About the F1 Resource Restriction Agreement

[WhiteBlue]

Difficult to know what is the current status with regard to RRA. The last agreement has presumably run out with the concord in December 2012. As we know we have an interregnum at the time being with regard to the next concord agreement. I would assume that is also valid for cost control measures. They are probably not applicable or non existent. All we know is that the concord negotiations are hung up between Todt and Ecclestone. In the meantime all we have are the regulations to go by and they do not say a thing about head count.

[Richard]

So the RRA has sprung back to life. Saward seems to have details on it http://joesaward.wordpress.com/2013/12/ ... ap-agreed/

[GitanesBlondes]

So the RRA has sprung back to life. Saward seems to have details on it http://joesaward.wordpress.com/2013/12/ ... ap-agreed/

This is what will likely be the death blow for F1. F1's already been on a downward spiral for sometime now sadly.

That will solidify the entire thing as nothing more than a glorified spec-race.

But even better is, if this stupidity goes through, just wait till the rampant accusations of cheating up and down the grid.

There is no way to effectively police a RRA, and good luck to the FIA trying to chase down where money is spent in a company like Red Bull.

Not to mention, given the astronomical costs of the V6 turbo units, I have no doubt the engine suppliers want to see their money recouped. What happens if this RRA causes the engine manufacturers to be unable to recoup costs? One engine supplier could be a possibility.

[FoxHound]

The horse whisperer (a pr mouthpiece for ferrari), recently suggested that a very succesful team over the last 4 years (draw your own conclusions) has made a substantial error on its accounts.
To the tune of 445 million.

Failing this, we also have seen what happens when a team is flagged for missing accounts coloumns or non existant paperwork. Nothing.

The whole charade is to appease someone somewhere as to the sports viability and sustainability.
And in the same breath they utter a double points finale.
Budget caps will not stop spending if there is a desire to spend.

Bernie's sprinkler idea is looking positively genius at this moment in time.

[SectorOne]

Wasn´t that about Autosports article where they messed up the counting of Red Bull´s resources which Ferrari then addressed and criticized the author of the article?

When the championship finishes, the moment arrives to take stock. If it’s enough in sport to look at the points standings, in business some trust in summer valuations, even if they are carried out under a parasol.

For that reason, months later, a reconstruction of the budgets of Formula 1 teams developed by an Autosport colleague has transformed itself into journalistic fact. It’s a pity that the cited figures are largely fantasy and they can draw even distinguished newspapers into conclusions that are wildly erroneous.

It would be easy to deny the figures with facts but the truth about business matters has to stay confidential: this too, like technology, is a crucial factor in competition.

- See more at: http://formula1.ferrari.com/news/horse- ... BPsrO.dpuf

Last week Ferrari's infamous Horse Whisperer reappeared with a small article that left many scratching their heads in confusion.
The piece was entitled 'Slow on the uptake with summer blunders' and it stated that "when the championship finishes, the moment arrives to take stock. If it's enough in sport to look at the points standings, in business some trust in summer valuations, even if they are carried out under a parasol. For that reason, months later, a reconstruction of the budgets of Formula 1 teams developed by an Autosport colleague has transformed itself into journalistic fact. It's a pity that the cited figures are largely fantasy and they can draw even distinguished newspapers into conclusions that are wildly erroneous."

