FIA - Budget Caps from 2009.

[Carlos]

No worries. It's just Max showing us how capable, important and indispensable he is, he's hard at work saving F1 for future generations; not distracted by side issues. I understand there was some sort of ethics thingy he'd like us all to forget.

[WhiteBlue]

I have allways had my doubts about the policing of a budget cap. That will be very difficult to do. I agree with all people voicing concerns in that field.

On the other hand the demise of Super Aguri shows that continuing down the present road F1 will soon be the domain of the auto manufacturers and a handfull of billionaires who can afford to promote their core business by spending the outrageous money that it takes to compete. the concern obviously is that those corporations and billionaire brands could turn their back on F1 as fast as they have embraced it.

I don't criticise that F1 harvests the billions that those super rich people and companies can spend but it should be viable for privateers with much smaller budget as well. there must be a middle road between the times when there were 30 teams in pre qualifying and now where we have just 8 corporations that can afford the going cost. one should not have illusions about the viability of Williams and Toro Rosso.

I believe that certain restrictions make sense. if it isn't by budget caps they can limit certain resources. if teams cannot employ more than 200 employees they will have to spend the rest in hospitality facilities. that would be a good way to redirect the excess cash. of course you immediately get the problem that people will be outsourced and the services be supplied at fictive cost. that is one of the problems that need solving whether you limit resources or money.

In the end it means a lot more burocraty and by making a lot of exceptions the whole thing isn't achieving much for the forseeable future. Remember that engines, recovery systems, drivers and management isn't covered by the budget cap. under such conditions you probably have to add another 50 mil $ to the average budget. when they start engine development back we will easily talk 150 mil $.

I believe there is probably no other way but try the budget cap just to discourage racing execs asking phony budgets fromn their parent company boards. but it will not solve the problem of the little guys. they need to have access to engines at a capped price and used chassis if they can't afford to build one. customer chassis of at least 1 year of age should be allowed as they were allowed 40 years ago. then everybody could compete with a Cosworth engine and a used chassis as Williams did. Why is that supposed to be bad by now? The racing wasn't worse at the time.

[Chaparral]

I was just reading in the Sunday Herald here (in Peter McKays motor sport section) that confirmed figures that Lewis Hamiltons base salary is $155 million over 5 years from Mercedes Mclaren ($31 million USD PA) + a further $10.7 million USD from Nike + bonus' on top of that - he is now the highest paid British sports person - i.e. he earns more than Beckham now. Sporting analysts say he will earn more than a $1billion USD from his career. And driver salaries are not in the FIA cost cutting equation - that makes a lot of sense doesnt it.

[WhiteBlue]

The exceptions to the budget caps are in the FIA proposal because they have been added by significant support of the teams. The FIA has initially only thought about resource caps. The teams have proposed budget caps instead and have in a first round of talks on that issue made the proposals not to include driver and management salaries, engine and KERS development expenses. what is the point of accusing the FIA for every bit of regulation that gets created? mostly - and particularly since the 2008 rules are in effect - rules are generated by consultation and majority decisions. in my view that isn't a bad way to govern.

[Chaparral]

The exceptions to the budget caps are in the FIA proposal because they have been added by significant support of the teams. The FIA has initially only thought about resource caps. The teams have proposed budget caps instead and have in a first round of talks on that issue made the proposals not to include driver and management salaries, engine and KERS development expenses. what is the point of accusing the FIA for every bit of regulation that gets created? mostly - and particularly since the 2008 rules are in effect - rules are generated by consultation and majority decisions. in my view that isn't a bad way to govern.

And the Drivers, Team Principle, KERS, Marketing are not resources - Im sorry theyre all resources in what is effectively an entertainment business - you selectively leave these out of the equation then the well resourced teams will spend what they need in those areas. If your going to cap it (the business that is F1) then you cap it all or why bother - I have the same feelings towards the Basketball, Baseball leagues - in fact any of those high rolling business/enytertainment ventures' - I think they all should be capped - it may make for a better league/business in many instances and reduce costs across the board right down to what the fans pay at the ticket box. As it is we have very much a series of races with 'spec V8 engines' - no room to move because of the aero rules with little or no racing - and all at great cost to all involved including the fans. At the end of the day there is no effective way to audit the whole procedure anyway.

