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Gascoyne calls for budget cap as FIA promises action on costs
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Mike Gascoyne; Caterham F1 image
Posted By: James Allen  |  15 Jun 2012   |  11:52 am GMT  |  108 comments

Veteran F1 engineer Mike Gascoyne has said that the FIA needs to impose a budget cap on F1 “for the good of the sport”.

As the pressure intensifies for F1 to act on costs by the end of this month, so that a structure can be in place for the 2013 season, the last few days have seen interventions from Ferrari president Luca di Montezemolo, calling for dramatic cost reductions and FIA president Jean Todt promising FIA action to do that.

Speaking at the Cheltenham Science Festival yesterday evening in a talk on “Innovation in F1”, Gascoyne, the Caterham Chief technical officer said that the Resource Restriction Agreement (RRA) has been proven to be a failure as the top teams have found ways to carry on spending pre-credit crunch levels of budget and that a budget cap is the only sustainable answer. He believes that there is plenty of scope for F1 to maintain its position as a hotbed of innovation, while containing the costs.

“I want freedom and innovation and I think we need a budget cap but we should leave people free to spend on whatever you like within that cap,” he said. “So if you want to spend it all in the wind tunnel or on some trick new innovation then you can do that, but there is a limit and there has to be a limit.

“It’s a fine balancing act because you want innovation; you want F1 to be the pinnacle, it has to be the quickest single-seater motor racing formula in the world. It has to be the best, but it has to be sustainable.”

“In today’s economy you can’t be spending hundreds of millions of euros a year to do 20 races and you don’t need to,” he continued. “Small teams like Caterham are proof of that. We’re two and a half years into our F1 career and we are now qualifying 1.5 secs to 2 secs off pole.”

We’ve been here before; Max Mosley tried to force through a budget cap in the summer of 2009, but Ferrari led resistance to it and it led to the FOTA teams announcing a breakaway from F1 in July 2009.

The current situation finds Red Bull out on a limb, seemingly wanting to maintain its winning position by blocking budget restrictions. Ferrari has said it wants the FIA to be involved in a workable cost reduction structure. It is not saying at this stage what its position would be on a budget cap, were this idea to gain momentum.

If there were to be a budget cap, what should be the level? And to give the top teams a chance to get down to it, would there have to be a glide path, giving them a few years to get from where they are now down to a budget cap level?

“If you want to introduce a budget cap it’s got to be a ramped thing because you have teams out there spending €200m to €300m a year and you’ve got others doing it on €70m,” says Gascoyne. “If you just say ‘everyone has to work off €80m,’ that’s not going to work.

“You’ve always got the problem of inherent selfishness from the teams; they (the top team) have got the money and they want to spend it. Ultimately you are going to have to impose it and get it through because you are never going to get agreement.

“Interestingly you have now got Montezemolo at Ferrari saying ‘we need to seriously reduce costs’; you could be cynical and say, ‘He’s not winning’ and then you look at Red Bull, who have been winning and they don’t want to change anything. That’s always the way in F1, you’ll never get agreement. So to bring something like that in, I believe the FIA is going to have to impose it for the good of the sport.”

Most of the teams feel that the only way forward is for the FIA to regulate costs and FIA president Jean Todt told Autosport yesterday that the FIA is determined to play its part, particularly with reference to the new 2014 hybrid engines. The private teams worry about the high initial costs of introducing these engines, to cover development costs by manufacturers and some are proposing delaying or putting off these engines altogether. But the FIA, Renault and Mercedes are adamant that the sport needs to move with the times with more efficient hybrid engines and reducing the number of engines per driver to four per season will keep the costs down,

“It is true that the [2014] package will be more expensive, but it is also true that the FIA has been in consultation with the engine suppliers in order to reduce the cost increase,” he said.

“For example we have already agreed to a reduction in the number of power units. From eight per driver per season in 2012, we will reduce this to five per driver in 2014 and to four per driver per season in 2015.”

Todt called a meeting with F1 teams on the Monday after the Monaco GP to address the general costs situation in the sport, and has said that efforts to finalise the implementation of a Resource Restriction Agreement are ongoing behind closed doors.

“We are discussing this as we have been asked by 10 of our 12 teams to control costs.”

The two outliers are believed to be Red Bull and its sister team Toro Rosso.

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108 Comments
  1. Sebee says:

    It’s the only way to be fair.

    But what does it matter when certain teams always get more from the purse just because their cars are red?

    1. Wade Parmino says:

      Whether you like it or not, F1 would not be F1 without Ferrari. Ferrari is the team responsible for bringing more fans to F1 than any other. They have a strong bargaining position and they milk it for all it’s worth. Bernie would give everyone NOTHING if he could get away with it.

      1. Sebee says:

        Yes.

        But if cap is 100m, and Ferrari already get 50m for performance an 30m for being red plus their other bonuses, its a bit different than a team like Caterham needing to find that 100m, isn’t it. And so comes the element of fairness as money is everything in F1. Not necessarily championships but usually top 3 if you spend.

