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Mosley admits budget cap can be raised
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Mosley admits budget cap can be raised
Posted By:   |  22 Mar 2009   |  9:27 am GMT  |  0 comments

In an interview with the Sunday Telegraph, FIA president Max Mosley has said that the £30 million figure, which was announced on Tuesday as the level for the budget cap due to be introduced next season, is merely the first round in a negotiation.

“It is provisional. I actually think it could be done for £25 million but that’s just my opinion. All my advisers think it should be more. When people calm down a little bit they will see that all of this is brilliant for Formula One. It won’t hurt the DNA of the sport – £30 million is still vastly more than any other series.”

Team bosses I have spoken to say that at that level the cars will not be the same as they are now and that no team would be able to employ more than 250 staff, roughly a quarter of the staff Toyota employs, a third of Ferrari’s and half of Williams’ staff.

It would bring every team down to around the staffing level of Toro Rosso.

He has gone for an extreme figure, when what he really wants is for the teams to accept the principle of budget caps. Mosley says that the response of the FOTA teams to Tuesday’s announcement was ‘weak’ and suggests that the teams are not as united as they claimed to be at the FOTA press conference in Geneva recently, where the famous “Road map for F1′ was unveiled.

Mischievously, where up until now it was believed that the teams were not consulted on the budget cap plans, he now says that he discussed them with some of the independents who stood to benefit the most, like Williams and Force India. His implication is clear, FOTA is an alliance that cannot survive because competitive animals are not designed to form unions with each other. Their individual desire for a competitive edge will always undermine their collective sense.

“They knew we were considering a budget cap, but I don’t think they expected us just to do it like that. The complaint was that we didn’t consult them. Well, we’ve been talking a lot to Force India and Williams, both of whom were very supportive. I’ve not spoken recently to [Red Bull owner Dietrich] Mateschitz but I would have thought it might appeal to him too.

“In any case, we had to do something. All we’ve had from the teams so far is ‘We’ve done a fantastic job, we’ve reduced costs by 50 per cent’. So what? It has come down from $300-$400 million to $150-$200 million? Well, that’s admirable, but I’m dubious as to whether they will still have $150-$200 million in 2010 and 2011.”

“The thing is; it’s just an option. If I’m wrong it doesn’t matter. If I’m right it will be the salvation of Formula One.”

Thought-provoking words to end on.

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  1. Dennis Dithmar says:

    “The thing is; it’s just an option. If I’m wrong it doesn’t matter. If I’m right it will be the salvation of Formula One.”

    If you’re wrong, Max, a good 3000 people will be laid off. Doesn’t that matter? He is so busy trying to be Jesus he doesn’t realize that he is acting like Nero.

  2. rpaco says:

    Divide and conquer!

    Max is right in saying that FOTA was weak and indecisive. Luca needs to crack the whip and get them organised.
    Where was the press statement from FOTA?
    Where is the FOTA website?

  3. Bludd says:

    I am sure you mean employing 250 staff. :)

    This is vintage Mosley behaviour, remember when he was sabre rattling regarding the standard engine?

  4. Aaron James says:

    While the points nonsense was a farce, I’m not too opposed to this budget capping exercise. But the number needs to be pretty big.

    $75m indexed to inflation/(deflation!) in my opinion, is a good figure. The commercial side of the sport can more than sustain such a number if the proceeds are distributed more equitably between the vulture fund CVC and the teams.

    I don’t agree budget caps will ruin the DNA of the sport – actually quite the opposite. We’ve had so many reg changes of the past few years to try and get costs down which have had the effect of stifling innovation. Oh and the net effect of the changes just raised costs anyway.

    By controlling budgets teams can innovate to their heart’s content and there is less need for such constant reg changes.

  5. Luke Dalton says:

    £30 million, is this the sort of money the likes of Mclaren, Williams, Brabham spent per year in the 80′s? but managed to operate just fine and still produce competitive cars and great racing.

  6. Luciano says:

    I agree with Dennis. It DOES matter when the head of the FIA is wrong and it DOES matter when he behaves as if F1 is his plaything.

  7. DaveC says:

    I really don’t see what Mosley has against FOTA, surely his job and the sport would be run alot easier if he fought to get FOTA on side rather than split them up.

    His argument that he’s spoken to the independents about a budget cap is hardly justification for what he’s done. If he is serious about a budget cap then he would need to win over a major manufacturer (in my eyes Toyota would have been an easy target right now!). Speaking to the smallest teams in the pitlane does not mean you have the support required to enforce a rule.