PS Im not accusing the FIA of anything by the way

[gcdugas]

Well, I'm back.....

Such a foolish notion as a budget cap could only come from a N@zi socialist pig (who has been disinvited from Monaco ). Such a deluded mind that is ignorant of basic economic laws. People will pay what they think an item is worth.

Imagine the "art police" setting a price cap for a Monet... OK, the Monet costs a maximum $5M... but the frame suddenly costs $3M more.... Did I forget to mention that it now costs another $12M to insure the $5m piece during the 20 meter transit across the auction hall to the new owner? And since the current owner is a purist, "he loves the painting so much he couldn't bear to see it uninsured for a minute". And, wonder of wonders! He deems his wife's newly formed insurance company to be the only one competent for such a challenging and perilous 20 meter journey.

So the budget is arbitrarily set by the FIA deities but suddenly Mercedes starts to develop a LMP car (that never actually races) and guess what.... the LMP car has a F1 transmission "that needs to be refined" before the car debuts. Toyota decide that they are contemplating a Champ/Indy car that has a trick differential and carbon brakes, BMW's salon cars get special radiators and cooling systems that need to be refined every week. Honda tests suspension developments in their Acura endurance racers that also needs an integrated gearbox. Formula Renault suddenly sees an influx of "testing". Ferrari's new A1GP car has many "bugs" that need to be worked out. Actually those bugs are so problematic that they take several years to weed out. etc. etc.

What does the FIA propose, a full time Gestapo auditing crew to inspect the books 24/7 at each team's HQ. What's this? Ferrari only pay $3 per yard for a square unit of carbon fiber material and Toyota somehow are charged $8 per square unit. And guess whose cars have the material manufacturer's decal on them? Etc. Only a mind fully given over to lunacy could ever think that such cockeyed notions could be effective. If prostitution is "the oldest profession", then accounting is the second oldest.

Economics 101.... people pay what they think an item is worth... If a buyer values a Monet at $X million, then that is what he will pay, unless another buyer values it at $X.1 million and he gets it unless another buyer values it at....... its just a simple law.

If a manufacturer thinks that the F1 crown is worth $450M, then they will spend $450M trying to get it. Now if $200M is the allowed FIA N@zi socialist budget, then there will be another $250M elsewhere in their LMP/Champ car/DTM/ whatever they want to call it. (Perhaps a team will even secretly buy out Carbon Industries, HitCo or Brembo and charge themselves a pittance while charging their F1 rivals a higher price for inferior products.) The whole thing is sheer lunacy. We are talking about economic laws that are as sure as the law of gravity. Max is a very sick loon and his immanent successor must reject all these foolish notions.

[zac510]

Some of you guys are so bitter, twisted and angry at Max that you can't even see past your own rage in order to give a rational judgement of this proposal.

[WhiteBlue]

That is a wonderfull description in colourfull words. =D> =D>

Unfortunately it fails to adress the problem that the teams and the FIA try to solve before it ruins their very existance. They have given themselves protection from outside competition by artifical entry barriers of the constructor priviledge. Internally they have such a fierce competition that none of them is generating a decent profit and only eight teams seem viable in the short term.

Without some action in the long run the whole thing can only land in the hands of two or three of the richest players with all others gradually going bust. This could even come much quicker if the disruption in the world economy deepens and the six car companies get into bigger financial problems than we see at the moment. The projected oil price of 200 $ /barrel at the end of the year could make a bubble burst that would redefine the world for F1. oil prices could do for F1 and automotive business what happened in the great depressions of the past. total disruption of consumer spending on many of the products and a huge shrink in the established market sectors.

Under such scenarios it is worthwhile to give some thought to possible counter measure however imperfect they may be. perhaps one should think about removing the entry barriers combined with some caps until a healthy equilibrium has been regained. pure market economy never works. the markets have had anti trust regulations for 100 years. F1's trust needs a rethink if the sport wants a future. just my personal opinion.

[Chaparral]

Some of you guys are so bitter, twisted and angry at Max that you can't even see past your own rage in order to give a rational judgement of this proposal.

