Silly season 2021-2022-2023

[Big Tea]

So, how does the cost cap impact 2023? Can they co-develop 2022 and 2023 with split budget accounting? Can you use 2023 tech that was accounted for on 2023 spending while still in 2022?

The cost cap isn't assigned to a car, it's assigned to a year, like everything you do (in the departments falling under the cost cap) during that year, doesn't matter for which car, falls under that cap. For instance, this is 2021, they are using the 145 mln for the development of the 21 car, the design of the 22 car and possible even some innovations that will be on the 23 or 24 car.

So, what happens if a team has more income the the cap? are they just plain not allowed to take it, or put it in a deferent account etc, or can they 'lay off' on a different team.

Example, Ferrari get more in sponsorship, so 'feed' some to Alfa by sponsoring a driver? Ferrari (or who ever) is still taking and spending over the cap.

[f1jcw]

It makes no sense. Alfa belongs to Fiat group and why would they want to "BUY" engines from someone outside of their group (free or paid or discounted), when they have Ferrari in it.

I am presume they are bought out and change to

Sauber-Andretti Mercedes

Alfa Romeo already renewed their technical and commercial rights contract with Sauber (Confirmed). And it seemed they are going to continue with Ferrari engines until the end of the engine freeze in 2025 (Rumors). It would only make sense to do this, since they probably designed the 2022 car well in advance, and as we've seen with McLaren, changing engines is not a trivial endeavour.

So really even if Bottas joins, it wil be atmost the Alfa-Romeo Sauber Ferrari.

Then the switch to Merc is fake. The Andretti thing is the only thing that would make it seem sense.

[Jolle]

So, how does the cost cap impact 2023? Can they co-develop 2022 and 2023 with split budget accounting? Can you use 2023 tech that was accounted for on 2023 spending while still in 2022?

The cost cap isn't assigned to a car, it's assigned to a year, like everything you do (in the departments falling under the cost cap) during that year, doesn't matter for which car, falls under that cap. For instance, this is 2021, they are using the 145 mln for the development of the 21 car, the design of the 22 car and possible even some innovations that will be on the 23 or 24 car.

So, what happens if a team has more income the the cap? are they just plain not allowed to take it, or put it in a deferent account etc, or can they 'lay off' on a different team.

Example, Ferrari get more in sponsorship, so 'feed' some to Alfa by sponsoring a driver? Ferrari (or who ever) is still taking and spending over the cap.

If you have more income, you l’ll make a profit. So, basically, a team is a better investment, or has a better return (because spending is capped).

Ferrari would of course never spend their capped money on another team but would sponsor, let’s say, Sauber, trough their parent/sister company.

[JordanMugen]

So, what happens if a team has more income the the cap?

It's a cost cap, not an income cap! Teams are allowed to (indeed, encouraged) to make a profit and have cash reserves surely?

[Big Tea]

So, what happens if a team has more income the the cap?

It's a cost cap, not an income cap! Teams are allowed to (indeed, encouraged) to make a profit and have cash reserves surely?

But they would still be spending, just on another team.

[JordanMugen]

Meanwhile, they can house Illott @ Haas and see how he'd fare.

This is all very well, but sounds like wishful thinking. Schumacher has a HAAS contract doesn't he? So Illot would be the Ferrari junior placed in the available Alfa Romeo drive.

[JordanMugen]

But they would still be spending, just on another team.

The cap is only on what is spent on F1 by the racing team. If they want to sponsor another team that is A-OK!

[Big Tea]

But they would still be spending, just on another team.

The cap is only on what is spent on F1 by the racing team. If they want to sponsor another team that is A-OK!

Having thought for a while, which I should have done before posting, I realise thats what RBR do

[Jolle]

So, what happens if a team has more income the the cap?

It's a cost cap, not an income cap! Teams are allowed to (indeed, encouraged) to make a profit and have cash reserves surely?

But they would still be spending, just on another team.

Let’s say… redbull. There is a parent company, RedBull AG that owns four companies. RedBull racing, RedBull Tecnologies, Alpha Tauri Racing and RedBull power plant.