        For the record, I never cared how much they spend because I don’t ever remember it coming from my wallet. But if they will cap, bottom line is the buckets of free cash ensure constant minimum level of Ferrari success. It’s a purely business decision to give it to them, not a sporting one. But then again F1 is really entertainment and business, not sport.

      2. KenC says:

        Yes, Ferrari is the most popular team. HOWEVER, they already monetize that popularity thru sponsors and their fans. Why should they get a built-in advantage by getting more from the Concorde than the other teams for the same results? Is there a similar monetary arrangement in any other sport?

    2. zombie says:

      Red attracts attention, just the way you pull aside for fire trucks to go through! Jokes apart, Ferrari’s long history and racing culture brings money to F1. Its not that Bernie is an idiot to give away money to a bunch of Italians, he knows which side of his bread is buttered.

    3. Andy says:

      But it will be policing the budget cap that could be almost impossible. What would stop a large company like Mercedes or Ferrari using a research department separate from the actual team to do major research on engine components. The team could then just buy the finished product at a cheap price. The actual team wouldn’t be spending the money, they would just be the customer in the same way that Sauber is to Ferrari or Red Bull to Renault.

      The only way to police would be if the entire budget of the company was analysed, but that’s never going to happen. A budget cap would be easier to swallow than than the RRA, but any easier to police or sanction, not sure.

      1. Sebee says:

        You’re right. I’m sure they will fully expect those types of violations. So to not waste time auditing they will simply set the budget number accordingly, keeping in mind say a 20% violation margin. What do you think?

        Remember there are issues here. Example: customer team buys rear end. They have no possible cost overruns associated with development of that rear end. While the team who sells it does. Same for engines and other shared components.

  2. Alistair Rumbold says:

    Would love it if you could get the video up on your site, as the stream broke about 15 mins into your talk. Even better if it was downloadable for slow connections. I got the last 20 mins.

    1. James Allen says:

      Will have it uploaded soon, waiting for Cheltenham Festival to send it to me. Thanks

      1. Alistair Rumbold says:

        Thank you

  3. James Enocre says:

    “In today’s economy you can’t be spending hundreds of millions of euros a year to do 20 races ”

    In any economy you can spend as much as sponsors pay to have their name on the car and sponsors of races contribute to prize funds, and TV revenue pays into the pot. No more. No less.

    There are plenty of places happy to build a circuit and hold a race, and no problem getting TV to bid for the rights, so I doubt that part of the pot is getting smaller.

    Is the FIA really going to give sponsors a maximum they can pay to have their name on the side of a car ?

    1. means says:

      No. Presumably the idea is that additional sponsorship income will go towards making some of these teams profitable. Restrict what they spend, not what they earn.

      1. Doug says:

        I think additional sponsers & the ammount they are willing to pay will diminish as F1 goes away from the FTA model. The big teams will always be the big teams & the smaller teams will potentialy always struggle with regards to their finance.

      2. Dean V says:

        I beg to differ to some extent. Red Bull weren’t big until they won a WDC. And Williams are no longer big…

    2. Andrew Carter says:

      Given that Philip Morris, Santandare, Red Bull Vodaphone and PDVSA are the only big time spenders on the sponsorship front, I dont think thats going to be a problem.

  4. IJW says:

    Wow, 4 engines per driver per season. Those engines had better be ultra-reliable from the get go, or some drivers are going to be sitting out the last few races because they have no engines left. Unless they can get extra engines but have to collect a 5 or 10 grid place penalty.
    Interesting times.

    1. Dom Jones says:

      I was justing thinking about that problem. What if a driver uses up his four engines by race 11. Grid penalties for the rest of the season aren’t going to be a satisfactory option. Its no use imposing a rule where the penalties for breaking it end up being wholly disproportionate.

      1. Brett says:

        That’s not how it works now though. If you have to use a 9th engine, you get a grid penalty the first time you use it, but no subsequent penalties for the 9th engine. If you need a 10th, you get another penalty.

        Still 4 per season, wow they used to have engines just for qualifying…

      2. James Clayton says:

        I just don’t get the sense of further restrictions on the engine quantity at the same time as introducing a new engine formula. New designs are surely likely to be less reliable. The current restriction works because these engines have had their development frozen, aside from reliability issues, for about a billion years

      3. CTP says:

        no, that’s not the way it works now, so it wouldn’t work that way with fewer engines either. you get a five place penalty only the first race you need a new engine, not every race thereafter. so, in your example, the driver would take a 5-place penalty in race 12, and let’s say he needed one more engine for the season, a further 5-place penalty in race 17.

      4. olderguysrule says:

        CTP, the penalty for a 9th engine and every engine after is 10 places. As per the sporting regs. the penalty for the extra transmission is 5 places
        http://www.formula1.com/inside_f1/rules_and_regulations/sporting_regulations/8689/

    2. Daniel MA says:

      That’s exactly what I thought, but obviously no one knows yet if the engines will last more than one race, this are much more complex than what we have now and I wouldn’t be surprised if they ease the penalties for engine changes if everyone starts to have failures.