No not me bitter and twisted Zac - I could care less for whats happening with Max thats his own business and if all else fails and 'motors' are a thing of the past I can still ride a horse - thank god Im a country boy

I said it above - if indeed theyre going to try and cap costs then it should be part and parcel that its across the entire business not just pick and choose as to which sections are included - that will not work. As I said Im not sure (well pretty much very sure the situation cannot be audited) so Im not sure why theyre bothering as GDUgas says it can all be hidden in various areas - and is that a case of pandering to the manufacturers so they can spend what they need to spend to win a WMC then when all the marketing has run its course they exit the game - BCE has always said they (the manufacturers) are in it for a short time then they will exit - he's correct by the way. So is it a case of the broader question - what does F1 want out of F1 in the long run and how do they achieve it - maybe its a question theyre already asking themselves and forget the FIA

[checkered]

STR is probably the

"minnowest" of them all at the moment, the only team that runs (what is to a great degree) a customer chassis. While I do have serious reservations about customerisation as such being introduced to Formula One, Gerhard berger does ask the same question I've raised (in one form or another) every once in a while:

GP2 teams are running on budgets of €3M to €5M; "must Formula One be 100 times that?"

Budget caps or not, it is well past high time to rethink the equation. The current regulations do no services to the focus of expenditures, nor the potential returns of F1 R&D. Sure, the chaotic nature of the exercise will have it that developments will emerge nonetheless, but the sport is only accommodating by the volume of investment, not the general environment. That needs to change drastically if we are to reduce the level of investment. Perhaps different promising technologies could be divided more purposefully among different motorsport classes. That'd have more people working for the investment and thus presumably more (financial, social, ecological) bang for the buck. Money itself invents nothing and the current arrangement appears terribly unfocussed and unnecessarily inefficient, to be honest.

F1 could still remain "the pinnacle" by virtue of an "adequately" disproportionate budget, say 20 - 30 times any other, so it could absorb the latest developments the quickest in a comprehensive synthesis. Seriously, Formula One can do without the (already all too evident) infamy of standing in the way of necessary progress. Bernie has exceptional talent in maximising the "circus" part of this, but let's face it, technology no longer is the "Sideshow Mel(vin Van Horne)" to his "Krusty the Clown". Only with technology, and the innovation and income that go with it, Ecclestone is out of his depth so I suspect he'd rather see the showy side of the economy dominate from here to eternity - absolute earnings potential be damned. Or cash in before it's too late for him to do so.

Let's see. The trouble is that almost every top level operator in this mess has "cried wolf" at least one time too many to be taken at face value. We need structures where resposibility is shared and there's adequate transparency to satisfy even the most jaded sceptic. New people, new ideas, continuity. Enough with the charade of make-believe, an unviable construction supported by people (tragically) ingenious enough to make practically anything work. Substitute this with real motivation, real prospects and real advancement. Some recent Pitpass.com articles:

When is a limit not a limit?
A declaration of war?
Even not hosting an F1 race is too expensive

[Chaparral]

Im not sure what F1 as a whole wants or thinks it needs and whether its relevant to anything other than itself - does that make sense.

John Barnard & Mario Illien basically expressing a opinion that there has been no correlation to road technology in the past (Motor Sport UK issue March 2008 for those interested) - and that is correct. What theyre saying is and I quote 'This could be a fantastic challenge for both the racing and the road car industries' - but from an F1 background as only they could.

Now whether that is possible is an even bigger question and how do you set the parameters - is it KERS based and/or fuel based etc and if fuel comes into it which fuel etc and at the end of the day will any of this filter down to the general populice and the day to day cars that everyone drives in the near future produced by the manufacturers in the business of F1 today and will those manufacturers still be in F1 tomorrow - BCE says most likely the manufacturers will not be here & I tend to believe that stance.

The other side of the coin is what we fans want from F1 - well I for one want a race series that isnt controlled to the minute degree - where racing and overtaking is possible yet retain that mantle of the 'pinnacle of motor sport tecnology' - I guess its let the 'clever guys - i.e. the tech guys and engineers etc)' make and initiate those ideas to win - without the handcuffs they currently operate with in the current guidelines - god it must be boring for the engine guys in a 'spec' V8 series and aero bits that cost millions to achieve a 10th of a second when you know 'give me a free hand and I will show you what we can do' would achieve so much more from an engineers and a fans point of view and for the spectacle of the sport - (you will have to excuse me but my ultimate motor sport formulas were 1960/70s GP & Can Am 1966-1974) so I'm a bit of a free form tragic.

