About the F1 Resource Restriction Agreement

[Raptor22]

correct WB, if it sponsors wnated to be in F1 then it would be no problem to obtain backing. But I don;t see even wealthy companies queuing up to paint their colours on F1 cars. Why? F1 is just a bad investment thats why.

RedBull fits the bill themselves because it fits with their marketing strategy but they need to keep cost within reason. I recall Adrian Newey accepting a pay cut when he joined RB but did so because he wanted more free time and flexibility to persue other projects like an America's Cup Racing yacht and even more recently he has expressed interest in developing a RedBull AirRace aerobatic plane. He would never have such flexibility at another employer.

F1 is in dire straits. New manufacturers and sponsors are not knocking down doors trying to get in. No major manufacturer attempted to take up the slot left by USF1. All the talk about VW in F1 is just politicing trying to lure VW in but they are too smart to get suckered in under the current rules. Budget caps and cheaper engines ar ebrilliant ideas that were scupered by selfish politics and a lack of desire to change by people who think they can afford for the world not to change around them.
I have always supported the budget cap, I first mentioned it the F1-live forum years ago and was labelled a dillusional fool. Rest assured it will remain in the background and will eventually become the way F1 does business. The change will simply take place quietly and people won't know the difference.

[timbo]

F1 is in dire straits. New manufacturers and sponsors are not knocking down doors trying to get in. No major manufacturer attempted to take up the slot left by USF1. All the talk about VW in F1 is just politicing trying to lure VW in but they are too smart to get suckered in under the current rules. Budget caps and cheaper engines ar ebrilliant ideas that were scupered by selfish politics and a lack of desire to change by people who think they can afford for the world not to change around them.

I fail to see why VW (or any manufacturer) would want to enter budget capped formula.
What they can bring to table to beat, say, Williams? They have no experience and with budget cap no way to buy experience.
What FIA should do is make sport less dependent on manufacturers, to insure a fairer deal for teams with Bernie.
Maybe there could be something like Kyoto protocol, so if somebody overspends it must share money with lesser teams, or be deducted from Bernie's revenues.

[JohnsonsEvilTwin]

F1 is not in dire straights, whatever technical laws are imposed.

If you think we have had the same engines for the last 4 years, what has changed the F1 show? If anything it has got closer.
My main concern here is how the RRA is enforced. Reading Bensons piece alludes to an open secret that Red Bull are making a mockery of the whole thing. And it shows.

[marcush.]

It´s all relative..when you get 27mill€ for 10th place in the championship on TV money alone and that was a position in reach of Virgin and even HRT let´s not forget..
One lucky draw in a race would have solved all issues for 2011 ...
I wonder just how much money is available to 1st through 9th place in the championship...

[WhiteBlue]

I wonder just how much money is available to 1st through 9th place in the championship...

The pot in total is just under $500m. So the average should be below $50m. If Ferrari wins it there is a lot less in the pot because they get payed premium.

[marcush.]

thanks ...
so a well oiled outfit challenging above its weight(Toro Rosso in 2008,Force India in 2009/2010 could be run self sufficient without resorting to paydrivers..

[ESPImperium]

There are 4 teams that get paid historical payments; Ferarri, McLaren, Williams and Renault. In the Historical payment column you have Ferarri taking 40% and the rest getting the other 60% split depending on Constructors posistion the year previous. So 25% last year would have gon to McLaren, 20% to Renault and 15% to WIlliams.

So if there was $100m in the pot for historical payments, it was split for 2010 like this:
Ferarri; $40m
McLaren: $25m
Renault: $20m
Williams: £$15m

Then you pay the teams their TV pot money on top of that, whitc was for 2010 standings:

Red Bull: $50m
McLaren: $47m
Ferarri: $44m
Mercedes: $40m
Renault: $38m
------------TIER ONE ABOVE-----------------------
Williams: $35m
Force India: $33m
Sauber: $31m
Toro Rosso: $29m
Lotus Racing: $27m (Now Team Lotus)
------------TIER TWO ABOVE-----------------------
Hispania: $7.8m (Will gain $12m free freight costs from DHL)
Virgin Racing: $7.2m (Will gain $12m free freight costs from DHL)
13th Team: $6.5m (Will gain $12m free freight costs from DHL) [illistration purposes]

However under the RRA the 13th teams money will get split equaly amoungst the tier three teams once they make it to the half way point in the season, whitch will mean that both Virgin and Hispania will get an aditional $3m of TV money and an aditional freight allowance from DHL. Thats the way it was explained to me in theoretical terms.