      1. ben S says:

        With reliability as it is these days, I don’t think 4 engines per year is likely to be a problem. After all, it’s quite unusual for a retirement in the past few seasons due to an engine itself giving up. Been some time since the tell tale plume of smoke has engulfed our screens. The bigger factor is probably keeping an engine’s performance over increased mileage. I don’t know the numbers I’m no engineer or expert, but I remember a piece either on the BBC coverage last year perhaps or maybe here on JAF1 talking about the loss of power and engine management eg planning around high power circuits like Monza and making sure the teams aren’t using a 3-race old engine or the such like.

        I would be more fearful about less engines being available leading to engine management from drivers, akin to the fuel saving or tyre management that seems to have stopped out-and-out racing recently as drivers lap to a time delta. Imagine the engineers radio messages…. ‘slow down, we need to beat Driver X in next weeks race’!

        Formula 1. Should be the pinnacle of racing. But there’s a risk it could be the pinnacle of time trials and reliability IMO.

      2. James Clayton says:

        See comments above. I highly doubt that the new engines will be as reliable from the get go as today’s ones.

    3. hero_was_senna says:

      It wasn’t long ago that cars were worked on into the early hours of every morning.
      Parc Ferme was introduced and many teams complained of how restrictive these conditions would be.

      Around this time, some teams changed engines between free practice and qualifying sessions, in fact in the turbo days you had the race engine producing 900bhp, whereas the qualifying engines powered the missiles with between 1200 and 1500 bhp. These engines were as expendable as qualifying tyres.

      Rules change all the time, and the days of Honda, BMW and Ferrari spending whatever was needed are long gone.
      But you know what, they have all adapted, and reliability is staggering these days. How often do you see a top team breaking down?
      It was only 10 or so years ago that everyone was astonished by Ferrari’s reliability when Schumacher dominated.

      They currently run with gearboxes that last 5 races, ie 4 boxes a year. The biggest difference is the gearbox internals are now much thicker to allow greater reliability, whereas the Ferrari F2002 had gear ratios that reportedly were merely 5mm thick.

      What the Fia should be doing is re-writing rules that allow no grey areas of development.
      The banning of EBD has brought about many theories on how to best use the exhaust gases to replicate EBD, yet if the FIA had merely said the exhaust should exit behind the diffuser, there would be no confusion.

      I don’t like the idea of removing innovation from the teams, but I really don’t see the advantage of allowing teams to be chasing marginal advantages because of a hole in the floor, or a slot. Let’s be honest, no-one really cares.

    4. Andrew Carter says:

      Look at IndyCar this year. It’s great that they’ve opened up the engine competition now, but at Long Beach we had 14 drivers with a 10place grid penalty for engine changes, and theres 6 this weekend at Milwauke (sp?) with penalties as well. It’s definitely hurting the series a bit I think, and the same could happen to F1 in 2014.

    5. Isn’t there the same reaction every time F1 as to make do with less engines?
      If anything, it has made the series more reliable.

      Four engines per season sounds about right for now, until this number reduces again.

      I also wouldn’t be against a reintroduction of the 2005 tyre rule now that we’ve got a single supplier. This would also mean lifting the ban on refueling to create pit stops.

      1. Martin says:

        Hi Damien,

        An interesting idea with the tyres. The FIA likes containing lap times. What we have now is a cap on times in the race through degradation and the fuel effect. But in qualifying we have a much faster car and drivers pushing to their limits. With one set of tyres there’s less likelihood of a situation where someone makes a chancey move while the lead car warms the tyres up. A similar sort of thing to Rosberg in Bahrain. If the lead car sticks to the line it is fine, but any “robust defence” is where wheels can interlock.

        A thing with the engines to is that small techical analyses I’ve read suggest the maximum fuel pressure for the direct injection systems will limit maximum rpm to 10,500. A sixty percent cut in rpm would help reliability quite a bit. The fuel pump pressures are a new area of technology, and any failure downstream of the pump could be quite messy…

        Cheers,

        Martin

  5. B Grylls says:

    Most of the new FIA rules implemented over the last years (e.g. banning of exhaust blown diffusers) have the intention to reduce the difference in competitiveness between teams. A budget cap would obviously have the same, but much stronger end effect. It would also be good for the sport, even if the “prestige” might suffer a little bit…

    BG

    1. Brett says:

      Also every time they are not 100% solid on the rules (ie, Blown Diffusers, Double DRS) they cost the sport huge amounts of money. Blown Diffusers were declared legal, so everyone had to spend countless amounts of money developing it, only for it to be banned the next season.

      If something is legal, make it legal. Don’t make it legal for one season with a known ban coming the next season. They do this ALL the time.

  6. sagi58 says:

    1.Although I understand the importance of being fiscally­ responsible, during this financial crisis, I­ wouldn’t take the same approach Todt and the FIA­ seem to have. First of all, F1 is not a non-profit­ organization/charity, it’s a business, as such it­ needs strong teams who can afford to run cars that are­ at a high level of performance. It seems that all the­ cost saving measures that have been introduced and are­ being currently discussed are little more than attempts­ at creating a homogenous group of teams to race. ­ Rather than hold back the development of new­ technology, rather than ruling that all teams must not­ stop for fuel, rather than imposing one tire on all­ teams, etc.

    the FIA should be looking at how many teams­ are on the grid that can’t really afford to be­ there, without these “cost-saving” measures. ­ Yes, that sounds callous; but, look at the start up­ and operating costs for an F1 team! Consider not only­ the “visible” expenses such as drivers, pit­ crew, cars, etc. but also those we don’t see on the­ track on Sundays such as the car assemblers, designers,­ etc. Each team could probably run a small country with­ the budget required to be competitive in F1! ­ Granted, this may sound like an elitist attitude; but,­ in the end, isn’t that what F1 is? An elite sport?­ Isn’t it supposed to be the “creme de la­ creme” of the motorsport world?

