How to cut costs without a cost cap?

[Mui]

If its a money problem, then the smaller teams should just pool their money together. Instead of making the big teams use less money, smaller teams should just increase theirs. If force india , sauber and lotus or the next to team to enter f1 have a $100 million each then they can use the money to reach at least some kind of economies of scale. The smaller teams should collude in order to go up against the bigger teams. It would mean 3 teams having exactly the same car. They can put it under the banner of technical partnership or whatever floats the FIA boat. The only distinguishable difference being the track side team and race day strategies.

It would also be bang for buck for sponsors. Basically having their brand on 6 cars. Liveries can be different to but the brand name stays or if their a conglomerate they can put a subsidiary brand on the car.

The only problem with this is that once one team becomes successful, they might opt out in the future and everything breaks down and their back to square 1.

The smaller teams can't do this for a number of reasons
1) Prize money is a large part of their income - they would only get one set of prize money, not 2,3 or 4
2) Another large chunk of their income is drivers. They can only have two drivers paying them at any one time (at least, unless you're Sauber apparently), so again, pooling money doesn't work here.
3) The final large chunk of their income is sponsorship. You can probably do reasonably well here and get twice as many sponsors on a car as they currently do, but you certainly can't manage to just "pool" the money as you suggest, the result will certainly be significantly smaller than the total they currently get.

I wasn't being clear enough, force india, sauber and lotus will still register as 3 separate teams

1) The teams will still register under 3 different teams, suppose by the end of the season the results are this then by seasons end force india, sauber and lotus can have $240 million as prize money. How much they put for the next season they work out among themselves. (The numbers do look a bit optimistic though).

2) Again, 3 different teams so they can have 6 different drivers. I do agree though it might be tough to pool money from selling seats to drivers given that one seat might be more valuable because of the teams recognition etc.

3) Maybe I was a bit enthusiastic about sponsorship money. However, if the 3 teams brought in $15 million of sponsorship money each this season so in total $45 million and it carried over to the next season wouldn't it still be $45 million? They don't have to start from scratch with regards to sponsorship.

I do see the problem with no.2 and no.3, that the value of the seat and advertising space on the car is directly linked to something that is intangible. Although all are midfield teams, some might value the lotus brand higher given its better name recognition.

So instead, they should set out a budget for the season, lets say $250 million. Reach that number however means possible and the smaller teams shouldn't have to complain about money. Think of it like redbull or Ferrari making 6 cars though unrealistic certainly would be feasible.

There are other advantages as well, as a union of 3 teams it would make sense to have the same engine, so 24 engines altogether. It would be hard for Ferrari, Mercedes, Renault and even Honda to resist the lure of having 3 teams with their engines. Okay maybe Mercedes since they 2 teams already have their engine but for the others it would be a good opportunity.

[Moose]

The problem with the above is that the FIA don't allow it. You can't share data between teams. This was introduced to stop RedBull using ToroRoso as a test bed for the A team.

[Slife]

While the proposal suggesting F1 teams form essentially alliances with each other seems interesting, I think it would lead to the big teams forming mega alliances, ie Ferrari, Alfa Romeo team. Or perhaps Red Bull just run three teams sharing resources.

[Moxie]

As part of your proposal, the ancillary items should be left free. Hence, a proper racing engine is still to be developed. That requires the participation of car manufacturers.

I do agree Formula One should be looking for the economy of scale. But that could be done by changing the regulations in such way, that participants could use the same engine as they do in other series / at other events - e.g. Le Mans.

I see your point, and I admit that I am not an engineer, Perhaps this idea is way off base from an engineering perspective. This approach is an economic one. I am sure that the engineers of the group will point out my errors. Roll with me for a bit.



Lets pretend that Ferrari chooses to use the Ferrari 136 engine block and heads that are currently available in the Ferrari 458 as well as several Maserati and Alfa Romeo models. A team could purchase a Ferrari 458, put the engine into their chassis, and make it go down the track for the cost of $250,000 to $300,000.

