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F1 budget cap back on the agenda, but top teams still set against
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Darren Heath
Posted By: James Allen  |  02 Apr 2012   |  3:15 pm GMT  |  108 comments

Over the past couple of weeks the majority of F1 teams have reached commercial agreements with Bernie Ecclestone to stay in the sport until 2020. Next will come a process by which other details of the next Concorde Agreement will be generated.

One of the most important aspects of securing a stable sport will be agreeing the best method of cost control going forward. Ecclestone has been pushing recently the thorny subject of budget caps and it’s interesting to note that on the official F1 site today, Sauber CEO Monisha Kaltenborn endorses the idea.

Kaltenborn says that the Resource Restriction Agreement, which was put in place by the teams at the end of 2008 when the economic crisis hit and which ultimately led to the break up of the F1 Teams’ Association, because of disagreements over it, has served its purpose to this point. But she added that it’s not the right tool for the next step,

“We now have to evolve it to the next step, and in my view the future should indeed lie in some kind of budget cap under which each and every team could do what they want to, because we all have different strengths,” she said. “Looking at our team, for example, we have a good infrastructure and a good wind tunnel, so it would allow us to benefit from that. Others have other assets.

“Overall I think it would make Formula 1 more interesting as it would also mean that we would all use different strategies and take different approaches to the business and the sport.”

Of course different approaches are what we have at the moment anyway, with Ferrari a completely different type of business from Red Bull Racing, which in turn is different from Sauber. And for this reason it’s very tricky to square the circle and find a ‘one size fits all’ cost control mechanism.

What is interesting about Kaltenborn’s interjection here is that Sauber is politically very close to Ferrari – always has been – and yet is pedalling an idea that is very much against Ferrari’s interests. Ferrari was so against the budget cap idea when it was put forward by then FIA president Max Mosley in 2009, that it was prepared to breakaway from the sport rather than accept it. Part of that was Mosley’s methodology – and it’s worth noting that this time around the agreement of the majority of teams has been reached with hardly any fuss or polemics, which team bosses tell me, has a lot to do with Mosley not being part of the process.

Ferrari does not agree with budget caps because of the difficulties inherent in policing them and because a cap is hard to define. The larger teams are always going to push back on the budget cap idea because they have invested heavily to become bigger and that’s where their competitive advantage comes from.

Kaltenborn’s wider point is that the big teams need to think beyond themselves and remember that without the midfield teams the spectacle of the sport would be greatly diminished. It’s an interesting moment to raise this point because the commercial rights holder has now reached agreements with most of the F1 teams, with the exception, as I understand it of Mercedes and a couple of the smaller teams. So those who are in, are in it for quite a long time and their income has increased under the new deals. Whether or not they can be sustainable and even profitable is down to cost control. Mercedes are important to the sport for a couple of reasons; they bring prestige as one of the world’s leading car brands since the invention of the internal combustion engine (which they had a hand in) and as a supplier of engines to a quarter of the grid.

“I think by now even the big teams should appreciate that Formula One with four teams would not be overwhelmingly attractive to fans,” said the Sauber boss. “That would be a very wrong message. So my hope – and I have to say that most of them have already supported the RRA and have now signalled that they would give their support to taking the next step – is that something is happening very soon.”

The discussions on the best way forward are ongoing. Ideally it would be good to have a way forward agreed for the start of the 2013 season.

There is some support for focussing spending limits on the ‘tangible’ elements, like the number of updates each team may make per year, but Red Bull believe that the RRA ultimately failed because of the impossibility of measuring ‘intangible’ things, like how much support a manufacturer backed team gets from the manufacturers’s off-site resources.

Putting the RRA into a new structure whereby it is managed by a third party and subject to arbitration in the event of dispute is the logical next step – it’s being discussed now – and one that sounds like it is agreeable to Ferrari, but Red Bull and its sister team Toro Rosso need some persuading.

A budget cap remains a step too far; however much the midfield and backmarker teams might want it.

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108 Comments
  1. Andrew Halliday says:

    James, where has this Monisha come from? Although we’ve seen plenty of her on Sky over the past couple of weeks I’ve never heard of her before…

    1. James Allen says:

      She’s been around a little while. She’s a lawyer by training. Sauber wants to pull back a bit and she’s the one he wants running things, a bit like Frank Williams was with Adam Parr until last week..

      1. Kedar says:

        James, i am iinterested in f1 as long as engineers and drivers run the sport. Once the financiers and lawyers come into the fray it’s the beginning of the end!

      2. James Allen says:

        Understood. But it’s a question of what the majority of the existing and potential fan base want, isn’t it? That said, research showed that F1 fans are interested in technology, more than Mosley or Briatore realised

      3. Sebee says:

        Who’s going to pay for all that engineering and pay the salaries of the drivers?

        Oh yeah…fianciers have to worry about that.

        When you pay the bills, you run the house.

      4. Sebee says:

        Fianciers – best type-o ever by me. Where is autocorrect when you need it. On second look FIAnciers.

      5. Femi Akinz says:

        James,

        have you read the Moles reasoning behind the Williams/Parr split?

        Fascinating stuff and worth a read.

        Would you buy that in the slightest?

        http://f1mole.wordpress.com/2012/03/27/the-mole-takes-a-boat-trip/

      6. James Allen says:

        Yes. Still getting to the bottom of that story. Sounds like there could be something to it.

      7. DMyers says:

        Monisha may be a lawyer by training, but she is a racer at heart. It’s great to see women breaking through into high positions within teams, and there should be more.

    2. DC says:

      She has Indian background. Joined Sauber in late 90s through the Fritz Kaiser Group – her employer at the time, who were a sponsor and co-owner of the team. As a head of Sauber’s legal department and a member of it’s Management Board she has been present at races where, it has been said, media often confused her for Peter Sauber’s translator. Appointed CEO of Sauber Motorsport after BMW pull-out.

    3. Wayne says:

      The remainder of the field will never get the respect they want/deserve while teams like RBR maintain a disgracefully arrogant, pre-madonna attitude. Nothing about the way RBR conduct themselves in F1 ties into their branding outside F1 for me. It is all a hypocritical nonsense. RBR have been at the top for 2/3 years, they need to remember that they can become a midfield team over the course of a single season. There is 1 rule book in F1 whihc applies to all teams.