    An in terms of this being the start of a negotiating position, making it a dead certain rule is hardly the way to go if you plan to change it again in the next 12 months. It makes a farce of the rule book and just adds further confusion for the audience.

    I’m an ardent F1 fan, have been for 14 years now, and even I wasn’t sure what exactly the rules were for F1 2009 until about December last year.

  8. James says:

    Dennis Dithmar, above, is right on this one. The big teams will have to lay off thousands of people between them, which in the current financial climate surely isnt right? Max most know that it’s pretty damn hard to get a job out there right now?

    He probably spoke to Williams and Force India who may have agreed with the him in principle that costs had to come down, but I don’t think they would have supported him on this one due to the number of people that would be made jobless.

  9. Jake.. says:

    I believe that because of the independent teams it is inevitable we will get budget caps, but hopefully not of a figure that low.

    I don’t mind budget caps, but that low, it’s just a little bit too low. Maybe 75m? I really don’t know, but it seems like a better value.

    Will FOTA crack ?

  10. Tomys says:

    If he is wrong, and I hardly remember he wasn’t since 1997 with slick ban (except admitting it was a mistake), then he will damage DNA of formula one, unless all teams agree to have budget caps.

    Berni and Max made multibilion bussines from formula one, it is at first place their mistake that manufacturers has to spend lots of money to succeed in it.

    Yet, Max behaves like he was not there when this started. People call it arrogant behaving. By ignoring FOTA as such.

  11. Nick Robertson says:

    If the budget cap stays at £30, It will be a massive surprise. I don’t think Mosely is seriously expecting the teams to agree to this, by the time it’s actually implemented (and I don’t doubt that it will be), the figure will be at minimum £50 million, and maybe up to £100 million, depending on
    how much the FOTA can get the FIA to backtrack.

    As for Max’s comments on the FOTA being unable to survive, It’s just his way of trying to drive a wedge into the potentially dangerous union (dangerous for him that is).

  12. Moog says:

    I don’t mind the idea of budget caps so long as the limit is large enough to give the teams freedom to develop and create.

    The last thing we want are 20 cloned cars driving around, it’s nice to see the great engineering and technical wonders the teams create.

    So if by having a reasonable budget cap it means removing things like the engine freeze and standard components, then great.

    But one thing is sure, whatever is decided, it needs to be applied across the board and not create a two tier formula.

  13. Adam says:

    Whatever Mosley says about FOTA being ‘weak’ its simply disguising the fact that FOTA won a huge victory of Bernie and Max this week by forcing them to abandon the winner takes all method for deciding the title. It’s hugely significant that all the teams united were able to stop a stupid rule from the FIA, and it was also amazing that after FOTA’s statement on Friday the FIA backed down within a cupple of hours.

  14. James Allen says:

    JA writes: This is quite interesting. Looking through your comments above, quite a few of you do not object to the idea of budget caps and of those who quite like them, a figure of around £50m seems to be considered about right, which means that this process has got you thinking. I’m not sure about it, still weighing it all up and will be asking around a lot on this is Oz and Malaysia. What is for certain is that costs need slashing in the short-term, but with the possibility for them to be lifted to a slightly higher ceiling in future once the economy recovers. I still quite like the idea of areas of non-compete, which we looked into here just after Christmas.

    The teams presented their 50% budget cut for 2010, but the key question is, have the sponsors and manufacturers been secretly contacting Mosley to say, “for heaven’s sake do something serious on costs”, as some would have us believe?

  15. Peter Freeman says:

    Here is the REAL question:

    Why should FOM get so much money?

    What EXACTLY do they DO for 50% of the revenue???

    From where I am standing the answer to the economic crisis and the survival of F1 is solved at the stroke of a pen by the FOTA walking away and forming a new formula.

    I bet more than 100 million could be given to each team for each season before we even start the prize money!

    I wonder if Williams and Force India would be interested in THAT?

  16. DanB says:

    Ever since F1 went on the cost cutting drive by limiting engines etc, I’ve said that the only way to realistically cut costs, bring them under control and make F1 attractive to privateers again is to bring in a budget cap. All this tinkering with engine freezes and spec parts is a drop in the ocean. As long as they’re free to spend what they want, it doesn’t matter how much you restrict one area of development; if a team has the money and resources, they will just re-invest them in another area that they can exploit and the situation ultimately remains the same.