I think the 'green' thing is a load of rubbish really and you can always work towards a more efficient technology in anything but lets not be led to the trough and made to drink when it doesnt make sense - if that makes sense - I think F1 and the sport needs to make a decision of what it wants to be - forget all the other influences.

[Rob W]

Some interesting calls in the past couple of days on here. I'd agree that its not simple but could be managed somehow... perhaps.

For those who think there will be a way to manage the budget cap which excludes marketing spend and driver contracts etc.. I'd ask you to consider this: In normal corporate business accounting five different accountants will get completely different results on a company report even when they're in-house and have complete access. Moreso, in most countries it is common practice to re-assess old accounts and re-sbmit them (up to x years later in some cases).

Now, in the secretive world of F1 how would it be possible at all to ensure teams are biding by the budget cap? I have yet to see a single plan of action by the FIA which could not be circumvented - at face value from what I've seen - by any accountant if it was asked.

Short of having a couple of people embedded in each and every team full-time and checking every piece of material and design process (god knows how they could) the FIA wont be able to manage this proposed cap IMO.

R

[WhiteBlue]

some very good points by checkered! =D>

caps on race fees could be a good way to protect some of the essential European races and the Australian. in actual fact those races are in some occasions run by FIA member clubs(ADAC and AvD) that might pick up the idea.

the biggest waste in F1 is the drain that Bernard Ecclestones personal and family fortune has on the use of revenues. the loans that were secured with the F1 business have been replacing the billion $ that Ecclestone took out for his personal use. 50% of the current revenues are now going in to the interest and repayment of those loans (F1 bond). nobody would mind a decent remuneration for Ecclestone but this is clearly excessive and it puts unnecessary pressure on ticket prices and an immoral leverage on the tax payers to subsidise FOM. so one way to sorting out the problem would be a removal of Mr. Ecclestone and pressure on him to repay some of the money that he has somewhat misappropriated.

I agree with the Toro Rosso budget cap figure. € 90 mil should be enough for a total team budget including KERS and engine development, driver and management salaries. If some amounts should be taken out of this figure the total budget should be reduced. In actual fact only those figures should be taken out that would not apply synergetically to all teams. engine and KERS development could be such an issue.

fuel efficiency improvement research will be a much wider issue than just F1 but F1 could contribute something to that field. contrary to Chaparrals believe there is a lot of scope in green motorsport as reams of studies and technologies established in other fields of energy transformation clearly shows. Ciro has posted many links pointing towards proposals how to make racing green. those who follow the discussions on regenerative technologies, aerodynamic and balanced performance factors know a great deal about the potential.

non automotive and automotive sponsored teams would obviously have a different approach to REGEN, efficient aero and engine development. the automotive teams should be allowed to do their research with their parent company outside of the budgets but they should be obliged to provide the results in very short time to non automotives teams at manufacturing plus service cost. non automotive teams could still do their development within a seperate compagny if they wish. they would also have to provide the results after one year of use at cost. the scope for HERS and KERS should be accelerated.

as I have posted before the entry barriers for new teams should be deleted. New teams from feeder series should be given access to F1 with the option to source initial equipment from 1 year outdated material. whenever an entry becomes available (as presently by SA) a qualiufied team from a feeder series should be promoted to F1 with special starting priviledges and financial help from the CRH by a special fund. such use of money would be much better than having it sunk into Mr. E's coffers.

[gcdugas]

John Barnard & Mario Illien basically expressing a opinion that there has been no correlation to road technology in the past (Motor Sport UK issue March 2008 for those interested) - and that is correct. What they're saying is and I quote 'This could be a fantastic challenge for both the racing and the road car industries' - but from an F1 background as only they could......


I think the 'green' thing is a load of rubbish really and you can always work towards a more efficient technology in anything but lets not be led to the trough and made to drink when it doesn't make sense - if that makes sense - I think F1 and the sport needs to make a decision of what it wants to be - forget all the other influences.