      “We have told our team manager to talk to both Marussia and HRT about getting their drivers to pay more attention,” Marko told Austria’s Servus TV.

      He added: “They drive in a different league, they are six or eight seconds slower, and so they need to watch out more.”

  2. Rich C says:

    Get Bernie Maddoff out of prison and let *him run F1 finances oversight. He’d have them all thinking they each got a special, great deal!

    1. franed says:

      Bernie does that already! :-)

  3. Boing says:

    A rule only has value if it can be enforced, if it can’t be it will be ignored.

    So how will this work? We get to the end of the season, we see who wins the championship then presumably the FIA will start to audit the teams accounts. I’d imagine this won’t be the work of a moment so a month or so passes and the FIA realise the World Champions have exceeded the budget cap, they’ve cheated.

    Do you kick them out of the championship? they doubtless recieved a large poerformance advantage from their excessive budget so its the only fair thing to do but imaginge the awful publicity that would bring on the sport. Months after a superficialy clean title fight the world champions are kicked out for accountancy irregularities….

    That’s just not going to happen is it? and if I can see that, so will the teams and they will happily walk all over the rule.

    The trick isn’t to limit spending it’s to shape the technical regulations in such a way that you can remain competitive without spending too much. That way the teams that have it can spend as much as they want, they just won’t get any great advantages from it.

    1. mario says:

      is it just me or have we forgotten what F1 is all about? Innovation! Technology! The hunger for Number 1!

      because the removal of the ability to enhance engines, the manufacturers begun intensive work on aero packages and the public hated it. they’ll find a new way to work around the rules and we’ll hate it.

      now they want to remove the ability to enhance the cars during the season. if the cars are fixed from the beginning of the season, we might as well watch the first five races and then predict the drivers and constructors championship winners from the average. the next 15-10 races (however many they squeeze into the calendar) will be a waste.

      i can’t wait for this second generation turbo era to come as engine development will be on the cards again and the true nature of F1 will live again – unless the pencil pushers can do something to spoil that for me too.

      why can’t we just see true innovation on the track that can hopefully spill onto the consumer products? there hasn’t been much technology innovation in the consumer world since the freeze in engine enhancement in F1.

      i’ve found myself supporting drivers instead of cars manufacturers these past few years because the cars are boring. aero takes up 98% of the talk of development and its very hard to understand even for the technically minded.

      Maybe that a reason why Nascar in the states is soo successful. the cars are simple and seem to be making more power each year so its worth while still supporting your favorite car manufacturer. none of this embarrassing hitting of the rev limiter during an overtake. I feel embarrassed for the sport each time that happens and i’ve been watching F1 for a little while now.

      we need a motor sport guys not a money factory for those few who don’t even know what the fundamental principals of internal combustion are…

      1. anonymous says:

        Isn’t it that NASCAR especially, such as Indy have very, very strict limits on the technical development?
        And on the other hand isn’t it that what makes the sport affordable in the first place?
        How can you marry that with your desire for “Innovation! Technology!”.

        Technology and innovation costs money. To save money means having more standardized parts and make them simpler and last longer, means less innovation, less technology. You can’t run with the fox and hunt with the hounds, you need to sacrifice one for the other.

      2. Sebee says:

        It’s a fine line to walk.

        Bottom line, all that F1 has to do is appear to control finances for marketing reasons so we don’t feel like richest buy championships. The rest – what do you care? Personally it makes no difference to me how much Ferrari spend. It doesn’t come from my wallet. I don’t bank with Santader and I think Ferraris are a waste of money and brake pads.

    2. Adam says:

      Engine innovation is a terrible idea. Supposing a top team is unlucky enough to opt for an uncompetitive engine supplier, they will be nowhere.
      Formula one should be about innovation, agreed, but, engine innovation is done by blue collar workers, not by the highly skilled engineers that do the aero. Anyway, formula one innovations are simple why didn’t I think of that solutions
      To conclude, on the article this is written on, a budget cap is a stupid idea and teams should be allowed to spend as much as they want providing the books balance. The sauber ceo wants a cap so her team will become competitive. Eventually what will happen is salaries will be reduced and will make f1 an unattractive option for top engineers.
      Formula one will therefore have less innovation and become even more boring, simple.

  4. AH says:

    Well i must say that this RRA sounds to me like its unfair to the established teams, likes of Ferrari and McLaren that have invested heavily in expanding. That came with many years in sports. To put a budget cap for the sake of smaller teams does not sound logical. It should be up to each team to decide how much to invest in R&D.

    1. Rich C says:

      No. That would kill the sport dead.

      Have you forgotten how much they used to spend?

      Ferrari and Toyota were reliably reported to spend half a billion Yankee dollars per season, without counting the marketing bs at each event or the drivers’ salaries.

      That is enough for each of them to have their own nuclear attack submarine! Each year!

      1. Kay says:

        LOL with a budget like that, they could run an army for US or operate a small government!

      2. KL says:

        Probably operate that small government a damned sight better than politicians will too.

        If you want something fixed, get an engineer to look at it!

      3. Doobs says:

        If they couldn’t afford it they wouldn’t pay it.

      4. anonymous says:

        That’s why Toyota, Honda, Frd (Jaguar) and BMW pulled out of the sport, why Renault went back to being a (paid) engine supplier, and several teams went bankrupt.
        You must get a proper balance, so it is still possible to win the championship without spending a state’s gross domestic product for development. Have you watched the Moto GP last year? How pitiful it was to watch a full blown racetrack with a handful of bikes fighting for a title that’s worth worth nothing due to a lack of competition! It was almost like watching the infamous 2005 Indianapolis Grand Prix every race.

  5. goferet says:

    Monisha Kaltenborn makes some very good points regarding the budget cap and that’s why I have always been of the view that women make great leaders and more so great business leaders e.g. They are not selfish nor are they thieves or crooks.

    Yes the big teams should get in line and realize that the world economy is still balancing on a knife’s edge so we can’t possibly go back to the wild west where you have new, young teams like Toyota having budgets of $300 million a year with over 100 staff flying around the world with nothing to show for it in terms of results.

    A budget cap is good business for everybody for not only will the fans have lowered ticket prices but we will also have car manufacturers willing to take a gamble on the sport with the belief that they have a chance of achieving results with a budget cap in place with a budget cap potentially cancelling out the history & experience much older teams enjoy.