This is F1 and development is the name of the game. Without a doubt the manufacturers would have an advantage. This proposal doesn't address the financial inequity in F1. It just lowers the hurdle to get in the game.

Ahhh the slippery slope!!!

As this idea has rattled around my head, I realize it would be possible for a firm like fiat to develop an energy recovery system specific to F1 , which could be used in conjunction with the production engine, but never used in production cars. The expense of developing their own ERS would be prohibitively expensive to smaller teams. If regulations such as the 107% rule are to remain in place my original,proposal,would not work. I am not yet willing to give up on the economic method of controlling costs, but I acknowledge that additional ancillaries would need to be covered by the production quotas.

[Pingguest]

However, what would remain of Formula One as a series with technical innovations?

[Moxie]

i would argue that technical innovation is spectrum rather than a fixed point. F1 fans are used to seeing engines that rev to 18k rpm and use pneumatic valve springs. It is all very fancy, and frankly I love it too. But this technology will likely never see the public roads.

In an effort to make the engines more road relevant the current engine specs were introduced, and everyone hates it. Moreover, the specs and regulations are so tight that precious little development takes place.

This proposal actually opens up the specs for innovation, but keeps the type of innovation closely tied to the public roads by making sure that the fundamental parts are available in production vehicles. These engines will certainly sold in high end sports cars, to customers who expect the latest and greatest. There will be a built in tolerance for innovation. Such tolerance has its limits of course, and the manufacturers goal will be to push the boundaries of those limits, for price, reliability, and durability.

[Pingguest]

In various series production-based engines are used. In most if not all series the legislators see an obligations to equalize the engine performances - balance of performance. Without (much) equalization, manufacturers will simply not enter. How much engine manufacturers do they have in LMP2?

[Jolle]

I don't like the idea of teams sharing chassis (and areo), it just doesn't feel line F1.

reducing costs for the top teams has no value. If you regulate everything but the rear view mirrors for example, the top teams would have 100mil rear view mirrors.

I believe around half the costs of a mid field team is the engine, the rest is R&D, the factory, 3rd party stuff and the racing team itself.

The teams are ordered, if they want to compete, to have a top of the line, expensive PU. The most expensive parts of the engine are the last few HP, so... the manufactures should be able to sell different spec of engines, like ferrari does with Manor now. this way, teams can cut costs with millions. Same goes for the ES. Now they have to buy very expensive 25kg packs. why not just a minimum? if Sauber wants to invest more in a light chassis and have 5kg extra ES. Or put it out there for different partnership for the teams with parties like Samsung, Duracell, etc.

one of the cool things about F1 has always been, that faster is more expensive combined with the David vs Goliath (like Brauwn, with cleaver engineering) It's part of its charisma.

Even the small teams are obliged to build a racing team and build cars like the big factory teams. There are not so many erea's where a team boss has control over. PU is regulated, you should have 25 people around the car during a pit stop, you should have a second racing control at the factory, with a satellite uplink, etc etc.

If you have a car with today's aero rules, a PU that is 50-100 HP down form the top teams, ten mechanics around the car with the pit stops and three people on the pitwall making the calls. It's still within the 107%, the cars are still fast, and a good chance, it's even within the budget form the prize money. With any sponsor, your car gets quicker...

[Moxie]

Now in some racing series balance of performance equalizations make sense. This is F1, and I would argue against the use of BOP. This does mean that there will be years where one manufacturer designs the better engine and runs away with the WCC. So be it. The real equalizer is that the other teams and manufacturers will watch closely and develop, buy each other's engines, imitate, reverse engineer, and generally do the stuff that always made F1 great. Customer teams will dump the dogs and buy the best. Because the Engines are affordable and available on the open market a team need not be locked into spending a whole season with a $h1tbox.