    Can F1 afford­ to become a sport where anyone of us can get together­ with a group of friends, throw our money into a pot and­ wait for the FIA to help us by making all the others­ teams drop their standards and expectations? With all­ these teams that need to be protected by the big bad­ teams with money, is it any wonder that many fans­ can’t afford to go to a race? We are the ones­ carrying the brunt of the burden! Maybe the answer­ is to allow those financially struggling teams to go on­ hiatus for 2-3 years to determine if F1 is for them? This “hiatus”­ should be allowed only ONCE to avoid a revolving door­ to the race track!! Do I have all the answers? NO, I­ do NOT! But, then again, it doesn’t seem that the­ FIA does either! Hopefully, all the teams will have an­ equitable say and that they are allowed to be honest,­ rather than politically correct in voicing their­ concerns. I love F1 racing; but, with all the­ restrictions being imposed on the sport, of late, I now­ believe that if the any team can’t play with the­ big boys, they should find another game!!

    1. James Allen says:

      [Please put paragraph breaks into your posts, they are unreadable otherwise. We have inserted them for you this time. Thanks - Mod]

      1. sagi58 says:

        Thanks for your time and effort!! =’-)

    2. Onko says:

      Well said.a quote by the late US president
      Franklin D Roosevelt, if you can’t stand the
      heat in the kitchen get out.

    3. Mark says:

      “with all the­ restrictions being imposed on the sport, of late”…

      Where have you been for the past 40 years or so? Remember the tall shaky wings attached to the suspension in the late 60′s? Gone. How about ground effects? Gone. Or turbo engines? Gone. Or what about alcohol fuel? Gone. Active suspension and traction control? Gone. The “fan car”…..?

      I think you get the picture. It should be obvious that restrictions in F1 are nothing new, and are in fact part and parcel of the “Formula”.

      1. sagi58 says:

        Though I haven’t been watching F1 as long as you obviously have, I was referring specifically the the changes in recent years, that “seem” to target expenditures, namely:
        -> no more in-season testing;
        -> no more fuelling during races, etc.

        And, to be quite honest, I don’t believe “all” change is negative; but, if we want an F1 that is the leader of the motorsport world, then we need be careful what we do change.

      2. Mark says:

        I’ve been watching F1 for 30 years, but I do know some of its history before that. While many recent changes are openly stated as targeting expenditures, the real goal is to maximize profit. In that sense nothing has really changed.

        While many changes made to slow the cars down in the past were implemented in the name of safety, the bottom line has always been an economical one. It was always far cheaper to create rules to slow the cars down a bit than it was to engineer the cars to be able to withstand every kind of impact with ever increasing speeds (impossible, especially given the materials available in some eras), or to totally rebuild every F1 circuit to give the cars enough runoff space in the corners.

        This was especially apparent in the “ground effects” era when cars occasionally hit bumps big enough to cause a sudden and massive loss of downforce, making them virtually uncontrollable missiles flying off the track.

        I do understand where you are coming from when it comes to F1 needing to preserve its elite status. This is likely the main reason why the wings remain despite the way they make passing much more difficult. Without wings F1 would be an open wheel touring car championship. So F1 has always been walking a fine line between performance and economic viability.

      3. sagi58 says:

        Thanks for your insight (and patience), Mark!

        In my ignorance, I did realize that F1 is, first and foremost, a business, as are all professional sports. Unfortunately for fans,

        Which brings us back, full circle, to my suggestion that if teams can’t be viable, they might consider:
        ->taking a hiatus until they can find the backing they need;
        ->joining forces with another team; or
        ->finding another motorsport series to “play” in!

    4. Andrew Carter says:

      I take it you like watching 6 cars going around by themselves then, because that seems to be what your after.

      There’s been a lot of talk of a number of teams in financial straights this year and you have to wonder, if 4 teams have to be put up for sale within a short space of time, how many of them will actually find buyers to keep going or invest even more.

      1. sagi58 says:

        I’m not sure what I wrote that has you assuming that I’d be happy with “watching 6 cars going around by themselves”! You see, I don’t believe it’s the “all or nothing” situation.

        Rather than sell off teams, owners should have the option of pooling their resources to create a new one between them. I would imagine the FIA would consider that type of eventuality.

        Sure, egos will be bruised; but, if it’s important enough, then the word compromise needs to lead the way.

    5. Question:

      Was F1 less of a sport when the McLaren and Williams won championships with half the budget Caterham currently has?