    Further more, a budget cap would keep newbies from heading for the hills (like Mercedes is thinking of doing at the moment) for teams like Mercedes & BMW do not believe in using money like toilet paper without getting a return for their investment.

    Besides budget cap is very good for the spectacle of the sport for we would have many more seasons like 2012 where midfield runners have a shot at upsetting the big teams instead of rubbish ones like 2011 where one driver/team runs away with it from race one thanks to big teams having more money = Able to invest more.

    So, yeah the teams should just agree to plant FIA officials in every team to keep an eye on the cheats that want to pull a fast one (by launching B spec cars) and that will be that, problem solved.

    All in all, the chaps in F1 are pretty clever blokes, hopefully they come to a correct decision soon.

    P.s.

    Yes Sauber used to be pretty closely aligned to Ferrari in the past but with a incorruptible maverick for a CEO (translation woman), we’re about to witness lots of new changes e.g. a Sauber challenging a Ferrari for victory.

    1. Rich C says:

      “… women make great leaders and more so great business leaders e.g. They are not selfish nor are they thieves or crooks.”

      ROFLMAO Ohhh… /me wipes tears from my eyes

      Yes we all know they are all Vestal Virgins – not a con artist, thief, crook or murderer or lawyer amongst them!

      Thanks for the laugh.

      1. anonymous says:

        “women make great leaders and more so great business leaders”

        Am I just being sarcastic, or why did I just think of Carly Fiorina?

    2. Ed H says:

      “Monisha Kaltenborn makes some very good points regarding the budget cap and that’s why I have always been of the view that women make great leaders and more so great business leaders e.g. They are not selfish nor are they thieves or crooks.”

      I think you are over-generalising. I know some pretty selfish girls who would maime and steal for some things: I.E. Lipstick, Justin Bieber autographs, etc. But in all seriousness whilst I can see Kaltenborn’s point, she is fighting her corner because she knows that costs are going up all the time and last year they could not develop the blown diffuser beyond silverstone as they had understood that after that race they’d be banned: Then of course they were not, which compromised their season.

      But what she says about making the regulations play to all the team’s different strengths sounds interesting. (Though i’m not sure if that would work, it would leave teams scope to claim that the other got an unfair advantage.)

      I wouldn’t go as far to say that Monisha is incorruptable, (we’ve all got our predelections) and I also would like to point out that there are other people in that team who make descisions and are doing a sound job at present. Saying that, if Sauber ever want to survive then they cannot do so off of Ferrari indefinately. As we’ve seen them claim after the events of Malaysia, they are their own team and I think this comment on the resource restriction agreement reflects that.

      P.S. I don’t think Sauber need to rely on a budget cap in order to beat Ferrari, as Malaysia showed, they just need luck and talent. (Mainly the latter, you would hope, but the former always helps.)

    3. rgvkiwi says:

      Sorry but I can’t help myself…

      What a load of bosh. An “incorruptible Maverick i.e a Woman”….”Woman make great leaders, they are not selfish” etc…blah blah….

      That might be your own personal experience or dream but woman, like men, can be good AND bad.

      To massively stereotype like you have here is beyond ridiculous.

      However, I do agree that some sort of budget cap or limit is required.

      Like everyone else, i really struggle to see how it can happen.

      Maybe a limit on raw materials like carbon fibre, wheels, raw aluminium/titanium/unobtanium would be a start…?

      A limit on staffs annual, billable man hours per team i.e wages…..

      Dunno, a real tough one.

    4. Sean says:

      Women DO make great leaders. I have women in charge of two of my companies.

      Are they selfish? Yes. They are just as likely to be as selfish as any man.

      Are they incorruptable? No. They are just as likely to be “corruptable” as any man.

      The great many advantages that I have found women bring to leadership positions include:
      Relationship building, networking, discovery of less apparent opportunities, vigilant oversight without micro managing, more reasoned and logical decision making, they are less likely to be influenced by their ego, improved business performance. etc etc. The list can go on.

      Do all women make great leaders? No. There are probably as many great female leaders as there are male leaders.

      Are women better as leaders than men? In my organisations I have found them to be more effective than their male predecessors, but a great leader is a great leader regardless of gender. I would be just as inclined to promote or hire a male leader as I would a female leader.

  6. Adam says:

    Ferrari don’t think they need any other cars in the race. Look how they treated Indy when the tires could not handle the track, rather than agree to compromise they let a sham of a race take place with just six cars and they were two. That is an example of how little they care about the bigger picture!

    If they did care they would have said no to the sham at Indy, the track would have been altered and a full race taken place. Why would things change now? More power to Sauber for being independent. That team just went up in value in my eyes!

    1. [MISTER] says:

      LOL
      So was Ferrari’s fault because the Michelin tyres could not handle the track? Are you kidding me?

      1. SImon Donald says:

        No, it was not Ferrari’s fault that the Michelin tyres couldn’t handle the track, but Formula One is a show, it is entertainment, accordingly Ferrari had a responsibility to ensure that rather than being completely inflexible as they were, they should have ensure the American fans were able to see the spectacle that they had paid good money for. It was even more important in a market like the US. The other two Bridgestone teams Minardi and Jordan were willing to compromise even though they had much more to lose than Ferrari did in allowing the Michelin-shod teams to run. They should have compromised to let the Michelin teams run in the race by placing a temporary chicane before the last banked turn, but only allowed the Bridgestone shod teams score points. That would have the only sensible conclusion – the fans would have gotten the race they came to see, lets face it many of them couldn’t have cared a damn how it affected the WC, and Ferrari would have gotten their 16 points. Their car was so bad that season, it hardly had any effect on the WC anyway.

      2. DC says:

        Don’t bring that story up! Other compromises were possible too. The teams without suitable tyres could have driven slower through the banked turn, but no one wanted to bulge. It was each teams’ (and tyre manufacturers’) responsibility to bring equipment that is up to the job. Should top teams this year remove KERS just ’cause Marusia & HRT don’t have one? Let’s give them a chance, let’s not forget: Formula One is a show, it is entertainment, accordingly top teams have a responsibility to ensure that rather than being completely inflexible, they should ensure fans are able to see the spectacle that they are paying good money for.

