About the F1 Resource Restriction Agreement

[FoxHound]

So STR have a turnover of 4 Million?

[Richard]

I'm saying they only spend £4m with RBT. Obviously they have a higher turnover. You'd need to get their accounts from Italy for that detail.

I've clarified the wording on my post if that helps.

[WhiteBlue]

I believe the whole discussion is overlooking an important piece of information from the RRA thread. In the RRA teams are restricted to somewhere around 300 head of personnel and a maximum of around $40m in services from external sources. The company that is called RBR cannot be the entity that is controlled under the RRA. The figures simply do not fit. My best gues is that RBT is a group of companies that split three ways into the Red bull teams. There is one company that does all of Red Bull racings development. There is another company that does STR development and there is a third company that does general stuff like software development, simulator development, running two wind tunnels for separate intellectual property and such stuf. Somehow those sub divisions of RBT are the companies that respond to the RRA requirements. I see no other way that Horner can say they fully comply with all RRA requirements.

[Richard]

According to the Annual Reports:

RBT Staff
- Design 249
- Racing & production 249
- Admin 107

RBR Staff
- Racing & production 50
- Admin 2

[raymondu999]

I see no other way that Horner can say they fully comply with all RRA requirements.

Why not? Setting up RBT as an independent subcontractor would mean you fall perfectly within all RRA requirements. As I understand it there is no full blown audit, so there is no investigation (as I understand it) towards the transactions, and whether or not the transactions are done at arm's length.

[gato azul]

Wonder where AMuS came up with the 245 Million number for RBR from?

Taking the 215m GBP RBT turnover and deduction from it, the 4m GBP turnover/sales which where generated by selling to STR, that makes 211m GBP which they then converted into €
Pretty simple, but you will note, that they talk about the cost for RBT not as you claim for RBR, but may you have another article in mind.
At todays exchange rate it would be closer to 260m €, but again, even their calculations are a bit simplistically based on "turnover" values, which is not the same as "cost".

Demnach hat Vettels zweiter WM-Titel Red Bull Technology die Summe von 211 Millionen Pfund (245 Millionen Euro) gekostet
AMuS

[FoxHound]

Seems a great big convoluted mess if you ask me. Maybe that's the idea...smoke and mirrors.

Also, there have been murmurings in the past about Red Bull's spend and how they publish it.

http://www.yallaf1.com/2011/09/21/red-b ... agreement/

http://uk.eurosport.yahoo.com/22092011/ ... reach.html

http://paddocktalk.com/news/html/story-173765.html

Anyhow, this was set aside.

But there was an intriguing story I will try find in relation to the CapGemini Audit in relation to false inventories and blanked accounts. I'm sure it must have been an oversight by Red Bull, they conform to all the rules without question...don't they
Do we all recall how Red Bull left FOTA?

This suspicion has been poisoning the atmosphere within F1 all year, despite attempts to reduce it.
As well as the endless meetings aimed at bringing the two warring sides together, there was an investigation in the summer by external consultants into the way the teams were detailing their use of resources.
But while Red Bull believe this effectively cleared them of wrongdoing, their accusers disagree. "The analysis showed more than one concern about what Red Bull were doing," one insider told me.
The next step, as laid out by the RRA, was for a full audit of the accounts of the team about which there were suspicions - if a certain number of teams wanted this to happen, the accused team had to agree.
But this point was never reached, and after further meetings at the season-closing Brazilian Grand Prix, Ferrari and Red Bull ran out of patience.

So there where concerns regards Red Bull's activities. But FOTA was toothless as the RRA was never rubber stamped by the FIA. The accused team had to agree for a full audit and this point was never reached.
I think in a few years time we will know the full scale of this, but right now, who cares right?

[raymondu999]

I'm still not sure I buy that entirely. Every journalist I've talked to speaks of the RRA as a legally-binding document that stands on its own.

But to my understanding - the RRA in and of itself makes no provisions for any auditing. It's an inherent flaw in the design of the document, with regards to what it's supposed to be doing - but you can't blame a team for following flawed instructions, if you catch what I mean - because the same flaws are exposed to every other team.

[Richard]

But there was an intriguing story I will try find in relation to the CapGemini Audit in relation to false inventories and blanked accounts. I'm sure it must have been an oversight by Red Bull, they conform to all the rules without question.

Where is the source?

This is starting to sound like the flex wing complaints, ie a team comply with the rules and published tests but people squeal its unfair.

Interesting that the sources you quote don't actually support your claims about Red Bull. Yes they say Horner denied media allegations, because the media asked questions. However the Capgemini did not point a finger at one specific team. Instead they said the RRA was too vague in a number of areas. That's a fault with the RRA.

Despite Capgemini's report having given the outfits it looked at – believed to be McLaren, Ferrari, Mercedes GP, Red Bull Racing and Sauber – the all-clear, AUTOSPORT understands that there are issues relating to the scope of the RRA that still need sorting however.

and

Sauber CEO Monisha Kaltenborn said that the matter was going to be dealt with in forthcoming meetings at FOTA.

"What Capgemini did was a benchmark study, looking at methodologies and how they are used," she said. "We were not in any way trying to verify the abiding of the RRA, that was not its mandate."

So the conclusion is that the RRA was vague, and the so called audit wasn't actually an audit in an accounting sense, it was an investigation into the methodologies used by various teams.