      1. sagi58 says:

        Damien, I can’t answer that, because I haven’t been watching that long! However, I would suggest to you that, “relatively” speaking, the percentage spent today vs monies received in sponsorship, merchandise and ticket sales, etc. as compared to those same percentages during the days you’re referring to is incomparable. Does that increase in percentages make F1 any more of a business?

      2. I was being rhetorical.

        Your reasoning makes perfect sense assuming only wise heads are allowed to spend what they earn.

        The issue is that some/most teams spend more than they earn. I know that through an F1 supplier that was very close to not bringing their essential equipment for a team in Abu Dhabi and Brazil unless they were paid. I bet this is not an isolated case.

        The FIA need to avoid repeats of the Super Aguris, Midlands and Team USAs of this world.

        To answer one of your questions, I can think of at least four teams that cannot afford to be in F1. Please also bear in mind the 13th slot is still up for grab.

        The risk of only having less than a handful of teams on the grid is very real and the sport need to protect its competitors, even against their own will. There’s so much ego involved it affects rational business decision making.

      3. sagi58 says:

        Again, F1 is a “high-risk” business and, just as you’ll find in any business, there will always be those who choose the conservative road to take calculated risks and those all-or-nothing characters who will gamble everything, seemingly on a whim.

        I would suggest that the only way to avoid bankrupt teams would be to have a change in philosophy, where Mr. Ecclestone, et al are concerned. Basically, that would mean that the “bottom line” can’t be the ultimate piece to determine if and when expansion is most suitable. It might also mean a re-think, for the time being, on some venues where the fan base doesn’t make a race financially viable without huge government subsidies/interference.

        p.s. rhetorical or not, I couldn’t resist answering the question! =;-)

      4. It might be useful to dig a little deeper in the economics of the sport, who gets what and how.

        It’s fascinating but it would take me forever to go through it.
        James’s website is a very place to start though. :)

      5. sagi58 says:

        To be honest, Damien, I have tried to dig a little deeper; but, it would seem that those who are most profitting from F1 have such deep pockets that their “true” income/profit is not open for public viewing.

        Not difficult to assume that means that plebeians aren’t privy to those facts and figures, let alone that we’d be able to join the party!

  7. Merlinghnd says:

    Hi James,

    “Gascoyne says that the Resource Restriction Agreement (RRA) has been proven to be a failure as the top teams have found ways to carry on spending pre-credit crunch levels of budget ”

    Can you give an example of what teams have done or rumoured to have done, names would be interesting but understand if you cannot say who did what.

    1. MISTER says:

      From the articles in the media I understood that Ferrari have accused RedBull of overspending the agreed budged in the RRA. Ferrari then asked the RRA to sanction RedBull, but that seemed to be very hard.

      That led to Ferrari leaving the RRA basicaly saying why should we be part of this RRA if when one of the members breaks the rules, no sanctions are being applied.

      This RRa needs to be looked at and something changed that when and if one of the teams breaks the rules, sanctions can be applied.

      1. hero_was_senna says:

        Look, i’m not advising a conspiracy theory here, I am a massive Ferrari fan, but is their progress this year helped by the fact that they withdrew from the RRA and have adopted RBR’s methods and are out-spending Red Bull?

      2. Kay says:

        Interesting.

        Did the media provide any details on what exactly was overspent by RBR?

    2. Tommi says:

      For me, it’s pretty obvious that the car manufacturer teams (Ferrari, Mercedes, McLaren) can hide their F1 costs in their non-F1 businesses.

      For example, McLaren’s designers can be employed to be working on the road car but in reality they’re doing F1 work. That is cost spent on F1 that no amount of financial checks can detect.

  8. Paul L says:

    So Ferrari is “inherently selfish” wanting to spend more, where does that leave Gascoyne wanting everyone to spend less so his team can have a chance at scoring a point?

    Nonetheless, perhaps a $100 million budget cap could work if technical freedom is allowed.

    1. zombie says:

      Its Ferrari’s money, and they are free to spend how much they want. How does that make them selfish ? And why should Ferrari feel sorry for the poorer team ? Going by that logic, Ferrari should gift me a F12 because i drive an old Honda..

  9. Hendo says:

    One way to reduce costs is to reduce the dependence on aero to improve a car’s performance.
    Take a look at the front wing on any of the cars – all the complicated winglets and fins and vents (not to mention F ducts)- incredible detail, but how much does it all cost?
    If the rules stated one wing, 1200mm wide x 300 deep with no end plates or extras the teams would just make that one part and adjust it a bit at each different circuit. Same goes for the rear wing and I’d ban all barge-boards etc.

    A year or two back Lotus boasted that they designed & made 22 front wings during the season – what a ridiculous waste of money – not to mention why employ a wing-designer who took 22 goes to get it right!

    1. Rich C says:

      ANything that goes 200mph is going to be aero-dependant simply due to the laws of physics. You can not get away from it.

      They should just give them all a budget, an engine displacement, and a box into which the car must fit, let the teams sort it out.

  10. vvipkho says:

    Hybrid engine for future of F1.
    Cut cost good for small team.

  11. UncleZen says:

    I just dont see how any form of budget restriction is policable. Anything like this can be worked around in legitamate and imaginitive ways if you need or want to.