The regs are too tight. In the 70's Renault introduced turbos. In LMP we have diesels. And Mazda still races a few Wankels in Le Mans. Right now we can't even change the V-angle, bore centers, camshaft location, metal alloys, number of cylinders etc. As recently as 2003 Renault was pursuing electro-servo operated pneumatic valves that were infinitely variable.

I know that the thermal efficiency of a four stroke engine is abysmal. Largely it is due to the load imposed by the camshaft/poppet valve method. A two stroke engine circumvents this load by opening ports etc. with the normal motion of the piston, but it introduces a whole host of problems with some of the fuel charge escaping out the exhaust etc. Surely there are better ways. There are all sorts of "six stroke", "Miller cycle", Desmo valve, even some rotary valve engines. And let us not forget the turbine which has no reciprocating mass at all. The point is that F1 could well be a proving ground for new innovations (like Renault was pursuing) The savings in mass was substantial as was CG etc. I remember reading statements like: "the era of the camshaft is soon to be over". This would certainly be well under way if not for the stupid rules in F1. And if we see it anytime soon in the future, it won't be from F1 that it was introduced but likely it will be LMP.

And what of materials? Certainly there is a great future for ceramics but at present even alloys are specified in the rules.

CVTs are banned... why? Imagine the gain in efficiency if a motor was allowed to be run at maximum torque RPM and the acceleration was achieved strictly by the CVT ramping up the "ratio". Road cars could easily transfer this technology to allow the engine to work at peak efficiency RPM with the CVT changing the "ratio" as desired. Then the pedal on the right would be truly an "accelerator" and not a "throttle".

And what of active suspension? I can guarantee you that cars in the future will all have it, so why not pioneer it in F1?

There are many other things that clever engineers will come up with but the point is that the rules in F1 prohibit innovation, take away the R&D return that a company might gain from involvement in F1 and even makes F1 less "green" as these things will be developed elsewhere.

[Ciro Pabón]

I feel obliged to correct WhiteBlue a little, I know he mentions I support "green cars" with all good intention. It's that I think I can interpret the feeling of many people here.

[Rant]
Simple: I don't think cars can be "green".

I'm interested in efficient engines because I think it's a worthy goal by itself, but I've said many times that green racing cars are like green sulphuric acid plants: an oxymoron.

Having said that, I still believe that cars are living their last decades. Ultralight planes are the future, car racing is a sport that will fade, the way locomotive races did. I strongly believe this will happen before I die.

I imagine that some day, some valiant lawyer will sue BMW, Mercedes, FIAT and the rest for the people killed in their cars, the same way some day, not many years ago, another brave lawyer sued the tobacco companies.

Besides, it's much more important the layout of our cities than the ways of transportation, as I've explained to the satisfaction of the forum. There is a direct relationship between city density and oil per capita.

Besides, I dislike the concept of "green" things. As proposed to this date, "green movements" are a feeble excuse for people in developed countries to continue living like princes while the world suffers a poverty that is truly offensive for people like me, that look at it in the eye day after day.

I'm not talking about effluents and contamination. The gravest thing about cars is the people dead. No KERS nor catalytic converter will change that.

And that's why I don't talk about green racing cars (except the ones made by our friend Greenpower Dude Reloaded). There are no green cars. The only green transportation is a bus or a bycicle, not because they contaminate less, but because they are safer.
[/Rant]

If they wanted to encourage less money spent, the recipe is simple: award points to the most cost efficient team, or make a cup for them. Btw, a cup that gives them enough monetary reward to continue in the sport, the way Le Mans do with their Efficiency Index Cup.

On the point in discussion, I think that the amount of money earned through TV rights can self sustain F1, if someone wished to, instead of paying the cars through manufacturers and putting the money in someone pockets.

It's funny to see FOMA earning a lot and teams going bankrupt, like Super Aguri. The teams are a little stupid, if you ask me.

If you see the issue under that light, the budget cap is a little ironic. If I were an F1 team (and F1 teams could talk) I would say something like: "The guy that gets his money through my effort gives me advice on how to restrain my spending... Thanks, guy."