When Pitpass editor Chris Balfe saw the Horse Whisperer's piece he asked business editor Christian Sylt to see what all the fuss was about. He soon found follow-up reports saying that the Autosport article in question was called 'The true cost of Formula 1' and was published in print and on its website on 31 August.
It fits Ferrari's description as the article does indeed contain a reconstruction of F1 team budgets and was written several months ago.
It claimed that Ferrari has a budget of £250m including engines and although the Italian manufacturer suggests that this is wrong, it is nothing compared to the error that the article makes about this year's champions Red Bull Racing.
Austrian energy drinks company Red Bull owns two F1 teams and they are run by completely different companies.
Italian company Scuderia Toro Rosso SpA runs Toro Rosso whilst its flagship team, Red Bull Racing, is run by two UK companies. The author of the Autosport article has read their financial statements, which have been lodged with the UK authority Companies House, however he does not seem to have understood them.
The first of the two companies is Red Bull Racing (RBR) and its financial statements say that its 'principal activity' is "the management of a Formula One motor racing team."
The second company is Red Bull Technology (RBT) which owns 100% of RBR. The financial statements for RBT state that "the principal activity of the group is the design, development and manufacture of Formula One racing cars.
The principal activity of its subsidiary is the management of a Formula One motor racing team."
RBT is the highest-level company involved with Red Bull Racing within Red Bull itself. We know this because the financial statements show that 100% of the shares in RBT are owned by Red Bull GmbH which is the actual drinks company.
Crucially, RBT's financial statements clearly state that they "consolidate the financial statements of Red Bull Technology limited and its subsidiary undertaking(s)."
This is why the financial statements refer to RBT as "the group."
You don't have to be a financial genius to find the definition of consolidated in a financial context.
Even a standard dictionary gives a pretty good indication.
For example, the Oxford English Dictionary defines it as to "combine (a number of financial accounts or funds) into a single overall account or set of accounts: (as adjective consolidated)consolidated accounts."
What this means in practice is that the turnover (which is another term for revenue) shown on the consolidated accounts for a company includes that of the subsidiary companies. Accordingly, in simple terms, if company X has turnover of £1m and is owned by company Y, which itself has turnover of £2m, then the consolidated accounts for company Y will show turnover of £3m.
As the turnover shown on RBT's financial statements is consolidated it already includes the turnover of RBR.
Adding RBR's turnover to this again would be completely inaccurate as it would be duplicating it.
However, this is precisely what is done by Autosport.
The reconstruction of Red Bull Racing's latest budget involves combining the 2011 turnover of RBR and RBT and then adding 10% for good measure. The article states that "Companies House records RBT's 2011 turnover as £215m (declared profits £4m), while RBR registered a bottom line of £640k on £177m spend. Adding 10 per cent for economics (2010/11 turnover increased by double that after RBR withdrew from FOTA/RRA activities) provides a global spend of £445m."
Most worrying of all is that Autosport then draws conclusions about the team's budget from this error.
It claims that Red Bull Racing's "actual spend... lies between RBT's turnover and the total, pointing to £250m annually for the overall RBT/RBR F1 operation." Given that this is based on an error it is not surprising that the conclusion too is flawed. As previously stated, RBT is the highest-level company involved with Red Bull Racing within Red Bull itself. Accordingly, it is hard to see how Red Bull Racing's "actual spend" could be higher than that of RBT.
Sylt says that the catalogue of errors in the article did not surprise him.
The author is an industrial engineer by training who later moved into journalism and at the same time set up a travel company offering trips to F1 races. Given the complexity of the subject it is no surprise that mistakes are made by writers who don't have a long track record purely writing about the business of F1.
The error simply muddies the waters of reporting on the business of the sport and should really have been weeded out by Autosport's group F1 editor Jonathan Noble. Clearly it has gone too far when Ferrari itself has to step in.
It is far from the first time that the author has made a significant blunder when writing about the business side of F1. Earlier this year Pitpass wrote a piece entitled 'Why there will be no change to F1 if the Concorde Agreement isn't signed' which referred to a report about a meeting between F1's boss Bernie Ecclestone, Ferrari, Red Bull Racing, Mercedes and McLaren.
The report said that they met "with the main discussion point being the need for a Concorde Agreement; whether F1 without Concorde - and, by extension, without FIA involvement - is viable.
Thus the FIA could effectively lose control of its own championship, which would in future be known not as the 'FIA Formula 1 World Championship', but simply as the 'Formula 1 Championship'."
As Pitpass pointed out, F1 was without the Concorde, the contract which commits the teams to race, for all of 2008 and half of 2009 yet the FIA did not "effectively lose control of its own championship" and the sport did not lose the FIA from its title.
The report even seemed to contain flaws with basic facts about the takeover of F1 by current controlling shareholder, the private equity firm CVC. It claimed that "when the teams in the early noughties threatened to set up their own breakaway series unless their demands (75 per cent of revenues) were met, CVC Capital Partners... agreed to a broad fifty-fifty split." CVC only agreed to buy F1 in November 2005 so how could it have agreed to a deal with the teams when they threatened to break away in the early noughties? It is the kind of head-scratcher which spurred Ferrari to take action and it has at last set the record straight in a very public way.

http://www.pitpass.com/public/print_art ... t_id=50604

[FoxHound]

Yes. A certain Chris Sylt.
Why on earth some papers give this man credance to publish tripe is beyond me.

[GitanesBlondes]

The horse whisperer (a pr mouthpiece for ferrari), recently suggested that a very succesful team over the last 4 years (draw your own conclusions) has made a substantial error on its accounts.
To the tune of 445 million.

Failing this, we also have seen what happens when a team is flagged for missing accounts coloumns or non existant paperwork. Nothing.

The whole charade is to appease someone somewhere as to the sports viability and sustainability.
And in the same breath they utter a double points finale.
Budget caps will not stop spending if there is a desire to spend.