      3. MISTER says:

        Man, this is a show for the fans, not for the teams who are putting millions and millions into this sport.
        That’s why at that stage there were 2 tyre suppliers..because each one of them had their advantages and disadvantages.
        This would be like those teams with Mercedes engines to turn their engine down just because those with Corsworth don’t have the same power or straight line speed.

        What responsability you think Ferrari had just to make the fans enjoy the race. Are you mad? This is a business for all those involved into the sport. You think they do this to put a big show? I cannot belive you just said that.

      4. Simon Donald says:

        Yes, other options were available. Ultimately Michelin stuffed up massivelty, but it is entertainment – sport is entertainment. A bit of common sense needed to be added into that problem. F1 needs the US much more than the reverse. A compromise should have reached to allow all teams to participate rather than the farce that happened.

        To answer your question, yes, I entirely believe that Ferrari and the other teams do this to put on a show for their brand and their sponsors. Ferrari are in the business of using F1 to sell high end cars, same as Mercedes, whilst Red Bull do it to sell their energy drink and to perpetuate their brand of adventure. It probably would have done nothing to change that, but to protect their brand and F1 brand in the US by being seen to act responsibly to ensure a race rather than a farce, would make sense to me.

        James may be able to correct me here if I am wrong, but I do believe that in recent years certain engines have been detuned to create a more even field.

    2. Justin Bieber says:

      It was the Todt/Schumacher era… winning at all cost, no matter what is the consequence.

      Ferrari is under new management now. Just like McLaren.

      1. Sebee says:

        So what? That means they don’t want to win at all cost?

        They (Ferrari) do, but they are not that smart aerodynamically. Unlike McLaren who always had that as a strength.

        Engines make little difference lately. It’s all about aero. Excep in Red Bull’s case their switch from Renault to Infinity engines surely seems to have made a difference. :-)

        I miss the engine battles. I miss a good solid in-your-face engine blow-up too. And how precious are those with 2 laps to go? That Vettel one a few seasons ago was a beauty. But nothing since. How predictable.

      2. Gatsby says:

        It was just a bad batch of michelin tires. That is what it was.
        Todd’s and Schumacher had nothing to do with it.

      3. Dizzy says:

        People blame Ferrari/Todt for Indy 2005 yet ignore the fact that Jean Todt wasn’t invited to any of the Sunday morning meetings between the Michelin teams.
        Jean Tody said he’d have been open to discussions to find a solution to allow all the cars to race if he’d actually been consulted on what the other teams wanted to do.
        Likewise both Schumacher & Barrichello as well as Ross Brawn said they woudn’t have objected to a chicane been installed at the final corner.

        Something else that came out after Indy 2005 that was largely ignored in the blame Ferrari/FIA aftermath was that the only team that had any problems with the tyres was Toyota & that was largely due to the amount of camber they were running on the rear overheating the left/rear.

        No other teams had a problem & most had done well over 20 laps on a single set of tyres throughout Friday practice & those tyres showed no sign of failure.

  7. Irish con says:

    I don’t ever want to see a budget cap in anything. Hate the idea. Not Ferrari or mclarens fault they have alot of resources. Nothing wrong way f1 the way it is at the minute apart from boring tracks and possibly losing spa once every 2 years. Travesty.

    1. Liam in Sydney says:

      You are missing part of the point. The GFC is still going on, and Ferrari would love to spend $100m p.a. instead of $500m p.a. like they used to. It saves money, still gives a good chance of winning, and the chairman of the board loves a company that saves money. What is needed is a balance… a RRA that is high enough to allow the big teams to spend the larger budget, but still low enough to give incentive to small teams who through ingenuity and hard work find a way to challenge the large teams based on merit. That is the balance that everyone should try to reach here, not ban the RRA on the grounds of unfairness.

  8. William Wilgus says:

    Of course the top teams are against a budget cap. Their ability to out-spend their competitors is what keeps them at the top. If F-1 was to be really fair, all teams would have an equal amount of money to spend—in any way they chose to do so.

    1. [MISTER] says:

      But these big teams have been here for decades. They are F1..not the likes of HRT and Renault who change their name every 2 years.
      These teams like Ferrari and McLaren have invested so much into F1..that in order to be one of the top teams..they have to invest alot.

      What makes you think that if every team in F1 would have the same budget that the spectacle would be better? What if the teams will become more or less like HRT and Marusia?

      1. William Wilgus says:

        Yes, a few of the teams have been there for years and have a lot of money invested, and more importantly, experience in the sport.

        If every team had the same budget, it’s possible that instead of 4 teams competing for the wins, there’d be 12 teams competing for the wins. That’s just as likely as your suggestion that we might have more ‘back-of-the-pack’ teams.

        Which of us is right? Perhaps neither. But I was speaking of fairness, not performance per se.

      2. MISTER says:

        And how is it fair for someone like Force India or old Renault or HRT to be given a shortcut to the front?
        Why would McLaren and Ferrari agree something like this just because other teams cannot afford it? It’s the likes of Ferrari, McLaren and Williams that build this sport into what it is today..or they’re the ones who contributed the most (from the current teams).

        A comparison would be a law firm having some juniors but suddenly the partners to be asked to earn the same as the office guy. Its the partners who build that firm..not the junior who was hired last week.

        Formula 1 is not only about the battle on the track..is all the politics and drama..all the Schumacher, Ferrari and team orders buzz.
        Formula 1 would be another motor race without all the history behind it.

        What history would Formula 1 have if the teams would leave and others join the sport every 2 years? Would you watch that? I would probably not.

      3. kidVermin says:

        i FAIL TO SEE HOW IT WOUL BE A BAD THING IF ALL THE CARS HAD HRT performance. in my book performance is relative.

      4. MISTER says:

        I guess you don’t have high standards.
        I prefer to see cars go faster..rather than fast.

        In my book low budget means not much money to try new things..therefore potential new innovations will not be discovered.

    2. Kay says:

      Agree with MISTER here.

      Renault, Lotus, Marussia Virgin Atlantic F1, HRT or whatever they wanna call themselves, they just come and go as they please, unlike McLaren and Ferrari.

      McLaren were once minnows and look where they are now.

      1. anonymous says:

        Isn’t it interesting, or rather revealing, that you didn’t count Williams in? Doesn’t that make you think?
        Do you honestly think that Tyrrell, the original Lotus team, Brabham and others have quit for marketing reasons, fun, etc?
        Newsflash: They ran out of money.