  12. Elie says:

    I agree with Mike Gascoyne. His suggestion to phase down the big teams budget makes good sense. I’ve always believed that limiting spending does not reduce innovation and more often -stimulates it. I’ve experienced this in places I’ve worked for and had to tighten the purse strings.

    If your talking 80 to €100m pa that’s still more than three times any other motor sport category.Surely this somethIng the big teams can work with over the next few years. If not then it will be a competition of 3 to 4 teams winning only whilst poorer teams continue to make up the numbers or disappear. What’s the problem with teams saying to a sponsor ok you’ve been a terrific sponsor for 10 years therefore your logo will cost 5m not € 7m. This in turns keeps the sponsor in the game much longer & possibly sponsor other f1 events.

    The most important thing is that if the Agreements do come into place they are properly audited and penalties applied just as any other breach of technical regulations. If teams can agree to this then the FIA can relax certain techinical rules to allow greater flexibility to promote creativity and innovation knowing that teams are working on tight budgets. I think we would then see more interesting variety of cars and races with an even outcome over an f1 season as the spending would be fair to all and the talent both driver or technical would be more evenly transferred between the teams.

    1. ben S says:

      Certainly respect your point of view, and I understand where you are coming from but there are a couple of issues I have. If the sport was to go the route of no budget capping, limitless spending then eventually no-one will want to come into the sport as a start-up team in the future due to costs and then what if the existing teams pull out/fade away/financially fail? It may seem unlikely at the moment but are Red Bull here for the long-term? Maybe, but I doubt they will still be around in 10-15 years let alone 20, 30 or 40 as Mclaren, Ferrari and Williams as examples have. And then where are we? No teams building and establishing themselves to take over the mantle creating mediocre teams and the sport stops being the ‘pinnacle’.

      Here’s another consideration. Before Mr Ecclestone transformed the sport, the 50′s-60′s were all about the passion. The Garagistas. Lotus and Colin Chapman working out of a garage with a few chaps(Adrian Newey strikes me as the closest to Chapman that we’ve seen for many a year for sheer ingenuity, and Frank Williams with Patrick Head in the 70′s the last of the Lotus/Chapman ilk). I appreciate the landscape has changed, but if it continues to become an elitist undertaking then the future Colin Chapman/Frank williams may never emerge and that would be a shame. We’ll probably never see the likes of the early days again as the business has taken over the passion, until the bubble bursts and the sport comes out of the public limelight for a length of time.

      For me, I’d like to see a budget cap coupled with less restrictions. Reduce the regs to an almost ‘sand-box’ principle within reason. Let the teams see what they can come up with within certain parameters but within a budget and they may come up with all different solutions. New teams can come into the sport as and when the FIA deems appropriate and know that they have the opportunity to be competitive but teams DO need to be profitable or why will they bother?

      Use football as comparison. The sport has got richer and richer, the gap between the top teams and the rest has got wider and wider and over the past years many a debate has been had about the possibility of a European league where the top teams would no longer compete domestically. This would kill the sport if the ‘lesser’ teams couldn’t even dream of competing and to a degree we’re already there on that front and I can envisage a future where this could happen to F1.

      You can milk a cash cow(and by golly has the F1 cow been milked by enough financiers that just don’t care about the long term), but eventually, that Milk will run dry and if you’re not prepared for that, then there is no future.

      1. ben S says:

        The above was intended as a response to 6. Sagi58 @1.14pm, mistakenly placed.

      2. Elie says:

        We essentially agree Ben. Especially your para 2 & 4

      3. sagi58 says:

        ben, I do understand that “limitless” spending in inconscionable; but, that’s NOT what I was getting at! Surely there is something in-between a “free-for-all” spending philosophy and a “don’t spend more than anyone else can afford” mentality!

        Look at it on a very basic business level: If you realize that a friend is doing very well in a new business and there’s a market for that product, you decide to start up on your own. Say your neighbour starts up a similar venture and both are doing poorly because of initial costs, egos aside, would it not be more sensible to join forces, rather than expect the friend to slow down until you catch up?

        I realize that’s a very simplistic example; but, it’s not meant to be condescending!

        As for the changing F1 landscape, I think we’re just going to have to accept that anything that’s going to be successful will attract investors. The Olympics is another example of sports that were about passion but are now about endorsements and sponsorships.

        ‘Tis a sign of the times, my friend!

    2. zombie says:

      If you want to turn F1 into NASCAR then i’ve gotta a better idea, just watch NASCAR. Budget caps reeks of socialism. If companies are wealthy, they’ll spend more on R and D, that’s the way it is. Google spends billions on advertising R & D, some small startup cannot even dream of spending 1/100th of that money on research – thats the way world works.

      I have a better suggestion for F1/FOTA – loosen the restrictions on development and innovative ideas. If Lotus comes up with a cool idea that gives them 1 sec/lap, dont try to get it banned, instead pay Lotus for the copyrights and see if you can implement something similar and go faster.That way nobody gets robbed. And allow bottom 6 teams additional testing days mid and post season to catch up with the big boys.