Parts of RedBull Racing and Tecnologies plus some staff members of RedBull fall under the cap for RedBull, and the same for Alpha Tauri. How the income or the cash flow goes in real life between all those companies in unimportant.

[politburo]

So, how does the cost cap impact 2023? Can they co-develop 2022 and 2023 with split budget accounting? Can you use 2023 tech that was accounted for on 2023 spending while still in 2022?

The cost cap isn't assigned to a car, it's assigned to a year, like everything you do (in the departments falling under the cost cap) during that year, doesn't matter for which car, falls under that cap. For instance, this is 2021, they are using the 145 mln for the development of the 21 car, the design of the 22 car and possible even some innovations that will be on the 23 or 24 car.

So, what happens if a team has more income the the cap? are they just plain not allowed to take it, or put it in a deferent account etc, or can they 'lay off' on a different team.

Example, Ferrari get more in sponsorship, so 'feed' some to Alfa by sponsoring a driver? Ferrari (or who ever) is still taking and spending over the cap.

The cap is concerned with activities that allow a team to race in F1. Such as procurement, and maintenance of engines and other mechanical/aero parts and components and the car in general, paying drivers and employees (given they are not in the top 3 salaries of the team), and other relevant costs such as R&D costs, inter-team costs, employee termination costs, test days and other things used by the team in that year. This mens that giving/sponsoring Alfa-Romeo would still cost under the cap.

However, things carry over to the year, say a team's fixed assets such as motorhomes or headquarter buildings are not included. Thus if a team has a net profit they can simply invest it elsewhere like in WEC - building a Hypercar worth 100-200 million where the teams don't really get paid even 10% of what F1 teams get paid in prize money throughout a season, and in the regulations the do have a section where they explain that one cannot simply offset costs using gross income without adjusting for it in the cost cap.

[politburo]

It's a cost cap, not an income cap! Teams are allowed to (indeed, encouraged) to make a profit and have cash reserves surely?

But they would still be spending, just on another team.

Let’s say… redbull. There is a parent company, RedBull AG that owns four companies. RedBull racing, RedBull Tecnologies, Alpha Tauri Racing and RedBull power plant.

Parts of RedBull Racing and Tecnologies plus some staff members of RedBull fall under the cap for RedBull, and the same for Alpha Tauri. How the income or the cash flow goes in real life between all those companies in unimportant.

The reporting group is only the F1 team and its entities. Thus, RedBull Powertrains can make/develop engines, but if say RedBull Racing (the F1 team) are creative, they can separate the F1 team from all other RedBull entities, and simply include under their costs the costs of procuring the engines alone, whilst the costs of development are eaten by their engine supplier RedBull Powertrains. Thus the F1 team will be saving on engine R&D costs because these engine R&D entities are not part of their "reporting group".

[Jolle]

But they would still be spending, just on another team.

Let’s say… redbull. There is a parent company, RedBull AG that owns four companies. RedBull racing, RedBull Tecnologies, Alpha Tauri Racing and RedBull power plant.

Parts of RedBull Racing and Tecnologies plus some staff members of RedBull fall under the cap for RedBull, and the same for Alpha Tauri. How the income or the cash flow goes in real life between all those companies in unimportant.

The reporting group is only the F1 team and its entities. Thus, RedBull Powertrains can make/develop engines, but if say RedBull Racing (the F1 team) are creative, they can separate the F1 team from all other RedBull entities, and simply include under their costs the costs of procuring the engines alone, whilst the costs of development are eaten by their engine supplier RedBull Powertrains. Thus the F1 team will be saving on engine R&D costs because these engine R&D entities are not part of their "reporting group".

It’s not quite that simple. PU’s must be supplied for reasonable costs or a subtraction from the cost cap (real money doesn’t have to exchange hands/companies but the services or parts are assigned a value). It’s also not as cut clear as just having the whole racing team within the cap. Some parts will, other activities won’t or some will be assigned a different value then the actually cost. Loopholes like “just make a new company and sell a F1 car for a tenner” doesn’t work.

[politburo]

Let’s say… redbull. There is a parent company, RedBull AG that owns four companies. RedBull racing, RedBull Tecnologies, Alpha Tauri Racing and RedBull power plant.

