it's about having things that you can genuinely measure. As soon as you can't have that you get all of the accusation.
...and if anybody knows a thing or two about exploiting subsidiaries in F1, it's Adrian Newey.
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WhiteBlue
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Re: About the F1 Resource Restriction Agreement

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@FH
I don't know what you try to show by out of context quotes and negative remarks about Red Bull. All top teams have their preferences and issues with how cost control should be conducted. Why don't you let it cool down for some days until we have reason to discuss news or quotes by people involved in the talks.
Formula One's fundamental ethos is about success coming to those with the most ingenious engineering and best .............................. organization, not to those with the biggest budget. (Dave Richards)

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FoxHound
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Re: About the F1 Resource Restriction Agreement

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What you see as "negative remarks," I see as objective restatements that you may or may not like. Sorry about that, I think?

The evidence hardly supports your claims here though.

We go from all teams want "this."
WhiteBlue wrote:So with all teams supporting budget caps in some form it would be strange if they cannot find a simple minority for some form of cap in 2013.
To all teams want "something."
WhiteBlue wrote:All top teams have their preferences and issues with how cost control should be conducted.
But, it seems the teams have other ideas.
Sir Frank Williams believes a budget cap would not be correct in F1, but does strongly agree that each team has a responsibility to be as cost-effective as possible.
http://www.gpupdate.net/en/f1-news/2806 ... wer-costs/
Martin Whitmarsh wrote:Personally, I think it’s a little unrealistic to have a global budget cap because it becomes even more difficult to pin down and to know everyone is comfortably operating within it.
http://www.dailymail.co.uk/sport/formul ... t-cap.html
Christian Horner wrote:"Ultimately an overall cap that captured all activities of an entrant would be a better way of looking at controlling costs than what is currently proposed," he told AUTOSPORT. "I think the problem with what is proposed is different entities are treated in different ways, which is our major concern."

"This is the fundamental problem," said Horner. "It is very difficult. Basically you are looking at a supply price, but this is where budget controls fall down in terms of how do you police and regulate them?

"This is where stability of regulations will always have a much bigger and more transparent impact."
http://uk.eurosport.yahoo.com/news/eccl ... 04966.html
Christian Horner's position here is a pragmatic one. He believes a cost cap is more favorable to the current (former) RRA, because it doesn't attempt to distinguish between different types of expenditures like the RRA. But, that doesn't mean is in favor of a budget cap. Overall, he believes rules stability has bigger and more meaningful impact on teams budgets, because they're the only things anyone can truly control.

I imagine his position is informed by all the stuff his team got away with under an RRA that allowed RBT and RBR to operate however they pleased and to do so legally. Horner knows that no rules are bulletproof, especially budgetary ones. So, why bother?

Think about it. The only teams actively in favor of Bernie's $250 million budget cap are teams that don't spend that much anyway. What do they have to lose by being in favor of something that won't affect them at all?

I'm happy to let this issue rest forever as it happens. Despite differences of opinion about how or why, everyone here but you seems to understand that a budget cap will not work, because no way exists to effectively police it. That doesn't mean I don't think a budget cap is coming. I'd bet that it is. But, I'd bet my house that it will be just about as effective as a drop of water in the Sahara desert.
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WhiteBlue
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Re: About the F1 Resource Restriction Agreement

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FoxHound wrote:Despite differences of opinion about how or why, everyone here but you seems to understand that a budget cap will not work, because no way exists to effectively police it.
That is by no means a correct representation of the discussions we had.
FoxHound wrote:That doesn't mean I don't think a budget cap is coming. I'd bet that it is. But, I'd bet my house that it will be just about as effective as a drop of water in the Sahara desert.
Fine, that is your position and it is duly noted. We can later compare it to what happens in reality.

