2021 Cost Cap Rumours and Speculation

[Just_a_fan]

Not that I know, in fact the original Paddock rumor was 3 teams. After that people started to talk only about AM and RB. Who team 3 is?

For me there are 3 big spenders in F1, Ferrari, with huge TV money bonus awarded always for being the historic team that they are, Mercedes, who for a decade have been the big spender (when there was no cap) and redbull. As far as I know Mercedes still employs the most FTE. Toto in his own words talked about letting go 40 employees but then they would still employ the most staff.

And that is problematic to me, are they better at bookkeeping, or is all this “paddock talk” just hot air? Today we should get some more information on the proceedings.

And Red Bull attracted staff from other teams, including Mercedes, in the last 12 months. That helps Mercedes's bottom line but not Red Bull's. More people doesn't automatically mean higher wage bills, of course. Fewer people paid more can be more expensive than more people paid less.

The daft thing about the cost cap is that the big teams get almost the budget cap money in prize money payments from the FIA/Liberty. They don't need a lot more from sponsors and they're sitting on an excess they can't spend on F1. Even Williams gets a nice chunk thanks to its historic payment.

[Just_a_fan]

For me there are 3 big spenders in F1, Ferrari, with huge TV money bonus awarded always for being the historic team that they are, Mercedes, who for a decade have been the big spender (when there was no cap) and redbull.

Absolutely. If you try to put logic on it, the logical breach is by the three teams that had to cut budgets to 1/3.
But I currently feel, hope it still stands in one hour, that we are just talking about administrative issues. These can hit anyone.
And this would fit the timeframe that they can not release the certificates, they are arguing which costs are under the cap, which are not. If this is really floating they may need to recheck even the teams that already went noisy on the cost cap. I feat it is not a simple and clear "team xyz broke the cost cap by abc$".

The complexity issue is the big problem with the cap. I feel it should just be a case of the FIA saying "you're in breach unless you can prove you're not", not "we have to prove you're in breach". Not sure which approach is being used, but as it's taking a long time, I would guess it's the former.

[MattWellsyWells]

With all this talk of it being the first year and therefore there are clarifications and admin issues to sort out, didn't they do a 'dry run' in 2020 during which these things should have been sorted? Or did that never happen in the end?

https://www.racefans.net/2019/09/24/how ... ay%20arise.

[SuperCNJ]

The complexity issue is the big problem with the cap. I feel it should just be a case of the FIA saying "you're in breach unless you can prove you're not", not "we have to prove you're in breach". Not sure which approach is being used, but as it's taking a long time, I would guess it's the former.

Guilty until proven innocent! Wouldn't that make it even more complex?

[Just_a_fan]

The complexity issue is the big problem with the cap. I feel it should just be a case of the FIA saying "you're in breach unless you can prove you're not", not "we have to prove you're in breach". Not sure which approach is being used, but as it's taking a long time, I would guess it's the former.

Guilty until proven innocent! Wouldn't that make it even more complex?

It's the fairest way as it prevents the teams using ridiculously complicated reporting systems to try to hide overspending. If the teams can't demonstrate that they complied, then punish them accordingly.

Otherwise you end up with a situation like the infamous Benetton "it's there but we didn't use it" traction control.

[Sieper]

Not that I know, in fact the original Paddock rumor was 3 teams. After that people started to talk only about AM and RB. Who team 3 is?

For me there are 3 big spenders in F1, Ferrari, with huge TV money bonus awarded always for being the historic team that they are, Mercedes, who for a decade have been the big spender (when there was no cap) and redbull. As far as I know Mercedes still employs the most FTE. Toto in his own words talked about letting go 40 employees but then they would still employ the most staff.

And that is problematic to me, are they better at bookkeeping, or is all this “paddock talk” just hot air? Today we should get some more information on the proceedings.

And Red Bull attracted staff from other teams, including Mercedes, in the last 12 months. That helps Mercedes's bottom line but not Red Bull's. More people doesn't automatically mean higher wage bills, of course. Fewer people paid more can be more expensive than more people paid less.

The daft thing about the cost cap is that the big teams get almost the budget cap money in prize money payments from the FIA/Liberty. They don't need a lot more from sponsors and they're sitting on an excess they can't spend on F1. Even Williams gets a nice chunk thanks to its historic payment.

Exactly. Redbull has even moved their own branding out of the way, for big sponsors. Oracle. Bybit. Mercedes similar with Ineos and Petronas and actually Ferrari is the one who doesn’t have all the big branding on the car (shell).

So where is that money spent if only the FIA payment already comes close to the total cap.

[SiLo]

Not that I know, in fact the original Paddock rumor was 3 teams. After that people started to talk only about AM and RB. Who team 3 is?

For me there are 3 big spenders in F1, Ferrari, with huge TV money bonus awarded always for being the historic team that they are, Mercedes, who for a decade have been the big spender (when there was no cap) and redbull. As far as I know Mercedes still employs the most FTE. Toto in his own words talked about letting go 40 employees but then they would still employ the most staff.