Bernie's sprinkler idea is looking positively genius at this moment in time.

Creative accounting has managed to cover up so many misdeeds by companies in the corporate arena over the years. Even though some were sunk when it came out, I have no doubt many more escaped the executioner's axe than we will ever know about. I hear about quite astounding things about the sort of accounting trickery that goes on in municipalities, and it never even makes it into any newspaper. When the millions from the FOM payouts are on the line, god only knows what certain teams will deploy from their arsenal in order to gain every conceivable advantage from spending money to develop their cars.

Many years ago the great Mark Donohue talked about the unfair advantage as it pertained to the sort of things he and his cohort Roger Penske took to in the Trans Am and later Can Am series (well to be fair Roger continued it long after Mark's death). The unfair advantage will no longer be limited to just skirting the rules and regulations of building a race car, but to how well teams can hide their spending.

The idea that F1 is has road relevance, and will somehow be the harbinger of sustainable technologies for the planet is becoming quickly one of the biggest con jobs going in F1. Across the internet the fans who are oblivious continue parroting the line about road relevance --to some extent some here continue trying to perpetuate this myth-- even though F1 hasn't had any such thing in decades. Imagine how great a coup it is for F1 to have millions believing this tripe when people in the paddock snicker about such road relevancy claims?

No, F1 is slowly becoming an endeavor that WWE owner/chairman Vincent K. McMahon would be quite proud of. Tradition and the desire to push engineering boundaries in meaningful ways has all been sacrificed for the ever-increasingly important idea that "The Show" is what puts asses in the seats, and drives up ratings. Ramming through a RRA would be just one further step to show how far F1 has strayed from what it was. It's always been a sport for the teams that have the most money. There were far better ways to drive costs down while spurring on meaningful innovation, at least as it pertains to the sport. F1's idea to fix anything has for years now been to have a knee-jerk reaction to whatever the particular ailment is, and then throw out some absolutely moronic idea as the way to fix the problem. DRS, disintegrating tires, locked engine development, double points in Abu Dhabi, restricted engine design for 2014, and quite possibly a budget cap...all half-assed measures designed to give the guise of looking like they are doing something without actually doing something useful.

When people wonder why the product turns to ---, consider F1 is a money-making apparatus for a used car salesman who makes moves with intention of enriching CVC and no one else.

[FoxHound]

I concur there gitanes.

It always was a circus where dudes abide the sometimes crazy powers that be.
But there was a balance.
It was a sport to find the fastest man in the fastest car.

Now its about the fastest man in the fastest car, built to a budget, double points awarded at the last race and he must jump through fire hoops for a bonus point.

I'm getting the feeling that idiocracy is not just a film...but now before my eyes becoming a dumbfounded reality.
I would love to know who was the architect of this.
Todt?
Very unlike him it must be said.

[xpensive]

I recall when someone suggested a limit on the private jet's, not that JET, wingspan might be a way to go in order to cut costs?

[FoxHound]

Can you imagine the uproar it would cause at monaco?
Mr banker would have to fly cattle class(our first class) to have a weekend at the races.
Having been to Nice airport, I can tell you the FIA would have a nightmare of a job finding whos private jet belongs to whom.
I guess a good way of enforcing this (stupid) rule would be to get the transgressors to sit next to chris sylt for long haul flights and digest all his articles on the premise of perfect recital for redemption.
Oh the horror.

[xpensive]

Just imagine to sit next to a hard dr*nking Rencken from Heathrow to Oz? I would take refuge in coach...

[ScottB]

I don't think an attempt to curb spending is a bad thing. It's beginning to be implemented in football, the most crazy spending of all sports, so presumably it can come to F1.

Just needs to be a balance so that innovation can continue, but the smaller teams can survive and new teams want to enter. This would go well with the teams somehow managing to get a better share of the spoils rather than it all going to Bernie and the banks. Imagine if the teams were getting a percentage of the sports income along the lines of the sort of share an English Premiership team gets, I doubt any of them would be going bust...

[FoxHound]

Free market enterprise.

Should f1 also limit their profits?
This what it all boils down to.

[ScottB]

Free market enterprise.

Should f1 also limit their profits?
This what it all boils down to.

So do like football, force them to run at a profit, or at least at a non crazy level of debt.

[Pup]

Because they almost always do run at a profit. And running at a loss is one of the few ways a mid-pack team can improve (see: Red Bull, Lotus, Force India).

That's the problem in a sponsor-driven sport. Sponsorships follow performance. So unless you got a sugar daddy, your team ain't going nowhere.