I will side with Jean Todt who aims for separate budget restrictions for chassis and power train and is confident that the FiA has the means to control such caps. The federation has more than 100 years of experience in regulating and governing motor race competition. Todt has run the Scuderia Ferrari and Ferrari S.p.A. for many years. I think he knows what he is talking bout. At least I think he knows a great deal more than you.
Formula One's fundamental ethos is about success coming to those with the most ingenious engineering and best .............................. organization, not to those with the biggest budget. (Dave Richards)

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FoxHound
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Re: About the F1 Resource Restriction Agreement

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WhiteBlue wrote:
FoxHound wrote:Despite differences of opinion about how or why, everyone here but you seems to understand that a budget cap will not work, because no way exists to effectively police it.
That is by no means a correct representation of the discussions we had.
Really?
gato azul wrote:Doesn't really matter if we talk technical rules, sporting or any administrative regulations. As long as there is an intention, there will be a way.As long as (some) teams want to spend more money, they will find a way to do so
CHT wrote:F1 has always been a sport where teams will find all ways to cheat and exploit loops holes just to win. So it will be foolish for anyone to think that with RRA, teams will suddenly become fair play ambassadors and they will obediently self police their own spending hoping to win the fair play of the year award.
Lets not waste our time talking about something which is bound to fail from the beginning as modern f1 will never be a sport for amateurs and low budget team to thrive or survive
raymondu999 wrote:This, even a budget cap could not police, because estimates can indeed fall flat - meaning that the transaction never was always priced at arms length anyway (based on the faulty estimate)
banibhusan wrote:I think the only way this whole cost cutting s**t can work is if the FIA limits the teams from having outside suppliers.
bhalg2k wrote: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.
Cam wrote:This is a no-win situation and can never be regulated or prevented short of the FIA themselves issuing cheques to approved suppliers. Spec series anyone?
munudeges wrote:The RRA is obviously completely unworkable because you can never audit a team as part of a wider organisation. Ferrari will be doing the same thing with Fiat, Mercedes with Daimler and McLaren with McLaren Automotive. This has been pointed out to you umpteen times
Paul wrote: And many would feel finding a loophole in the cost cap is a convenient way to gain significant advantage with a comparatively insignificant investment. Multiple teams have been caught breaching "spirit" of the rules, but they don't seem to be too bothered about possible upheaval since they already have an excuse on standby. And that would mean back to square one in a season or two.
andrew wrote: Unit such time that the FIA holds the funds of each team and each team has to apply to the FIA to access fund the FIA will have virtually no idea on how much each team is spending. To this end the RRA is a pointless exercise and as much use as a chocolate fireguard without proper regulation.
Oh, well.
WhiteBlue wrote:The federation has more than 100 years of experience in regulating and governing motor race competition.
Hey, does anyone know what happened to the last "low cost" series run by the FIA, Formula Two?

And let me know when Charlie manages to stop flexy wings and the aerodynamic effects of exhaust gases. It's embarrassing to see the "all powerful" FIA unable to enforce its very own rules.
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WhiteBlue
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FoxHound wrote:Hey, does anyone know what happened to the last "low cost" series run by the FIA, Formula Two?
What ever happened to apples and bananas?
The current level of posting - I'm close to calling it piss poor - really suggest we take a break until something meaningful happens. I see no point in baiting by PMs either. So I will pass on that as well.
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WhiteBlue
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Re: About the F1 Resource Restriction Agreement

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The latest commented report on Red Bull finances has come out.
Marketing boost drives Red Bull F1 investment to record £108.5m
24/12/2012
It's no secret that in addition to employing some of the brightest talent in Formula One, Red Bull Racing also has access to one of the biggest budgets in the sport. It doesn't try to hide it but what is not immediately obvious is why Red Bull's investment in F1 keeps on accelerating. It isn't, as you might expect, because it is in a spending race with its rivals. Instead, Red Bull Racing team boss Christian Horner reveals in an interview with Pitpass' business editor Christian Sylt in the Daily Mail that the energy drinks company boosted its F1 budget last year due to increased promotion of its back-to-back championships. Perhaps ironically, the more it wins, the more it spends.