      1. Elie says:

        Fantastic ! Compare Google to F1. Yep spot on market sector NOT !!. Although I agree on loosening restrictions. But like I said – you don’t need Squillions to do that look at Sauber for eg. Since you’ re banging on about google — look up Elitist – and tell me that’s not exactly what’s wrong with F1

      2. Josh says:

        Small startup companies aren’t obligated to compete directly against Google (etc…) so your example is unfair. I don’t see how a cap sounds like socialism, and if it is, maybe that’s not a bad thing considering the finincial climate.

  13. Keith says:

    James,
    Sorry for the small change of subject matter, but has Mike been paid by Force India after the court case win, or is he still waiting?

  14. Rich C says:

    As I’ve said elsewhere in these pages,

    Its got to be a hard budget cap, with an army of accountants to watch over it all so as to suss out the expected “Hollywood Accounting”.

    There should be a “glide path” and *all teams should be able to *raise their spending up to that level and then just maintain the glide.

    Nothing else will do and its disingenuous to argue otherwise.

  15. Bollo says:

    Is it just me or does Mike look like he should be on the set of “Silence of the Lambs?”

    1. Elie says:

      Lol yes

  16. Atef Girgis says:

    So will tickets be cheaper ?

  17. Kay says:

    Why don’t we just go all the way back to 1990s, use cars from that era.

    Use same tyres from those days, current engines and voila! Still great racing!

    1. Basil says:

      Safety?

  18. Rafael says:

    This may not be a very popular suggestion, but maybe one way of cutting costs is to reduce the number of races. Sure, this may impact F1′s global appeal but it will lessen the team’s operating expenses, such as freight, travel, lodging, hospitality, catering, etc. Maybe we should just have 15 GPs a year? I mean, there are surely some races in the calendar that I wouldn’t miss when removed. One reason that makes NASCAR and IRL so affordable is majority of races are done in America.

    Maybe they should balance the calendar w/ 7 or 8 races in Europe and 7 races abroad? But with Europe (and the US) on the verge of a financial meltdown, they could do it the other way around and increase the ratio of fly-away races instead; 8 fly away and 7 European. Although this is unlikely, since less races equals less cash for Bernie and CVC.

    I am against a budget cap, mainly bec. you cannot tell someone how they should spend THEIR money. But like the ban on in-season testing, the FIA can probably implement greater restrictions and bans so teams with bigger budgets will have less avenues (racing wise) to spend on.

    1. Dean V says:

      Not such a bad idea. There would be too many conflicts of intrest though I think.

    2. Simon D says:

      I agree, a smaller calander reduces everyones costs and gives a bit more prestige to each event however I could never see Bernie and CVC agreeing.

      Im always hoping of a Fantasy F1 calendar:

      1. Melbourne
      2. Suzuka
      3. Singapore
      4. Yas Marina
      5. Monaco
      6. Silverstone
      7. Spa
      8. Monza
      9. Imola
      10. Hockenheim / Nurburgring
      11. Le Mans
      12. Montreal
      13. Austin
      14. Sao Paulo

      That saves 6 races, brings back Imola, job done!

  19. Hendo says:

    The are two ways to achieve this:
    1: very loose rules, as Rich C says above, a dollar amount, a set engine capacity and a box the car has to fit in. The danger is Mr Newey designs something so smart, that wins every race and all the fans get bored and the teams have to copy his idea which wastes all the money they’ve spent on their dud ideas.
    2: very controlled rules – even down to chassis & aero design and a set budget – this way you might even end up with 7 different winners in 7 races!!

  20. Elie says:

    There are many way for the FIA to control spending based on teams agreement. However the FIA might reward teams who achieve budgets by allowing a % increase in budget if they achieve strong points finish and achieve budget. Perhaps even reward teams which achieve patented innovations within set budgets . You would Defintely need to police it by appointing independent auditors.

  21. Rich C says:

    “…you cannot tell someone how they should spend THEIR money”

    Yes, you can. Many sports do it. Besides, you are not telling them *how they should spend it, just the total amount they *can spend.

  22. Qiang says:

    So Red Bulls want to spend whatever money they have to win. Ferrari and Bernie want to drop the new V6 engine to. Mercedes and Renault are with FIA for the new engine. Smaller teams want a budget cap so they can compete with bigger teams, etc.

    Any team with capability of building a fast car with less money will be successful and should be encouraged to do so again. I propose transparent spending for all teams with no limit. For teams achieved 50 points with 50 millions, should get the same money as teams spent 100 millions to get 100 points. That’s dollar for point match. It should also taking into consideration of how many peoples a team employed to achieve points.

    This could be a stupid idea but hey we need innovative idea here, do we?

  23. ArJay says:

    ‘Innovation’ is all about refining an existing idea or product and making it more commercially viable. F1 has demonstrated that it is clearly capable in this regard when it so chooses. What the sport needs is more ‘invention’ – the ability to come up with completely new concepts to challenge the prevailing technology.

    The DeltaWing Nissan running in Le Mans this year might serve as a useful paradigm and starting point. Maybe F1 could establish an experimental category similar to Le Man’s ‘Garage 56′, CDNT class. Funding? Formula One Group might like to re-invest some of its profits in order to ensure the sport remains viable in the long-term. To paraphrase, it’s not going to be sufficient to ‘stick lipstick on a dinosaur’ for too much longer.

