About the F1 Resource Restriction Agreement

[bhall]

I'm glad it pleases you?

[CHT]

I'm glad it pleases you?

It certainly does as it helps to put an end to some of those baseless speculations which has been going around for awhile. when you commented that its muddy, have you got other financial statement from F1 team to compare with?

[bhall]

I've never understood why people introduce Y and Z to conversations about A and B. Why does what other teams do matter here? I'm baffled as to why that's relevant.

When I said the Red Bull Racing/Technology financial statements muddy the water, I said so without considering other teams. The reason why I said it is because the reports are indicative of every garden variety accounting trick in the book (and likely a few I don't recognize). Lest you think I'm being unfair or overly critical, every company on the planet engages in such obtuse business practices.

You'll see that each report was "audited" by the firm Ernst & Young LLP. What that means is Ernst & Young LLP advised Red Bull on how to best take advantage of every possible regulatory loophole. When everyone was confident they'd exploited all that could be exploited, they gave each report a big ol' stamp of approval and went on about their week. That's business.

That said, it was probably wrong for Neue Zürcher Zeitung to claim Red Bull Technology/Racing has an annual turnover of $630,000,000. But, it would be just as wrong for someone to fail to recognize that these reports are merely the gospel according to Red Bull. In other words, this will never be black and white. That, too, is business.

[CHT]

I've never understood why people introduce Y and Z to conversations about A and B. Why does what other teams do matter here? I'm baffled as to why that's relevant.

When I said the Red Bull Racing/Technology financial statements muddy the water, I said so without considering other teams. The reason why I said it is because the reports are indicative of every garden variety accounting trick in the book (and likely a few I don't recognize). Lest you think I'm being unfair or overly critical, every company on the planet engages in such obtuse business practices.

You'll see that each report was "audited" by the firm Ernst & Young LLP. What that means is Ernst & Young LLP advised Red Bull on how to best take advantage of every possible regulatory loophole. When everyone was confident they'd exploited all that could be exploited, they gave each report a big ol' stamp of approval and went on about their week. That's business.

That said, it was probably wrong for Neue Zürcher Zeitung to claim Red Bull Technology/Racing has an annual turnover of $630,000,000. But, it would be just as wrong for someone to fail to recognize that these reports are merely the gospel according to Red Bull. In other words, this will never be black and white. That, too, is business.

I thought the whole reason to doing a postmortem of Redbull racing financial statement is to dig our evidences that they are cheating with an astronomical budget of $600m to win WDC and WCC.

And now that has failed, we are at the stage of examine if they are cheating with their fine prints in the financial statement, or did they engaged a rouge auditor EY to help them exploit the loopholes. And all these time, there was no mention nor show sign of the slightest interest in talking about other F1 teams.

[bhall]

[...]
And all these time, there was no mention nor show sign of the slightest interest in talking about other F1 teams.

[...]
when you commented that its muddy, have you got other financial statement from F1 team to compare with?

[...]
I thought the whole reason to doing a postmortem of Redbull racing financial statement is to dig our evidences that they are cheating with an astronomical budget of $600m to win WDC and WCC.

(Disclaimer: I offer a tip of my cap if this is so. Rules are rules are rules. They're the same for everyone, and it appears they've done a masterful job bending them like a front wing.)

At any rate, if you go back to my first post here on the subject, you'll see I'm not trying to denigrate the team. No matter what they've done and no matter how much was spent, it's all perfectly legal within the rules as they're currently written. That's F1.

[...] why are you under the impression that I've made pejorative statements that ascribe Red Bull's success to nothing but a big budget, as your question pointedly implies? Did you miss the instances where I acknowledged the complete legality of everything we've discussed here? Or where I more or less said that the very nature of Formula One dictates that teams try to find and exploit more loopholes than their competitors? Such is the nature of the beast.

[...]
It should be said that no one has referred to this or anything else as "alleged violations" of anything. Everything Red Bull has done appears to be quite legitimate. So, I don't understand all the über-defensiveness on display here.

And two of those were even addressed directly to you. So, please don't bring it up again.

[Raptor22]

This thread si getting funnier by the page.
Using an indeoendant auditor like Ernst & Young ensures compliance with Sarbanes-Oxley Act of 2002. non conformance to the requirements of this act would mean Red BUl GmbH would not be seen as a trust worthy investment for shareholders. The independant auditrs verify that what the Company says it did, it actually did do and complied with the regulatory environment.
The way Red BULL Gmbh has structured the racing activitity and the Technology activity is very clever but not uncommon because there are many companies who split out certain subsidriaries which may engage in their core competency outside of their parent company activities.
By setting up RBT is a brand, and RBR as a brand they allow RBT to persue activities outside of the F1 interests. So when shareholders coming knocking on the door demanding to know why a drinks compnay invested their money in a noddy car race.

The structuring of 50odd employees under RBR is likely for purposes ariisng to potential comflict of interest. Employees who work on the cars are usually highly mobile in that they could jump teams easily and have very good understanding of the working of a car. Any customer of RBT is not going to be too pleased if a RBR mechanic is fiddling with a STR or Caterham blobbin. There could be some interesting IP in there. Again , this is for transparency.
Core personnel who work cross the customer base neing listed under RBT allows for the parity in the quality of work coming from RBT, again this is a trust thing.

There are examples of this in other industries.