    If F1 is serious about bringing down costs, a budget cap is the way to go about it IMO. Limit their money, but let them spend it how they want. F1′s DNA of competition and technical development will remain in tact, albeit on a budget.

    However – I have serious reservations about what Mosley has proposed this week. If you’re gonna do budget caps, fine, but they’ve got to be for everyone on a level playing field. A two-tier formula rife with FIA meddling is just about the worst scenario I can envisage for the sport.

    I think budget caps could be the saviour of F1, if it’s done right, but Max’s vision of a voluntary budget cap and the two-tier formula it would create is so far off the other end of the scale, it could well be the death of F1 as we know it.

    What with this and Bernie’s crackpot scheme for the ‘winner takes all’ nonsense (thank god we’re rid of that in 2009), I really do fear for the future of F1 at the moment…

  17. Dennis Dithmar says:

    A question to bring with you to Oz and ‘laysia maybe.

    FIA talks about a ceiling at 42M USD. And states that it would mean a workforce of around 250 people. I mentioned the unemployment number, but what about the rest of the operation?

    According to recent numbers by Tom Rubython, and that is kinda his area, the average wage at Honda in 2008 was roughly 75.000 USD a year. That times 250 people is almost 19M USD on the payroll alone. Brawn is expected to force thru a paycut at around 30% which would mean a yearly average pay of 50.000 USD. With the paycut a yearly payroll expense of 12,5M USD.

    Could you try to get some insight asto how an operation would then run? Will the windtunnels have to go? How big a part of ie. the McLaren Technology Centre would be redundant and useless? Will all testing dissappear? How big will the changes be seen from the inside of these factories and their normal M.O.

    If FIA then promises bigger innovational freedom in the tech division, how long do teams reckon it will take a small outfit to be succesfull – is there at all a danger to this happening in the first years? And please ask a bit around about your own spot on suggestion that big teams like M&F will then run two parallel teams. Albeit not new, it’s an interesting thought, and even more so now.

    And finally a thought – not a question. FIA is obviously putting pressure on the big budget teams by letting the new 42M operations have tech-freedom against the strict regs of the big operations. That’s is obviously to pressure the big operations down in the 42M league. Once that day arrives and all teams are run on 42M USD – will there from that date still be innovative freedom, or will Max start to regulate them tightly as always from that date? Can he even wait to that happens. Knowing the Max we all know, I’m ready to bet on it ;-)

  18. Craig says:

    I’ve always thought the budget cap idea was a good in principle but there are two major issues yet to be resolved.

    One whether they can actually be enforced- Max said last week that after talking to advisors they could be but can you trust FIA advisors?

    And secondly the one we are talking about- what is the right amount?

    In this month’s F1 Racing in an interview with Sir Frank, he made the point that to develop the FW14, arguably the most sophisticated F1 car ever built cost around 32.5 million pounds.

    Now doing some internet research 32.5 million pounds in todays money ranges in estimates from 55 million to 82 million.

    I think there is some appeal in logic to making the cap the same amount in today’s money as the amount that it took to build the most amazingly advanced and innovative car in F1 history.

  19. Mark says:

    How much money spent on an F1 team is too much? All this talk of too much being spent in Formula One. Max saying that £30 million is about right. For an English Premiership football team £30 million wouldn’t be much at all. What is worth spending more on? An F1 team or a football team?

  20. Aaron James says:

    Areas of no-compete are good in theory, but in order to get a performance benefit you can still just throw money at the areas where you can compete. So it’s approaching the problem from the wrong way, teams up until August 2008 had pretty massive budgets, if you changed the regs, they just spent the same but on different things.

    Bringing in no-compete areas frees up cash – to spend somewhere else. So the relative have-nots, Williams, Toro Rosso, et al, do not benefit from no-compete so much.

    Putting a budget cap in place frees things up a lot, yeah you can have a fancy gearbox if you like, but you can’t spend so much on CFD, etc. What it puts an emphasis on is clever well managed engineering, not sledgehammer spend a billion engineering.

    Like the common ecu – much decried when first announced – finally put paid to TC, by just addressing the source of the problem, budgets themselves, can F1 make itself more sustainable.

    The nail in the coffin of no-compete, I think, are engines. We saw a number of approaches to trying to drive down engine costs. Some team, Ferrari, McLaren, all managed to find tiny places to spend a fortune on them anyway to competitive benefit. Basically freezing the entire engine is the only way to go if costs genuinely are to be cut.