Exact figures for 2009 from FOM are as follow (Figures from SportsPro magazine, May 2009):

Ferarri: $52m
McLaren: $48m
BMW Sauber: $46m
Renault: $45m
Toyota: $38m
Toro Rosso: $38m
Red Bull: $38m
Williams: $37m
Brawn: $65m*
Force India: $33m

*Brawn GP also saw it getting an advance from FOM as well, it got 2010s money in 2009, thus any money earned from FOM ffrom the 2010 season it would have to repay from 2010s money. Thus would have been closer to $35m.

[donskar]

Thank you, ESPImperium. Very interesting reading, particularly the "historical" payments. I think longevity should be rewarded -- good for Williams, especially.

I don't know SportsPro magazine -- never even seen it. Are they well regarded in terms of accuracy?

[marcush.]

that 30 mill $ advance payment to Brawn how does this figure in the Brawn was the richest team of 2009 Saga?
would anyone consider Bernie naive enough to shove 30mill$ across the table to his friend Ross instead of keeping his pocket closed when not necessary?

[marcush.]

Budgets For 2011 according to german mag AMuS:

HRT 40Mill€ 120Headcount
Virgin60Mill€ 220headcount
Team Lotus 70mill€ 240Headcount
Williams 80mill€
Force India 80mill€
Toro Rosso 80mill€
Sauber
RenaultLotus 20mill€ from Petrov alone!
Mercedes
Ferrari
Mclaren
RedBull 330mill€

max Headcount reduced from 350 to 315 for 2011 (instead of 280 as agreed)
reduction of external spendings to 30mill€ instead of 20mill€

""
Hispania stehen gerade rund 40 Millionen Euro und 120 Techniker für die nächste Formel 1-Saison zur Verfügung. Das sind nur zwölf Prozent des Etats von Branchenprimus Red Bull, der rund 330 Millionen Euro investiert. Virgin stehen für die kommende Saison 60 Millionen Euro und 220 Techniker, Lotus 70 Millionen Euro und 240 Mitarbeiter zur Verfügung.


Kampf um Sponsoren und Pay-Driver
Auch die etablierten Teams Williams, Force India und Toro Rosso sind mit jeweils 80 Millionen Euro knapp finanziert und kämpfen um Sponsoreinnahmen. Renault und Sauber konnten sich nur durch Sponsor-Abschlüsse von ihren finanziellen Sorgen befreien. Das Renault-Team ist inzwischen komplett in privater Hand, der Konzern selbst nur noch Motorlieferant.

Vitaly Petrov sitzt im zweiten Renault-Cockpit, weil er zehn Millionen Euro in der vergangenen Saison mitgebraucht hat. 2011 soll sich die Summe verdoppeln. Der Schweizer Rennstall Sauber überlebt nur dank des Engagements der mexikanischen Telmex-Kette. Die Folge: In einem der beiden Sauber-Cockpits sitzt ein Mexikaner.

Gerhard Berger: "Keiner bezahlt mehr dafür, nur am Start zu stehen"
Für Ex-FIA-Präsident Max Mosley sind die Finanzprobleme der acht kleineren Teams nicht verwunderlich. "Es wird immer schwieriger, sich auf dem freien Markt Geld zu besorgen." Formel 1-Experte Gerhard Berger ergänzt: "Weil die Firmen das Spiel begriffen haben. Keiner bezahlt mehr dafür, einfach nur am Start zu stehen." Hinzu komme laut Mosley, dass die großen Teams nicht wirklich sparen wollten, was die Aufweichung des eigenen Kostenreduzierungsplanes zeige.

2012 wird die Mitarbeiterzahl auf 315 statt wie ursprünglich verabredet auf 280 reduziert. Der Einkauf bei Zulieferern wurde nur auf 30 statt auf 20 Millionen Euro gekürzt. Ferrari-Chef Luca di Montezemolo fordert sogar die kostspielige Rückkehr von Testfahrten unter der Saison. "Ein Unsinn", so Mosley. "Es würde den Abstand zwischen kleinen und großen Teams nur vergrößern, weil sich die reichen Teams mehr Testfahrten leisten könnten." ""

interesting that virgins budget is only 10mill € lower than Team lotus with them having twenty headcount more + two instead of 1 expensive driver..

also Williams very lowish budget.

[Pingguest]

To my thinking, both a budget cap and the resource restriction are both just really bad ideas. I just can't see how you can have a series that is supposedly the pinicle of motorsport and boasts about showcasing the finest racing technology but and a bargin basement price.

You are quite alone in that opinion. At least nobody in the paddock denies that a strict cost management is absolutely necessary for F1 to survive. The sponsorship market has dried up and only four out of twelve teams can make their budgets while from Renault downwards all teams including Williams have to rely on pay drivers to bring in sponsorship.