What BH is saying is he is accusing RB GMbh of fraud which is quite frankly tripe.

[bhall]

[...]
What BH is saying is he is accusing RB GMbh of fraud which is quite frankly tripe.

Are you high?

[...]
The reason why I said it is because the reports are indicative of every garden variety accounting trick in the book (and likely a few I don't recognize). Lest you think I'm being unfair or overly critical, every company on the planet engages in such obtuse business practices.

You'll see that each report was "audited" by the firm Ernst & Young LLP. What that means is Ernst & Young LLP advised Red Bull on how to best take advantage of every possible regulatory loophole. When everyone was confident they'd exploited all that could be exploited, they gave each report a big ol' stamp of approval and went on about their week. That's business.
[...]

I'm starting to get the impression that there's a contingent within this thread who will accept nothing less than the idolatry of Red Bull. Silly me for thinking an objective conversation was possible on a technical forum.

Lesson learned.

Ciao.

[turbof1]

What BH is saying is he is accusing RB GMbh of fraud which is quite frankly tripe.

Not fraud, but it is highly unethical. Yes, many companies use that, but always at the expensive of smaller companies who can't afford such a structure. They just can't compete on that level. This is quite frankly to blame to poor national and international regulations.

[bhall]

It's neither fraudulent nor unethical to eek out every possible advantage under the laws and regulations that govern a business. In fact, it's incumbent upon management to do exactly that. It's no different than an accountant who helps individuals maximize income/property tax deductions. They just have different titles in the corporate world: they're called "Compliance Officers" or "Auditors."

Any executive who does not avail his company of all legal means to maximize revenues will quickly find himself replaced by someone who will. That's how business works.

[CHT]

What BH is saying is he is accusing RB GMbh of fraud which is quite frankly tripe.

Not fraud, but it is highly unethical. Yes, many companies use that, but always at the expensive of smaller companies who can't afford such a structure. They just can't compete on that level. This is quite frankly to blame to poor national and international regulations.

The only advantage I could see in RBT structuring themselve this way is to make the technology department more cost effective and independent so that there will be no conflict of interest in serving other F1 team.

AFAIK, there is still no RRA agreed upon, implemented etc F1, so lets not talk about how RBR will or is gaining from putting RBT outside RRA or vice versa.

[Richard]

I dunno, man....

("We just made up some of this ---.")

To my eyes those seem like normal notes in most company accounts. They simply say that the balance sheet is based on stock in the factory and that partially complete stock is measured as partially complete. It also says stock is valued as the lowest value, which is normal conservative accounting.

It also says that when they get stuff for free in exchange for sponsorship or other consideration then they record the actual value instead of saying it was free.

This is all above board and you'll find near identical statements in virtually any company. Essentially you underplay the value of your stock and you count everything coming in and going in.

So far those conventional accounting practices fit neatly with the RRA. The crux for the RRA is how they define the missing £36m as not related to RBR. Clearly that will relate to developing IP and facilities that can later be used in direct F1 activities.

[bhall]

To my eyes those seem like normal run of the mill notes in most company accounts.
[...]

No ---.

Is there something going on with my language? How does this...

Lest [anyone] think I'm being unfair or overly critical, every company on the planet engages in such obtuse business practices.

...not translate?

I'll try this one more time.

Red Bull good. Red Bull not illegal. Everything OK.

[CHT]

I dunno, man....

("We just made up some of this ---.")

To my eyes those seem like normal notes in most company accounts. They simply say that the balance sheet is based on stock in the factory and that partially complete stock is measured as partially complete. It also says stock is valued as the lowest value, which is normal conservative accounting.

It also says that when they get stuff for free in exchange for sponsorship or other consideration then they record the actual value instead of saying it was free.

This is all above board and you'll find near identical statements in virtually any company. Essentially you underplay the value of your stock and you count everything coming in and going in.

So far those conventional accounting practices fit neatly with the RRA. The crux for the RRA is how they define the missing £97m as not related to RBR. Clearly that will relate to developing IP and facilities that can later be used in direct F1 activities. The report quotes £70m spent on activities defined as R&D for tax purposes (note 3 pg 16). So that takes us down to a missing £27m.

Richard, i still couldnt figure out where you got the below numbers from. mind pointing me to the page.

RBT have a turnover of £350m, of which £250m goes to RBR, £3m to STR. So there's £97 floating around for an unknown purpose, presumably research as opposed to direct F1 activities.

[Richard]

Silly me - I was quoting the numbers from earlier in this thread. Now I see they don't match the published reports because some people are mixing $ and £.

The declared 2011 RBT and RBR turnover for 2011 was:

RBT - £215m

Which includes turnover relating to:
RBR - £177m (100% subsidiary)
STR - £4m (£1.8m sales and £1.2m recharge costs)

Hence unidentified £36m.

I've corrected my previous posts

[Crucial_Xtreme]

Silly me - I was quoting the numbers from earlier in this thread. Now I see they don't match the published reports because some people are mixing $ and £.

The declared 2011 turnover for 2011 was:

RBT - £215m

Which includes sales to
- RBR - £177m (total turnover of RBR which is 100% subsidiary)
- STR - £4m (£1.8m goods and services plus £1.2m recharged costs)

Hence unidentified £36m.

I've corrected my previous posts

Wonder where AMuS came up with the 245 Million number for RBR from?