    So it is with budgets, there needs to be a limit. A high limit. But a limit nonetheless.

    And CVC need to give the sports entrants more money – this is essential.

  21. John Kilmartin says:

    In short, dual regulations is a non starter. Certainly to insert this into the regulations at such short notice is unworkable and tantamount to incompetence by the WMSC (aka Max it would seem).

    Similarly if the £30m is a negotiating position what on earth is it doing in the regulations already.

    I have no doubts that the, to be frank, embarrassing release made by the FIA with regards to the WMSC decisions has more to do with political power play than the “good of the sport”.

  22. Chris Roberts says:

    Ofcourse he’s gone for the ‘extreme’ option first – it’s the Max Mosley school of negotiation. When all the teams are up in arms, he’ll increase the cap, therefor ‘doing the teams a favour’ – for which they will be grateful, and he still gets his cap…

  23. john g says:

    max’s advisors clearly know more about F1 than he does. 30m is clearly a figure for the starting point of negotiation. max does realise tho, that it was his regulations that stifled creativity and increased costs exponentially in the first place.

    as above tho, it’s fairly obviously divde and conquer by max. also, with the budget cap in place, FOM won’t need to pay the teams so much money. max gets more power, bernie gets more money. this is what it’s all about.

  24. Dennis Dithmar says:

    The war is obviously on. Just picked up this one from The Times, and Bernie is using very strong language.

    “If they come in here with a gun and hold it to my head, they had better be sure they can f***ing pull the trigger,” Bernie said. “And they should make sure it’s got bullets in it because, if they miss, they better look out.”

    Cross your fingers, cos this could actually turn out to be the bloodiest years in F1 politics. Auch!!!

  25. Fudce says:

    “Where is the FOTA website?”

    http://www.teamsassociation.org/

  26. James says:

    You know what? I reckon I know the soundtrack to this season.

    “When two tribes go to war…”

  27. Fudce says:

    Budget caps aren’t a bad thing, when they are at a good level, and if they were introduced in a mandatory fashion.

    The level of the proposed voluntary budget cap for 2010 is too restrictive, and the very fact that it is voluntary will lead to a two-tier championship. All of the teams should start on a level playing ground, and by allowing some to voluntarily cap themselves to receive extra allowances from the rules doesn’t allow for the equal start that is needed.

    If the FIA were to cooperate with FOTA to find a managable budget cap, and they were to make it mandatory, then I don’t see any problem with limiting the finances of the teams.

    Call me a cynic here, but I suspect that the only reason that Bernie Ecclestone is being so active in pushing for the £30m cap whilst reportedly Max Mosley and the FIA are willing to negotiate a more reasonable cap is due to the prize money, and the pressure FOM has been under recently to spread more of the wealth with the teams.

  28. Michael Wilcox says:

    Adjust that for inflation (using RPI figures) from 1987 to 2008 and you get £68mn. What £30mn got you in 1987 is different to what it will get you in 2008. And that’s generalised figures for the whole economy. Consider changes in the sport of Formula 1 – how much do modern drivers get in relation to the drivers of 1987? Are chief engineers more sought after, and hence paid higher salary? Do teams get less in sponsorship revenue in real terms (adjusted for inflation, as I did with the 1987 budgets)?

    These are questions I don’t actually know the answer to, just suggesting as areas for thought.

  29. Stephen Kellett says:

    £30 million, is this the sort of money the likes of Mclaren, Williams, Brabham spent per year in the 80’s? but managed to operate just fine and still produce competitive cars and great racing.

    Allow for inflation, which doubles prices roughly every 15 years and you get 30 -> 60 -> 120 million in 2010 (assuming 30 million in 1980).

  30. Stephen Kellett says:

    and it was also amazing that after FOTA’s statement on Friday the FIA backed down within a cupple of hours.

    I think that was really sensible from the FIA veiwpoint.

    You wouldn’t want it challenged then going to the court of appeal (which wouldn’t happen for a month or two – thus after a few races), FOTA winning (which they would), the points system changing part way through the season (that would look really stupid).

    And of course, having lost so badly in public in this manner, they could never re-introduce the rule. Which is of course why Bernie is now already out there saying “it will happen”.

    If you look on ITV-F1 today, the photo of him chosen to go with that story, he looks a tad like the Emporer in Star Wars…

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