Manufacturers, of course will have difficulty changing designs quickly, because of the requirement to sell a specified number of production cars that use the engines. In a strange juxtaposition of power, it is the manufacturer owned teams that may find themselves at a disadvantage because clearly the Mercedes team wouldn't replace their engines with Ferraris. Talk about technological innovation. This will put the various road relavent technologies to the test, and the customer teams will decide what works and what doesn't.

Customer teams would probably be offered a great deal of money to use a specific manufacturers engine, and they would have to weigh the risks of accepting the money vs. the loss of flexibility. Again I say so be it. These are the decisions that engineers and strategists must make in F1.

[Wayne DR]

1. Everyone makes their car designs (including engine maps, calculations and drawings) available to all other teams in July/August of each year to be copied. (Reduce mid-field engineering costs, and close up the field.)
2. Manufacturers hand down chassis/engine combinations to back markers. (Reduce back markers engineering and manufacturing costs.)
3. Introduce Customer Cars (Reduce back markers engineering and manufacturing costs. Make it easier for new teams to enter.)
4. Stabilise the rules (Stop constantly sticking fingers in the pie, and just let things be!)

[Pingguest]

Now in some racing series balance of performance equalizations make sense. This is F1, and I would argue against the use of BOP. This does mean that there will be years where one manufacturer designs the better engine and runs away with the WCC. So be it. The real equalizer is that the other teams and manufacturers will watch closely and develop, buy each other's engines, imitate, reverse engineer, and generally do the stuff that always made F1 great. Customer teams will dump the dogs and buy the best. Because the Engines are affordable and available on the open market a team need not be locked into spending a whole season with a $h1tbox.

Manufacturers, of course will have difficulty changing designs quickly, because of the requirement to sell a specified number of production cars that use the engines. In a strange juxtaposition of power, it is the manufacturer owned teams that may find themselves at a disadvantage because clearly the Mercedes team wouldn't replace their engines with Ferraris. Talk about technological innovation. This will put the various road relavent technologies to the test, and the customer teams will decide what works and what doesn't.

Customer teams would probably be offered a great deal of money to use a specific manufacturers engine, and they would have to weigh the risks of accepting the money vs. the loss of flexibility. Again I say so be it. These are the decisions that engineers and strategists must make in F1.

Formula One is about competition and with your proposal the cost of being competitive may well rise. The assumption that teams could buy each others engines, is wrong. No manufacturer could be forced to sell their engine and privateers do not have any knowledge of how to modify the production-based engine.

[Moxie]

Homologation rules requiring the production of a minimum number of units is not a new idea of mine, it has been done before. If the engine block, heads and ERS must be in cars that are available in the market, then they will be available for teams to buy and put into race cars.

The notion that privateers do not have knowledge of how to modify an engine is simply incorrect. If a team does not have the in-house personnel to do the job, there are contractors that are up to the task. Pratt and Miller are the first that come to mind, but I know there are others. Would it be cheap? Of course not. The teams with the most money will develop the engines to their maximum potential. The poor teams will be slower. As I mentioned before this strategy will not remove the advantage that wealthy teams have over poor teams. In regards to addressing the disparity between the wealthy teams and the poor teams, I refer you to my many posts in which I call for reducing the ratio of prize payout between the first and last place teams. The proposal here simply lowers the cost to send a car around the track, and gives the teams flexibility.

A key point of this strategy is that teams will not be forced to spend $50 million for a full year engine contract, only to be stuck with a boat anchor for the whole season. Using my Ferrari 458 example again, a team might put engines in the cars for $500k. If they don't like the Ferrari, they can spend another $500k to buy cars that carry the mercedes f1 homologated engine block or cars that carry the Honda homologated engine block. For that matter they could buy engines from all of the manufacturers, test them and choose which they like the best. In all it would still be a heck of a lot cheaper than the current arrangement,

[SiLo]

Maybe they should look into methods to reduce manufacturing costs, seeing as that's where a lot of the expense come from. Not in a sense of, just spend less, I mean achieve the same output for less money. CFD is obviously cheaper than running a wind tunnel, but then real world data etc etc.