      2. Kay says:

        Yer I didn’t count in Sauber and Toro Rosso either. I didn’t need to name all the teams, I just used several teams as examples.

    3. Gatsby says:

      What about the credit for being a team that can afford to spend more.
      That capability does not come out of the blue.
      It takes years of work and success being in the sport.
      That must have a value.

      1. William Wilgus says:

        Then it’s okay to ‘buy’ a championship? It does not necessarily take years of work and success in the sport to become the champion. Look at Ford’s GT-40 and J-cars at Le Mans in earlier years. They threw a lot of money at it and won it in their second and third years; nobody else was even close. The only way Ford stopped winning was because they stopped entering; they’d proved their point.

  9. Dennis says:

    “Ferrari does not agree with budget caps because of the difficulties inherent in policing them and because a cap is hard to define.”
    I call bulls… They are dead set against the idea, because they have so much money to throw at it and want to gain an advantage from those money. Same goes for Red Bull.

    1. Sebee says:

      No way same goes for Red Bull. Red Bull turns sugar water into billions. Ferrari have to sell overpriced cars per unit with large manufacturing and labour expences to a limited audience. Red Bull is mass consumed. Red Bull is hands down the mother of financial resources and marketing machines in F1. If this was about who can spend the most, you would be wearing Red Bull undies right now while waiting for the next RBR GP victory – guaranteed.

      Ferrari want F1 to be about engine. But it’s not. Thus lots of money must be spent on the aero. I think the truth is somewhere in the middle – not only must the cost side be controlled, so do the rules which demand so much spending on the aero arms race. That’s why if you go spec on certain aero components it will save. Then let them develop in limited areas and we would finally perhaps see who the best driver is. Not who is the one with best B.S.-duct.

      Since ’09 F1 has been hyjacked by something blown. The whole thing blows if you ask me. Well, it either blows or it flexes – but it’s same rubish to me.

  10. Mike P says:

    Budget caps will not work. How do you police someone’s creative accounting practices? How do you continue the annual development race… especially when 1 team has a large speed advantage?

    If the goal is to reduce costs, then the FIA has to do a better job at stamping out devices that lay in the grey area of the rules or do not follow the spirit of the rule. Otherwise teams have to spend countless R&D dollars to copy these devices.

  11. Wayne says:

    Interesting, the rich get rich and the poor get poorer? And the rich protect their riches jealously.

    Or another way to look at it, new entrants to the sport, who have not invested anywhere near as much over anything like as much time, want a short route to the top table that others have earnt?

    1. DingBat says:

      “And the rich protect their riches jealously.”
      lol..how else do you think the rich get rich and remain rich? ;-)

  12. madmax says:

    James, is there any info on Mercedes?? Is Ecclestone likely to accommodate them a better deal or are the rumours of a legal challenge or withdrawal from F1 likely?

    1. [MISTER] says:

      Well..I do like Mercedes, but they cannot expect to get the same as McLaren and Ferrari. So what they are a top team? They haven’t contributed much to F1..

      1. Colin says:

        Well, they have contributed a lot of engines. Would Mercedes want go back to being just an engine supplier?

      2. Kay says:

        +1

        Merc… another come and go’er as they please, just like Renault, Jaguar etc.

      3. Apaert from the strongest engine for the last few years, which powers a quater of the grid and has won plenty of championships…

      4. MISTER says:

        As far as I know, they don’t give any money to Crosworth. I was not aware that the engine suppliers are being included in these agreements that Bernie is doing. I thought we are talking about teams here..not engine, tyre or radiator suppliers..

      5. anonymous says:

        ..and the legend of the silver arrows that made people like Fangio win.

      6. James Clayton says:

        @MISTER

        And that, I would imagine, is one of the very points they are disputing…

      7. madmax says:

        The problem is Red Bull also got special treatment and they have zero racing heritage apart from the last two years triumphs.

        “They haven’t contributed much to F1..”

        From wikipedia “Mercedes-Benz had competed in the pre-war European Championship winning three titles, and debuted in Formula One in 1954, running a team for two years. Mercedes-Benz returned as an engine supplier in 1994, and two constructors and four drivers championships have been won with Mercedes-Benz engines. Mercedes have won two drivers championships and nine races as a constructor in Formula One.”

      8. MISTER says:

        I agree on that with you. People these days tend to think that RBR is some sort of daddy of F1..

        If they fail to win in the future..I wonder what it will be said about them in 10 years time..
        I would refer to them as “Newey and Vettel”…

  13. zombie says:

    It is a no-brainer. Say they cap the budget to 100m$/year, forget about policing, the sheer experience,ability to attract the best talents and drivers by the virtue of brands will make sure that the current top 5 teams will remain in top 5. Just because there is a budget cap, does anybody here think HRT or Marussia will beat Mclaren and RBR ? No. We have enough artificial restrictions on F1 that has curbed its technical side. If they allowed free development on engines but limiting the fuel available, it could have led to new innovations. The sooner Bernie retires ( he is 81, how long does he wants to stand around?), the better for F1.

  14. Justin Bieber says:

    Thank god Max Mosley is gone! Jean Todt may not be the most astute of politician but he has restored the teams faith in the FIA.

    Looks like they will get an agreement this year and we wont waste the summer talking about politic instead the fantastic racing we’ve had and will have.

    I hope Mercedes doesn’t leave the sport, It would make a big mess of 2 top teams.

  15. Henk says:

    Not surpising that the larger teams are against budget caps. Not surprised smaller teams are in favor either. It’s just like in football. Ofcourse smaller teams would like to see a budget cap. Afterall they don’t have as much money as the bigger teams so it would serve their benefit to remove the limitation of money and ofcourse big teams are against it for the opposite reason.

    However just like in football, I don’t think a budget cap in F1 would work. Besides the fact that there is no way of policing the budget cap, how about teams buying tech or teams that develop engines? What would be a fair budget for Force India that just buys a mclaren back end for their car? What would be a fair budget for teams that develop their own engines? Or how about teams that buy a engine from a company with no team in F1 (cosworth/renault)?

    Besides that, its also against the nature of F1. F1 has always been about developing the fastest car you can. With all the rules in place these days adding a budget cap would mean you might as well turn F1 into a specced series and just get over with the whole argument of on team having a better car than others.