Parts of RedBull Racing and Tecnologies plus some staff members of RedBull fall under the cap for RedBull, and the same for Alpha Tauri. How the income or the cash flow goes in real life between all those companies in unimportant.

The reporting group is only the F1 team and its entities. Thus, RedBull Powertrains can make/develop engines, but if say RedBull Racing (the F1 team) are creative, they can separate the F1 team from all other RedBull entities, and simply include under their costs the costs of procuring the engines alone, whilst the costs of development are eaten by their engine supplier RedBull Powertrains. Thus the F1 team will be saving on engine R&D costs because these engine R&D entities are not part of their "reporting group".

It’s not quite that simple. PU’s must be supplied for reasonable costs or a subtraction from the cost cap (real money doesn’t have to exchange hands/companies but the services or parts are assigned a value). It’s also not as cut clear as just having the whole racing team within the cap. Some parts will, other activities won’t or some will be assigned a different value then the actually cost. Loopholes like “just make a new company and sell a F1 car for a tenner” doesn’t work.

Perhaps you are right. But that last part is clearly not what I said, I never said it is a loophole but it's there in the regulations though, there are several clauses and definitions that may separate the F1 team and its costs from those of the controlling party of the F1 team and perhaps other legal entities within the same legal group. In the Appendix, they do define what reporting group is, and they also define what the legal group is. The cost cap covers the costs of the reporting group, not the entire controlling group (legal group).




This is why, even if Mercedes HPP was designated to be sufficiently outside the reporting group and produces powertrains for Mercedes F1 Team, the costs required for research and development (which are easily the largest areas of spending for teams) need not be accorded to Mercedes F1 Team if Mercedes HPP is an independent reporting entity outside the reporting group of the F1 team, but they still need to add the cost of procuring those components related to the power unit.




It'll be like Mercedes supplying power units to Williams in that case and that would be a huge adjustment if indeed that is correct, I am happy to admit that it may not be.

[ringo]

Kimi calls it quits!

[Jolle]

The reporting group is only the F1 team and its entities. Thus, RedBull Powertrains can make/develop engines, but if say RedBull Racing (the F1 team) are creative, they can separate the F1 team from all other RedBull entities, and simply include under their costs the costs of procuring the engines alone, whilst the costs of development are eaten by their engine supplier RedBull Powertrains. Thus the F1 team will be saving on engine R&D costs because these engine R&D entities are not part of their "reporting group".

It’s not quite that simple. PU’s must be supplied for reasonable costs or a subtraction from the cost cap (real money doesn’t have to exchange hands/companies but the services or parts are assigned a value). It’s also not as cut clear as just having the whole racing team within the cap. Some parts will, other activities won’t or some will be assigned a different value then the actually cost. Loopholes like “just make a new company and sell a F1 car for a tenner” doesn’t work.

Perhaps you are right. But that last part is clearly not what I said, I never said it is a loophole but it's there in the regulations though, there are several clauses and definitions that may separate the F1 team and its costs from those of the controlling party of the F1 team and perhaps other legal entities within the same legal group. In the Appendix, they do define what reporting group is, and they also define what the legal group is. The cost cap covers the costs of the reporting group, not the entire controlling group (legal group).

https://i.imgur.com/yDgUEru.png
https://i.imgur.com/qsWqUoB.png

This is why, even if Mercedes HPP was designated to be sufficiently outside the reporting group and produces powertrains for Mercedes F1 Team, the costs required for research and development (which are easily the largest areas of spending for teams) need not be accorded to Mercedes F1 Team if Mercedes HPP is an independent reporting entity outside the reporting group of the F1 team, but they still need to add the cost of procuring those components related to the power unit.

https://i.imgur.com/f3mt8JF.png
https://i.imgur.com/fWNk3wX.png

It'll be like Mercedes supplying power units to Williams in that case and that would be a huge adjustment if indeed that is correct, I am happy to admit that it may not be.

About the power units. HPP operations don’t account towards the cap, just their invoice for the power units to the team, which has to be a fair price. Income from for instance Williams or McLaren have no influence on the cap of Mercedes, just a good financial result for HPP.
Mercedes can of course give a discount to Williams for their PU but, the fair price will count towards the cost cap, even if the real cost is only half.