[Pingguest]

Homologation rules requiring the production of a minimum number of units is not a new idea of mine, it has been done before. If the engine block, heads and ERS must be in cars that are available in the market, then they will be available for teams to buy and put into race cars.

The notion that privateers do not have knowledge of how to modify an engine is simply incorrect. If a team does not have the in-house personnel to do the job, there are contractors that are up to the task. Pratt and Miller are the first that come to mind, but I know there are others. Would it be cheap? Of course not. The teams with the most money will develop the engines to their maximum potential. The poor teams will be slower. As I mentioned before this strategy will not remove the advantage that wealthy teams have over poor teams. In regards to addressing the disparity between the wealthy teams and the poor teams, I refer you to my many posts in which I call for reducing the ratio of prize payout between the first and last place teams. The proposal here simply lowers the cost to send a car around the track, and gives the teams flexibility.

A key point of this strategy is that teams will not be forced to spend $50 million for a full year engine contract, only to be stuck with a boat anchor for the whole season. Using my Ferrari 458 example again, a team might put engines in the cars for $500k. If they don't like the Ferrari, they can spend another $500k to buy cars that carry the mercedes f1 homologated engine block or cars that carry the Honda homologated engine block. For that matter they could buy engines from all of the manufacturers, test them and choose which they like the best. In all it would still be a heck of a lot cheaper than the current arrangement,

The current power units are expensive mostly because of energy recovery systems. However, no regulations but the competition demands teams to use them. That is why the energy recovery systems have become an integral part of the power unit.

I cannot see how this would be any different to your proposal. To be competitive, teams will have to use engines that are developed. Effectively, costs will not be reduced.

[Moxie]

Once again using an example of Fiat/Ferrari factory team vs. a privateer using the Ferrari engine.


Without a doubt, the Fiat and Ferrari engineers will collaborate to design an engine that will go into production vehicles, but can then be used in the F1 racecars. However, the price they are willing to pay for this development will be limited by the fact that they will have to sell a minimum number of those engines in the open market. Unless Fiat is able to convince a thousand customers to buy $1M for cars with engines that last only ten hours, the level of F1 specific development in the production engine will be limited. Furthermore, even if Fiat does sell 1000 cars with engines that last only 10 hours that cost $1M each, those cars will be available for purchase and use by the privateer teams, limiting the advantage of sinking tons of money into the production development.

The teams will start with identical heads, blocks and ERS. (Admittedly, ERS was not part of my original proposal, but as you pointed out in a previous post, certain ancillaries need to be covered by the production quotas. I hesitated at first, but after thought, I later posted that I agree that the ERS should be covered by the homologation rules). The real advantage for Ferrari is that they will know what mods they will do to the engine before any other team has access to the engine. The privateers are not stupid however, and with $50M of free budget, they will begin to develop the engine accordingly.


As for "cost reduction", nothing will reduce the costs in F1 until there is an economic disincentive to spend $200M on every lat 1/10000 second. Reduction of prize money is the only way for that to change. The team with the larger budget will always have an advantage. However, the law of diminishing returns combined with the fact that mechanically the development will begin from the same starting point means that the gains made above and beyond the development capabilities of the privateer teams will becom incrementally smaller.

Teams currently spend approximately $50M to be locked into a lease agreements. They cannot develop the engine outside of very specific parameters, and they cannot change brands if their first choice is uncompetitive. My proposal enables the teams to BUY (not lease) engines on the open market, at a price that can be supported by the high end sports car open market. The teams all have the opportunity to buy the same engines at the same price, and if that engine turns out to be a boat anchor, they can return to the open market and buy the other brand. The cost savings occurs because a lower end team can buy that high end sports car with the homologated engine, and make their F1 car go around the track for a heck of a lot less than $50M.