And that is problematic to me, are they better at bookkeeping, or is all this “paddock talk” just hot air? Today we should get some more information on the proceedings.

And Red Bull attracted staff from other teams, including Mercedes, in the last 12 months. That helps Mercedes's bottom line but not Red Bull's. More people doesn't automatically mean higher wage bills, of course. Fewer people paid more can be more expensive than more people paid less.

The daft thing about the cost cap is that the big teams get almost the budget cap money in prize money payments from the FIA/Liberty. They don't need a lot more from sponsors and they're sitting on an excess they can't spend on F1. Even Williams gets a nice chunk thanks to its historic payment.

Exactly. Redbull has even moved their own branding out of the way, for big sponsors. Oracle. Bybit. Mercedes similar with Ineos and Petronas and actually Ferrari is the one who doesn’t have all the big branding on the car (shell).

So where is that money spent if only the FIA payment already comes close to the total cap.

The payment cap doesnt include all running costs for the teams.

[Just_a_fan]

And Red Bull attracted staff from other teams, including Mercedes, in the last 12 months. That helps Mercedes's bottom line but not Red Bull's. More people doesn't automatically mean higher wage bills, of course. Fewer people paid more can be more expensive than more people paid less.

The daft thing about the cost cap is that the big teams get almost the budget cap money in prize money payments from the FIA/Liberty. They don't need a lot more from sponsors and they're sitting on an excess they can't spend on F1. Even Williams gets a nice chunk thanks to its historic payment.

Exactly. Redbull has even moved their own branding out of the way, for big sponsors. Oracle. Bybit. Mercedes similar with Ineos and Petronas and actually Ferrari is the one who doesn’t have all the big branding on the car (shell).

So where is that money spent if only the FIA payment already comes close to the total cap.

The payment cap doesnt include all running costs for the teams.

Notably driver salaries and the top three execs - probably the biggest 5 payments involved in the running of the teams.

[Sieper]

ah yeah, makes sense. so the cap is purely development budget and those kind of things, makes sense.

To me it all depends on if the teams really are game, or are gaming it. It is a 180 degree turn to previous thinking.

[arjen.teravest]

ah yeah, makes sense. so the cap is purely development budget and those kind of things, makes sense.

To me it all depends on if the teams really are game, or are gaming it. It is a 180 degree turn to previous thinking.

And a team can just make profit. See it as a company. Just think about merchandise alone. I think that even before the cap at least the big 3 were making a profit all in all.


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[Wouter]

Rosario Giuliana: *Please note that the time is approximate, understood as late afternoon today*

[Just_a_fan]

I think that even before the cap at least the big 3 were making a profit all in all.

Surprisingly, Red Bull posted a very small profit compared to Mercedes in 2020. Profit before tax of £1.2m compared to Merc's £17m. Interestingly, for 2021 Merc are showing a before tax profit of nearly £72m.

They did seem to put a lot of stuff down as costs - I wouldn't be surprised if there wasn't some licensing of name/logo from the parent company like the coffee companies do / did in order to reduce company tax liabilities. All entirely legal, if a little annoying for the common taxpayers in the street.

I also note that Red Bull's company accounts filing for year ending 31 December 2021 is showing as overdue on Companies House. Mercedes have got theirs in on time. I wonder if that's to do with the cost cap shenanigans.

Aston Martin's accounts for the year ending 31 December 2021 show a £43m loss.

[GrizzleBoy]

End of the working day in Europe then.........wonder if its literally going "down to the wire" as they say.

[Just_a_fan]

End of the working day in Europe then.........wonder if its literally going "down to the wire" as they say.

I bet there is an ongoing round of horse trading going on between the FIA and any teams that have been found to be in breach.

I have to say that if the FIA gets to the end of today and then announces everyone was OK after all, it'll be damnably suspicious. No need to keep missing self-set deadlines if everything is OK. You only do that if the poo is hitting someone's fan somewhere.

[Big Tea]

Exactly. Redbull has even moved their own branding out of the way, for big sponsors. Oracle. Bybit. Mercedes similar with Ineos and Petronas and actually Ferrari is the one who doesn’t have all the big branding on the car (shell).

So where is that money spent if only the FIA payment already comes close to the total cap.

The payment cap doesnt include all running costs for the teams.

Notably driver salaries and the top three execs - probably the biggest 5 payments involved in the running of the teams.

Having a somewhat warped mind, reading that post started me thinking.......( )
What constitutes an 'exec'?

Is it just the person, full stop, or a person that includes a package called an executive.
For instance, if you employ an outside designer you expect them to have their own investigation, legal, and drafting facilities, so would a top designer in F1 have a staff paid for out of their 'wages'?

Can A 25mil payment for one person include a working staff and facilities in one team and not another? (because they did not visualise the rule that way?)