    If any they should fight against the money spend on aero. F1 cars are cars, not upside down airplanes. Yet most of the budget is spent on aerodynamic wizerdry along with all the downsides of cars not being able to pass and having to use DRS like devices. Just settle for simple aero like in the early 90′s (would make cars look better too) and let them use ground effect again.

    Then allow them to start spending money on things that actually matter like engine development and better energy recovery systems. If the FIA really cares about F1 being ”green” allowing teams to invest in such tech would be much better. It would also be much more relevant to car manafacturers as they have 0 benefit from designing a F-duct, dubble decker defuser, front F-duct or blown defuser. However building high performance, fuel efficient engines with highly efficient KERS DOES have real world benefit.

    1. rgvkiwi says:

      I think I had a bit of an epipheny today….I have always followed th eline that F1 leads to passenger car development and innovation and that the rules should lean that way.

      But in reality most of us watch F1 for the innovation and excitement it brings to the sport, not to the eventual filter down thery.

      As well as the fact that the real innovations come from left field development, the more restrictive the rules are the less unique or valuable will the “new” concept be.

      In an era of ridiculous, blown out budgets etc, somehow we need to encourage innovation and magic. To a certain degree f-ducts etc do this within the bounds of the fairly tight rules….if the rules were looser but the funding restricted I can see innovation becoming the most valuable commodity rather than hudreds of millions of dollars and man hours in fine tuning and refinement as we see currently….

      For all the moaning of RBR’s “front wing” and mercedes f duct, these are the things that add the spice and intrigue to the sport we love…

      Does anyone know how RBR wing worked even now?

      Magic!

    2. kidVermin says:

      DuDe I’d love an F-Duct on My Car, think about it cruising down the Highway and I ca’t get past a little old Lady who is driving the same spec car as I have, but low and behold i move my knees/hand to bloch a hole in the chassis/cockpit and zoom BE-BYE granny F-Duct Away. Or Or a double decker dffuser, picture this an M3 flys past u and all uhave is a 318i (with a Double Decker Diffuser, maybe even the EBD) I’d nail that M3 in the bends. Maybe even DRS would help me to get past PESKY GrANNY as long as I can get within the 1 second window and then ZOOM. And what about Stepped Noses on your FIAT so that when u T-Bone someone at an intersection you dont cause too much damage by having ur Bonnet inside his Car.

      DUDE all these innovations are very much road relevent we just don’t want to embrace them.

      instead of fettling with your engine just shed drag, save fuel.

  16. franed says:

    Ferrari have a point, it will take 3 years of investigation of teams accounts, purchasing, personnel and outsourcing records to determine if they are keeping to the budget cap.

    The teams are very successful at circumventing the Tech and Sporting regs, so there is no reason to suppose they will be any less devious with financial regs.

  17. Mark Crooks says:

    How about increasing the budget cap for certain teams just as they do for distributing the profits from the TV rights (older teams allowed more) and based on the finishing position of the teams in the constructors championship.

    This would at least allow some flexibility to keep the majority happy.

  18. Sterling Mindenhall says:

    James: Perhaps Sauber is still being loyal to Ferrari. It’s not a stretch to extend her reasoning to Ferrari being able to once again take advantage of Fiorano.

  19. Andy says:

    As a business, why shouldn’t you be able to spend what you want. On the other side is sustainability. I think back to when there was pre-qualifying to see who would be able to enter the qualifying session itself. It isn’t that long ago but teams were in abundance. If you don’t have some form of budget restriction new teams will not enter. Motor manufacures come and go and I doubt Mercedes are in it for the long haul. HRT get alot of criticism, and rightly so, but compare their budget AND performance to that of Red Bull, are they as bad as they are made out to be?
    The teams themselves couldn’t manage the RRA, partly because Red Bull flouted it. Red Bull don’t want the FIA to manage it because they will be caught flouting it again.
    I wonder how much Red Bull spent on their flexible front wings. That alone must have run into millions.
    In the interest of attracting new teams, there has to be some sort of budget restriction. One thing I do detest is teams flying out parts on private jets etc. If you haven’t got it at the circuit, go without.
    Here’s a thought, pro rata the prize money according to your budget. The smaller the budget, the greater the prize money. So if a team with a 50 million budget scores a point, that points earns them ten times more prize money than a team scoring one point with a 500 million budget.
    It might make some teams become a bit more realistic.

  20. Adil Desai says:

    Here’s what I’d like to see:

    1. Remove the restrictions from design. Outside of engine size, four wheels and weight, allow the teams to design whatever they can think of that will win the championship. This way, we can go back to the days of the best design will win.

    2. Introduce a tiered spending cap. The big four teams have a lower spending threshold than the smaller teams. That way, for example, if a small team can get a hold of $45 million, they can spend it all if they want to. If they win the championship, then the earnings of FOM money might place them in a tier where they can’t spend as much.

    3. Engine suppliers have a frozen formula for 3 years. This way they can recoup their investment whilst also planning future improvements that can introduce green technology into the sport.

    These are some random thoughts while I’m sitting at my desk avoiding work. I think F1 needs to shake things up and I like the idea of a new concept being able to be created outside of the current regulations. Would Colin Chapman been able to create the Lotus 71 or Patrick Head the FW7 under today’s restrictive climate?

    1. anonymous says:

      1. Get G-forces and cornering speeds that are unmanageable by drivers. You want them to faint in the middle of a fast corner? Also: Where do you put the crash tests and mount points and other security features, such as crane and camera mounts into the equation? How do you think that would limit the costs for aerodynamics? And what makes you sure that the cars don’t snap in the corner, when the aero gets out of balance on bumps, like the wing cars occasionally, especially when the skirts got stuck in a raised position.

      2. How do you think you could enforce that facing strategies like outsourcing?

      3. The current formula is already frozen and will be for more than three years until 2014´, the return of the turbo era.

  21. markp says:

    Formula 1 will also have a new logo. A red background with a hammer and sickle on it. Money doesn’t always buy success, look at Toyota. Ferrari and Mclaren do spend alot but they know how to use it and have built up to this position throgh decades of dedication to the sport. HRT etc should stick at it for 20 to 30 years and they can prove through progression they are worthy of increased investment then one day they may have a big budget and know how to use it.

    1. zombie says:

      LOL!