Red Bull Racing has won the championship for the past three years running and took this year's title at the end of November. The team's UK parent is Red Bull Technology and last year the drinks company's investment in it increased by £3.5m to a record £108.5m. When asked why, Horner says "Red Bull F1 marketing activity is based in Red Bull Technology, and activities that exploit the success of the Red Bull Racing team are recharged to the parent." Red Bull Racing's accounts for the year-ending 31 December 2011 show how much it cost to fuel its championship campaign this year. This is because the bulk of development work is done during the 12 months leading up to the first race of the season.

Red Bull Racing had total revenue of £176.8m in 2011 and its single-biggest source of income is payment from the drinks company. This is followed by an estimated £55m of prize money it received for winning the F1 title in 2010. The remainder comes from sponsorship with Renault-owned car brand Infiniti believed to be its biggest backer.

Although all the F1 teams are bound by the Resource Restriction Agreement (RRA), Red Bull Racing's costs accelerated 11% to £176.2m in 2011. Horner says that this was driven in part by spending on developments such as the Kinetic Energy Recovery System (KERS) which was reintroduced in 2011 and is not covered by the RRA. Research and development is the team's biggest single expense and Red Bull Technology, spent £69.9m on this last year, up from £56.2m in 2010. Horner says that "whilst expenditure on certain aspects of F1 racing are restricted, others are not. KERS is unrestricted under the RRA and, to be competitive, Red Bull Racing had to race with KERS for the first time in 2011 so Red Bull Technology spent considerable resources in developing the system during the year. The costs of customer gearbox production and servicing, ticket purchasing and hospitality costs have all increased within Red Bull Technology.

The amazing on-track success also generates costs as drivers and staff are paid bonuses on results." After research and development, the team's second-biggest cost was paying staff and this is also covered by Red Bull Technology. Last year it employed 605 staff with the bulk in design, racing and administration. They were paid a total of £51.2m with the highest-paid director, believed to be Horner, receiving £1.3m. With a third title in the bag he has a positive outlook and says that "Red Bull Technology has found an increased demand for services during 2012. This has opened up new opportunities which include servicing the Caterham team with KERS and providing technology tools to other customers. These new business streams are generating additional contribution to the company (through higher turnover and costs), and provide more stability for the employees against a background of cost cutting in the sport."
This clearly spells out that Red Bull Technology is the parent company to Red Bull Racing in the UK. So the corporate model they have chosen is to outsource the racing activities rather than the design activities. Exactly as I thought. RBT have a surplus of employees if you compare it to the RRA figures but they most likely show half their employees in non RRA related fields, such as marketing, drive train development (KERS), services to other teams and admin over head.

Their corporate structure with regard to the RRA is a clever way of exploiting the rules. As Richard said further up any cost control system in the future would have to carefully look into ways of neutralizing such a creative presentation of the legal entities. And that is not only valid for Red Bull but also for teams that engage in multiple other related activities such as power train development, client racing, client engineering for competitors, road car engineering and the like. The F1 team activities and the F1 power train activities should answer to a set of rigidly defined legal structures that leave no wriggling space or loop holes IMO.
Formula One's fundamental ethos is about success coming to those with the most ingenious engineering and best .............................. organization, not to those with the biggest budget. (Dave Richards)

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FW17
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Re: About the F1 Resource Restriction Agreement

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WhiteBlue wrote:http://f1.gpupdate.net/en/news/2009/11/ ... he-breach/

So it appears that the resource capping for 2011 has been set to 280 head count for team personnel. I do not think that anything else has been revealed about the resource restriction agreement before, so this is at least one corner stone of information. One has to assume that the 2010 figure must be significantly higher than that. Considering that some teams employ in excess of 600 persons I could make an educated guess that the figure will probably be close to 450-500 next year. This would be based on the previous argument that employment cannot be reduced sharply in one go but in several steps.
Image

What are williams doing with 691 employees?