In that situation no reasonable person will deny that cost management is absolutely necessary. All teams have agreed to a framework of resource restrictions to run until 2017 which needs some additional work on the details particularly regarding cost control of engines.

How can you talk of bargain basement prices in a series with team budgets ranging between $50m and $300m?

Assuming there's nothing wrong with the framework of the coming regulations, it can be questioned whether a resource restriction is sufficient. The cost of intelligence will undoubtedly rise.

It could also be wondered what will happen, if a new and big-budgeted team enters Formula 1 and doesn't accept and doesn't wish to comply to the RRA.

[ESPImperium]

Thank you, ESPImperium. Very interesting reading, particularly the "historical" payments. I think longevity should be rewarded -- good for Williams, especially.

I don't know SportsPro magazine -- never even seen it. Are they well regarded in terms of accuracy?

It was once in the shops, thats how i got to know of it as it had a massive article of how Honda was pinned to fail from the way it did buisness all the way back till when BAR took over Tyrell and how it ran with a intrim car for the last year and went to have a massivly overcomplicated management structure with Raynard and Villneuve/Pollock at the helm all the way to how the "Earth Dreams" concept was concived out of the ashes of the failed $95m sponsorship a year from Google Earth and how it was concived by Management19 (more know for the Spice Girls management).

It is a well know magazine, and is all about the buisness of sport, it covers all bases better than well, tells you things that arnt reported in the manin news channels... It should for the £199 yearly subscription.

Accuracy, id recon that its very accurate as most of its pieces are all well researched.

http://www.sportspromedia.com/

[WhiteBlue]

Source
This (the resource restriction agreement) is between the teams. The FIA is not involved. So, a violation will not affect the results. If a team has spent too much, the agreement provides that it has to spend less in subsequent years.

This is a good source for the principle that overspending on the RRA will be punished by a lower budget in the following year. It has yet to be shown that Red Bull overspent. Domenicali is actually wrong about the role of the FiA. They have signed the RRA and so they are somehow involved in the issue. He is right though about the principle that no result can be changed after the price giving gala. That is why Alonso and Renault were allowed to keep the 2008 Singapore victory despite Renault rigging that race by ordering Piquet to crash.

For those who think the sponsor crisis in F1 is over I copy the following lines.

Source
Most F1 teams struggling financially
Only four of F1's twelve teams have budgets in place for the long term, according to an analysis by Auto Motor und Sport in Germany. The report said only Red Bull, Ferrari, McLaren and Mercedes are secure from a financial point of view, with at least half of the sport's teams fighting for survival.

Auto Motor und Sport named HRT as the team with the smallest budget (EUR 40 million) and lowest head-count (120). On the other end of the scale are the reigning champions Red Bull, spending 330 million annually. The report said Virgin (60m budget and 220 head-count) and Lotus (70m / 240) are the other minnows, with Williams, Force India and Toro Rosso running on just EUR 80 million.

Williams and Sauber have paying drivers on the books for 2011, and Vitaly Petrov has reportedly doubled the money he is taking to the Renault seat compared to his debut last year. Arturo Merzario, an Italian driver of the 70s famous for pulling Niki Lauda from his burning Ferrari, thinks the sport is living on borrowed time. "It will go back to being a sport only for a few car manufacturers," he told La Repubblica in an interview.

The message is clear. The RRA is still urgently needed if the eight teams in financial trouble want to survive.

[andrew]

The claims about Red Bull overspending smacks of the sour grapes that is common amoungst the established winners in F1 - they hate new winners.

Remember when Benetton started winning in 1994? Williams were determined to have muck thrown at Benetton at any given opportunity. Sure there were one or two dodgy goings on but they were vastly overstated. Exactly the same situation only this time the new winner is Red Bull and the established winner is Ferrari.

It could be quite simple - Red Bull used their funds and resource a lot more wisely than Ferrari. Domenicali does not seem to have any evidence of Red Bull overspending but he does have empty claims.

As for the Resource Restriction Agreement, it is an agreement between the FOTA teams - I think a glorified gentlemans agreement. As gentlemens agreement have no legal worth they are generally pointless.

[marcush.]

Nick wirth statement on autosport show:

"We formed a fantastic relationship with CSC, which has helped us install a new computer system in our technology centre in Banbury, and it means we will be the first team to go to the limit of aero testing only in CFD. In 2011 we will be doing more CFD than any other team on the grid - and I can say that because I know that if we did one day of wind tunnel testing then we would be breaking the rules."

Virgin may not have access to a windchannel but they claim to be ruling the block in CFD...