  22. Tim says:

    I’m not really in favour of a budget cap, but would rather see a discentive for spending money.
    Pick a figure. Let’s say $200m. For every $1m over that figure teams spend, the cars minimum weight requirement will increase by 1kg.

    That will quickly encourage them to spend less.

    1. anonymous says:

      How do you think you could evaluate the spending and whether it’s a supplier’s/technical partner’s/sponsor’ or a team’s dollar spent on development?
      As I team I would give Vodafone some confidential data and they would pay Eibach or Monroe for a bit of development and donate the result to me as part of their sponsoring. And being asked by the FIA controllers, I would say: “I don’t know how much they spend on it, they (Vodafone) pay it and have it developped by someone I don’t know, we’re just being sponsored.” Problem solved.

  23. j says:

    Not sure why some people think that a budget cap is impossible to police. If it seems so difficult then why not use a method that has been proven to work elsewhere. Impose a salary cap for drivers/mechanics/factory and management. All of the major North American sports have salary caps that work well and are easily monitored. If you cheat you go to jail for tax evasion. Teams with good infrastructure will be able to do more with less people.

    Then give the teams a maximum amount of fuel for the season, all races and testing. Teams with more fuel efficient engines and better ERS will be able to do more testing than the others. A team that has a serious technical issue that knocks them out of a race will have fuel left over to test and resolve their problems.

    And give them a maximum amount of kW of energy to run their wind tunnels. Aerodynamicists will learn to better utilize small scale wind tunnel testing. A 50% scale wind tunnel test will take slower wind speeds than a 60% or full scale test. Or some teams might choose to do limited full scale tests. It will be up to the teams to decide.

    Of course some teams will be able to waste more money on materials or high tech gizmos but without extra people they won’t gain much. Teams could also run lean and farm out the building of more wings and use 3rd parties for testing but in that case there would be no competitive advantage as all the teams would have access to the same 3rd party firms.

    Maybe not perfect but if there was a will from all the teams I’m sure that someone would be able to develop a plan that worked. Or at the very least would ensure that “cheating” would be in the direction of testing while using less fuel or running wind tunnels with less energy consumption or supporting younger/cheaper drivers in order to put more money into designers or hiring younger designers for less money to be able to afford a championship winning driver.

  24. Kay says:

    As far as I remember, Max Mosley didn’t initiate the budget cap. Ex-BMW F1 boss Mario Thtehthesian (can’t spell his name) initiated it and Max just took it as his own work.

    Worst of all is Mario initiated the thing and closed down the F1 operation and left everyone all arguing about it.

    So not only Mario stupidly made his team lose out in 2009 on not focusing on Robert for title chase, he also made stupid ideas that didn’t work for everyone.

    1. DC says:

      As far as I am aware, Mario didn’t close BMW’s F1 operation, he was dead against closing it – BMW’s board, possibly top management made the decision.

      1. Kay says:

        Yes and if he had listened to Kubica and chased for 2008 title rather than leave it for the following year which ultimately failed then BMW wouldn’t have considered in pulling out.

        So in the end it was Mario’s utter stupidity and bad management.

  25. Chris_NZ says:

    A resource restriction agreement with a budget cap seems hard to police. People could get special deals where you get supplied some for a special price, in exchange for ads on the car, or even free where as other could pay for it.

    I like how they have restricted test days, engine and gear box usage, wind tunnel hours as that hasn’t affected the racing. More measures like this would eventually reduce costs in staff and consumable parts. Its not directly addressing costs but a way of getting around it, where many parties could agree.

    Some people would argue the case differently, however this is just my opinion on the matter.

  26. Roland says:

    James – I always read the pieces on cost containment/reduction etc with interest as it is a worldwide motorsport issue albeit with varying numbers of zeros attached…..

    It’s hard to enforce spending caps away from the environment that is not controlled, i.e. away from the race track. However, at the track there is surely big scope in F1 for reductions in spending without going near the cars themselves. We have had a series of caps of a similar nature in V8 Supercars for a number of years and they’ve worked for us. For instance:

    1. with the calendar now biased to non-European events there is less justification than ever for the huge team hospitality units. They only get used for half or less of the races yet take multiple trucks and personnel to transport, erect and run. Teams could instead collectively contruct an upmarket marquee arrangement that is the same for everyone at all the venues – rather like the one used by all at the Australian GP. Saves money and also stops the pointless pissing competition.
    2. limit teams to two trucks per team at races with a single truck per engine supplier in addition. That would limit the truck costs, running costs and also the amount of “stuff” that teams could bring to each race.
    3. impose a strict (low) ceiling on all freight allowed at overseas events whether shipped by air or sea. Ban the transport of parts as “hand baggage” except in exceptional conditions. Very good V8 Supercar rule by the way when we fly to NZ.
    4. impose much tougher rules on the number of personnel allowed at races. When V8 Supercars introduced this we all said we couldn’t live with it….but we all adapted very quickly and now we “save ourselves from ourselves” by having to work within the limits.
    5. ban external communications outside the race track during actual on track activities including the races in order to stop teams running strategies etc from afar.

    I’m sure there are other peripheral things that could be limited that don’t in any real way affect the experience for tv viewers and spectators.

    1. James Allen says:

      Thanks very much for your contribution, Roland. Good to see you here.

      1. Craig in Manila says:

        Agreed.
        I think F1 would be very wise to seek input from people with the experience/background of Roland (assuming that he is who I think he is) as many individual motor racing formulae will have cost-reduction methods already in-place that could easily be taken-up by F1 with (I would think) minimal kickback from Teams.
        Simply saying “Thou shalt not spend more than X-million per annum” aint gonna work !

    2. anonymous says:

      The money that the teams saved there would be put into delevopment I guess.

      Let’s assume a budget cap won’t work anyway, why not change the angle of attack on the problem?

      Would there be a way to make small teams on a rather small budget highly competitive, so spending half a billion bucks on development won’t buy you an advantage big enough to make sense?

      Here’s a glamorous idea: Place weight into each driver’s car according to the driver’s points or championship position and give him the weight in gold at the end of the season.
      100 kg of Gold are worth about 4 million Dollars, which is a reasonable price money for a Formula 1 champion.

  27. Bob_ZA says:

    Slowly the focus is moving back to Max Mosley’s original proposition. He wanted a budget cap, enforced by ring-fencing the team’s accounts and monitoring cash flow. Simple.

