Is F1 financial regulations total garbage?

[LM10]

There is no way to totally control every financial steps of teams. If a team has a monster budget, it will find a way to make use of it and in order take an advantageous position.

[bill shoe]

More capital facilities can roughly replace some annual expenses. Anyone have insight into how capital assets and expenditures will be handled? Is there an incentive for big teams to do massive capital investments in 2020 before the new regs kick in?

[Xwang]

What will avoid a team like for example Williams to says that their engineers work for 50% of their time on project of Williams Engineering non F1 relevant?
Will FIA send their staff to control what every employee of each team is doing?

[63l8qrrfy6]

More capital facilities can roughly replace some annual expenses. Anyone have insight into how capital assets and expenditures will be handled? Is there an incentive for big teams to do massive capital investments in 2020 before the new regs kick in?

I think it's already happening. From what I am hearing 2020 is shaping up to become one of the most expensive years in F1 for the big teams. Maybe a better idea would have been to reveal the final technical regs after the spending cap was already in place to stop this mad spending spree. Of course that would have meant delaying the new rules by one or two seasons.



RB:

"My feeling is that a budget cap is ultimately a sensible thing for F1," says Red Bull's Christian Horner. "But the interim period of 2020 with the current regulations we have as teams gear up for '21 with unrestricted spend makes it a very expensive year, and I think it will create a broader gap between the teams going into '21 as those teams with more resource will simply spend more time in the research and development phase before the cars hit the track."

Merc:

The truth is that we are all within the same financial reality," says Wolff. "And none of us has unlimited financial resource behind us to just pour money into the system. It's still about efficiency. I can tell you, and you know very well, that in the auto industry things are not looking easy.

"Nevertheless, having said that, it is clear that the big teams are the ones that are very restricted from 2021 onwards. We need to look at our structures, change process and maybe also the organisation in a way to adapt to these new challenges, which will hit us hard in '21, because we will be doing things differently to the way we are doing them today.

"This is why it's clear in 2020 that we have to adapt and change, and all this change is costly and will be happening in '20, so '20 will be a year of more financial expenditure in order to get ready for '21."

[63l8qrrfy6]

It will the same philosophy basically: there will be financial rules to be circumvented, and the FIA will have to react. And no, nobody is expecting a full clear on the first pass. It will be years of refining. But again: this is neither international accountancy. This is not a case where a company can make use of one country's accountancy rules to get financial benefit out of a different country.

It will be difficult. They are doing a trial run for a reason next year. But the deep dive has to be made.

One of the major issues I have with the spending regs is that the way it is policed will not be transparent at all.

At the moment the sport relies heavily on "self-policing" (teams protesting or reporting infringements that FIA often does not spot or the occasional driver declaring he had not lifted during yellow flags) - this is highly unlikely to be as effective when it comes to financial matters unless I suppose the teams are expected to show up at the track with all the cash in a perspex case..

My point is that even if they miraculously come up with bullet proof rules it all still relies on FIA doing a thorough job of keeping everyone honest.

[subcritical71]

In case you haven’t read the 2021 FIA Formula 1 Financial Regulations: https://www.fia.com/file/105634/download/29729

5 year statute of limitations for infringements!

[bill shoe]

Scenario:

Team RB suspects team F of cheating. The FIA does nothing and says "If you think F is cheating then protest them". But RB does not have any detailed technical info on how such a cheat could occur so they have nothing specific to protest. So team RB (and perhaps team M) put money into R&D research to figure out technical details of how to do that cheat. Teams RB and M are able to generate a detailed plan for how to accomplish the cheating. Team RB then writes up the plan in the form a question to the FIA. The FIA issues a Technical Directive banning this plan. Team F is then observed to have much lowered performance.

So does the RB & M spending to (apparently) stop competitor cheating count against the RB & M spending cap?

This hypothetical issue could come up with regards to power units, which are largely free of the spending cap. But for the sake of argument, just assume the issue was a chassis thing which fell under the spending cap.

[mertol]

Instead of saving on all kinds of crap and limiting budgets they could make F1 actually attractive to sponsors.

[subcritical71]

Instead of saving on all kinds of crap and limiting budgets they could make F1 actually attractive to sponsors.

Marketing is not part of the budget cap so they can spend what the want in this area to make themselves attractive to sponsors.

[mertol]

It's not something the teams can do.