[raymondu999]

The RRA was always going to be a half-arsed effort in terms of implementation. There's no way you can police this competitive a bunch, without putting in place a full audit, and also investigating whether or not the transactions are properly done at arm's length between suppliers and customers. The arm's length business could be where things fall, really.

If it's a "lump sum" obligation in a contract - that work around even a budget cap. Back in 2010 weren't Virgin Racing basically paying Wirth Research a lump sum for a yearly contract of supplying a Formula One car and an upgrade program through the year?

[turbof1]

It's neither fraudulent nor unethical to eek out every possible advantage under the laws and regulations that govern a business. In fact, it's incumbent upon management to do exactly that. It's no different than an accountant who helps individuals maximize income/property tax deductions. They just have different titles in the corporate world: they're called "Compliance Officers" or "Auditors."

Any executive who does not avail his company of all legal means to maximize revenues will quickly find himself replaced by someone who will. That's how business works.

It is actually unethical, but that's not something a manager should be worrying about.
Just saying: that same structure that allows Red Bull to circumvent the rules, is used as a massive tax dodging by other companies.
Mind you: that's a situation created by goverments, who are much too infuentiable by lobby groups. Utlimately, the blame lies there.

[raymondu999]

It's basically clever cost management, that's what it is - setting up RBT as budget fodder, so that RBR can be fully compliant to RRA regs. It's not as evil as something like IKEA being listed as a charity organisation, but... yeah

[munudeges]

Seems a great big convoluted mess if you ask me. Maybe that's the idea...smoke and mirrors.

Also, there have been murmurings in the past about Red Bull's spend and how they publish it.

Give it a rest JET, seriously. 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, but of course, there must be a reason why Red Bull are where they are and Merc are where they are beyond just poor performance and that's what this is really all about.

There are sound organisational reasons why you would branch off a separate company to develop your technology and Red Bull Technology was started with the express intention of transferring technology between different Red Bull projects. It is a company that was started up when there was no concept of a RRA.

[WhiteBlue]

This suspicion has been poisoning the atmosphere within F1 all year, despite attempts to reduce it.
As well as the endless meetings aimed at bringing the two warring sides together, there was an investigation in the summer by external consultants into the way the teams were detailing their use of resources.
But while Red Bull believe this effectively cleared them of wrongdoing, their accusers disagree. "The analysis showed more than one concern about what Red Bull were doing," one insider told me.
The next step, as laid out by the RRA, was for a full audit of the accounts of the team about which there were suspicions - if a certain number of teams wanted this to happen, the accused team had to agree.
But this point was never reached, and after further meetings at the season-closing Brazilian Grand Prix, Ferrari and Red Bull ran out of patience.

So there where concerns regards Red Bull's activities. But FOTA was toothless as the RRA was never rubber stamped by the FIA. The accused team had to agree for a full audit and this point was never reached.

You quite obviously have a misunderstanding. The RRA is a contract between privat parties and can be challenged in court as any other contract. For this to happen a majority of teams have to ask for an audit. But the majority never asked for it. Had they asked Red Bull could not have refused. They have had no options but to let the audit happen (agree). That is what the text says.

Now the interesting question is why the teams did not find it useful to insist on such an audit. The most likely answer in my view is the simplest possible. The text of the RRA is not specific enough what constitutes a team, how the budget must be prepared and what type of legal entities are eligible for teams.

I think that Red Bull's loop hole is based on the structure of the Red Bull Technologies company. RBT is the only company that had enough people and sales to fit the activity level and the expenditure level. Red Bull Racing did not have enough people.

Another possible construct could be a total outsourcing strategy. If there is an option under the RRA to exchange people for services then Red Bull Racing could buy a lot more development services if they would transfer their head count allowance partially or totally to RBT. But we do not know if such an option is possible under the RRA. It sounds highly unlikely to me because the comments on the nature of the RRA were quite robust in 2009 and 2010.

So at this point the secrecy kills the RRA or the inaccuracy of its wording. Perhaps we will never know. But we can say with some certainty that the RRA did not work as advertised because the basic definitions were too ambiguous, verification was not not stringent enough or policing of violations became politically unsuitable. Whatever the reason was the fault was already build within the system in 2009. IMO you cannot install a cost control mechanism if you try to do it without a proper participation of the governing body. I hope the teams will learn from this and it looks to me like they did. The next solution they will try to implement will involve the authority of the FiA or they can give up completely on cost control.

[gato azul]

Sorry slightly off topic, but just to provide an alternative perspective.
It seems, that some members on here are worried by RBR/RBT structure, and the resulting possibilities.
It's a fair point, but then, it's not like that RBR/RBT is the only such construction in F1, but why there is no outcry about
the possibilities Williams has created for themselfs?

The Williams Group has established the Williams Technology Centre in Qatar (“WTCQ”) as a branch of Williams Grand Prix Engineering Limited.
williams group

How many wind tunnels, CFD computers and engineers could you hide their, if you wanted?

If you search the U.K. company register you will find a couple of dormant shell companies which are registered by McLaren,
such as McLaren International Ltd. & McLaren Cars Ltd. etc. So it's not something very unique or out of the ordinary in terms of operational structure.
It only seems to attract the attention of fans, when it goes hand in hand with winning or dominating of the sport.