    No need to measure wind-tunnel hours or whatever. It would probably mean that a lot of complex regulations would disappear. Indeed more leeway could be allowed in some areas because the budget cap would naturally limit at team’s scope and they would have to decide what avenues of development to pursue.

    Max was quite confident that the cap could be enforced by FIA because of what auditors had been able to uncover at McLaren in 2007 when it was necessary to establish the provenance of various developments on the 2007 and 2008 cars.

  28. Tony says:

    You could cut F1 costs Easily, a standard aero pack front wing , rear wing and underbody. No stick on bits like we have now, limit the amount of stuff that can be taken onto the grid to the amount one man can carry. Abolish telemetry or at least the stuff that goes back to base in real time. Give each team a much smaller amount of space in the paddock and limit the amount of vehicles in use.
    If teams want in season testing then organise a race for third drivers at the end of testing and let the public in, you then get subsidised testing.
    None of the above would affect the spectacle much and costs would be reduced.

  29. Mon Pen says:

    As someone who spends half his professional life dealing with lawyers I should point out that they are great on ideas but rubbish on numbers. How the budget cap will be audited and enforced is mind boggling. There will be so many little backhanders, favours and accounting tricks that the sport will turn into a competition between accountants.

    ps Tch tch Mr Allen, spellcheck victim! I think you will find that you peddle an idea, you don’t pedal it.

    1. Rich C says:

      Yes, we call that “Hollywood Accounting” and it is an art in itself.

    2. JohnBt says:

      Mon Pen, BINGO!!!

      “Lawyers In Love” comes to mind.

  30. Dunky says:

    Interesting comment about Sauber being politically ‘very close’ to Ferrari after what happened on the track last time out.

    Was all a bit suspect if you ask me.

  31. anonymous says:

    A rule that cannot be enforced is a tiger without teeth.
    Even if the FIA was monitoring each team’s accounts, the teams would then outsource work and costs to their “technical partners” and Sponsors, who would pay less to nothing for the stickers on their car, but support the teams with development effort from their side. And you can’t really control the acconts and amount of research that these “suppliers” do. McLaren would then get their Aerodynamics shaped by “Vodafone Aero Parts inc.” for pocket money and a Vodafone-sticker, Ferrari would have a ‘Marlboro-Performance-Suspension Systems’-Chassis with Santander-Winglabs-Aerodynamics. You get the picture. Sauber would probably get Telmex-Engines (built by Ferrari) for virtually no money.
    I’ve seen things like that for things like tax evasion and alike, where companies spun off several small companies (sometimes even staying on the same property) to get benefits for small companies rather than having to suffer the duties of larger companies. A budget cap is a nice idea, but slightly naive.

  32. CM says:

    I would like to see a budget cap introduced gradually over 5 years. So freeze teams budgets as of 2012. Then reduce this by a percentage each year, until the maximum budget is €100m

    That won’t effect anyone other than the top teams, it would make for better racing though.

    The rules would also need to be relaxed too. i.e do what you like as long as you don’t come over budget.

    The truth is though a buget cap can’t work.

    How could you stop Fiat selling selling engines to Ferrari for €1 while customers have to pay €5m?

  33. ChrisG says:

    If F1 was structured something like Indycar where each team is independent and each pays for an engine deal etc from a third party (rather than a competitor), then I could see a budget cap being workable, but I dont see how it can work when some teams design/develop/make their own parts such as engines and gearboxes, whilst others buy from those competitors.

    Mercedes, Mclaren and Ferrari etc supply customer engines/gearboxes partly because it helps them spread the cost of development so they’re partially financing the development by selling those parts and services to the third party. Assuming money they earn from a sale of parts can’t be added to the capped budget, if they can’t offset their costs in this way they’re either going to stop selling customer parts or charge the full development cost to the customer team so that both the works team and the customer team have to allocate the same chunk of budget to the part, either through development cost or by purchasing off the shelf.

    The only way round this that I can see is if Ferrari / Mercedes / Mclaren etc break off their powertrain development arms into seperate companies that operate outside the budget cap. These become suppliers to F1 and all teams, including the works teams, become customers of the power train companies buying the parts “off the shelf”, but are they really going to want to do that?

  34. Charalampos says:

    A budget cap does not make sense for those who invest more money and the why is very clear. If all the teams spend the same money then when new rules come everyone will be starting exactly from the same point. The very good f1 engineers are more than enough for many teams which would mean that Ferrari and the rest would not be able to just have a better car anymore as they would not have better people from the midfield.

    A more competitive f1 means less money for the top teams. So I do find it strange that teams like Maclaren or Ferrari agree for a budget cap and makes me wonder which ways they have found to protect their competitiveness.

  35. JohnBt says:

    Budget Cap = Less development and upgrades = Slower cars

    I fear F1 becoming a spec car, but then again the true colours of driver talent will be exposed. Look at what’s happening to Vettel. Maybe it’s better, I’m not sure. It’s still good at the moment so I will be following F1 until it tells me not to.

  36. Quillan Rogers says:

    Just quickly James, what is Mclaren’s stance in this? They have been very quiet so far, I did see that last race they were one of the teams that had agreed. Other than that though, they seem pretty quiet.

    1. James Allen says:

      Whitmarsh attended the RAC Club lunch last week, showing solidarity with the Bahrainis there. Apart from that no word, as you say

      1. Quillan Rogers says:

        Thanks James, they are usually quiet with these sort of things. If memory serves me right they were also very quiet when FOTA was going head to head with Max Mosely in 2009 too.

  37. Dizzy says:

    I always felt the budget cap was an intresting proposal although felt the figure Max Moseley suggested ($40m) was a bit too low.

    I felt it was intresting because rather than simply having the richest teams able to spend the most to gain performance, You would have everyone have the same budget & you would then see the cleverest design team come out on top rather than the richest.

    Go back a few years & remember that Brawn GP’s double diffuser concept was proposed & designed by someone at Super Aguri A team that woudn’t have had the budget to really develop that idea even had they survived into 2009.

    There are people at the small teams with some very innovative ideas who simply don’t have the budget to really look into & develop them. Budget-cap of some sort would start everyone out equally & those with the best ideas would come out on top or at least have a better chance of moving forward rather than slipping back.

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