    1. Rich C says:

      F1 could never adopt the DeltaWing! Because it is the sibling of the *losing Indycar design competition!

      Everything in F1 is in an ‘experimental’ category already. No point in have a separate class – what would they be doing? Running around getting in the way of the actual racers?

      1. ArJay says:

        ‘Starting point’ does not imply ‘copy’ or ‘adopt’. I specifically referred to ‘invention’ and not ‘innovation’. However, the concept of a vehicle which has around half the power, drag coefficient and fuel consumption of its ‘conventional’ equivalent must be appealing to those concerned with the future of the sport. It would be up to F1 to design from scratch.

        F1 is a constrained formula, it is only ‘experimental’ in an extremely limited sense. Regarding ‘getting in the way’, the DeltaWing’s qualifying time on its first outing was 109% that of the lead Audi. Considering that 85% of the circuit is run at full throttle this is some achievement. I’m sure F1, with all its expertise, could improve on that.

  24. Thomas says:

    On the BBC site Gary Anderson explains why a budget cap would not work and suggests a rule that says the teams have to fix the specifications of their cars for six races at a time, with a couple wild card upgrades allowed during the season.

    The article link is here:
    http://www.bbc.co.uk/sport/0/formula1/18464273

    Red Bull have proved that budget restrictions cannot be mandated, so surely the answer is fixing the spec of the car for a period of time.

    1. James Clayton says:

      That’s a terrible idea.

      The only thing cutting through the monotony of the 2009 season, for example, was watching how Ferrari and (particularly) McLaren caught up through the season.

      If you get a season where a car has a massive advantage, it’s going to be painful to think that there’s no chance of anybody challenging for at least another 6 races!

    2. Rich C says:

      No. What RB alledgedly “proved” was that the resource restrictions in the RRA wouldn’t work and could be circumvented.

      The “6 race” idea is a non-starter. You think “tech inspection” is difficult now? Try to insure that nothing has been changed since the last race!

      As for budget restrictions, you just pick a number and say here it is and here is the glide path you must follow.

  25. Kevin says:

    Massive equity problem here. Salaries…. The squeeze will be on the engineers paychecks. Whatever the cap are you going to spend 90% on R&D and 10% on engineers?
    If there is a cap (and there should btw) then salaries need to be out side it.

  26. Craig D says:

    It’s clearly a difficult situation but I ultimately a budget cap has to be the way forward. I’d rather see competitive edge be primarily due to innovation and human thinking power and ideas, and not money.

    1. Gord says:

      Teams that spend lots of money tend to innovate, hence why they are the fastest…

      1. CraigD says:

        To some extent but then a lot of money is spent on somewhat needless refinement as opposed to coming up with a piece of blue sky thinking technology. Didn’t McLaren spend tens of thousands for a wing update for Hamilton in 2008 just for the final race in Brazil (and ironically his car’s pace wasn’t great for that race)?

        Ultimately a budget cap is too difficult due to the vastly different sizes and business set up of the teams but you can’t have teams able to spend to infinity, the sport wouldn’t cope. Plus the competition would suffer, a bit like when Ferrari dominate through money and extreme testing.

        The way ahead will have to be resource restriction I guess, like we’ve had with the engines, which unfortunately sterilises innovation rather than promote it. Of course, we’ve got these new engines coming at least…

  27. Ian C. says:

    “Veteran F1 engineer Mike Gascoyne has said that the FIA needs to impose a budget cap on F1 “for the good of the sport”.

    What you really mean is that teams like Ferrari, McLaren, Red Bull and Mercedes should be penalized so that Caterham, HRT and the other tailenders can compete. If you want F1 to turn into IndyCar or Nascar where the only thing that matters is “parity” then a budget cap is the way to go. If however you want F1 to continue to be the apex of motorsport a budget cap should be rejected.

    1. tom in adelaide says:

      Well said.

    2. Rich C says:

      They just ran “the apex of motorsport” in a small town in France.

      F1 is merely the apex of insane spending on microscopic tweaks.

      And if you really *liked the US GP at Indy in ’05, you’ll *love F1 going back to unrestricted budgets!

      Why some car will probably shoot by every minute or two at least. You’ll be able to close your eyes and identify it by engine noise alone, since there won’t be more than one in earshot at any given time.

      1. Ian C. says:

        “And if you really *liked the US GP at Indy in ’05, you’ll *love F1 going back to unrestricted budgets!”

        And how exactly does unrestricted budgets to develop and build an F1 car relate to Michelin? Had the FIA not had a stupid rule that required tyres to last a whole race they weren’t have been a problem at Indianapolis.

  28. Dietcliff says:

    Quite honestly, scrap the budget cap, scrap the RRA, scrap the engine limits and unfreeze the specs.

    I want F1 to push the boundaries, I want F1 to be unreliable and exciting and unreliability adds a lot to that. I want engine development to be pushed once again, I want cars not finishing races again, I WANT REAL RACING, both development and on track. F1s gotten too safe, not in regards to driver saftey but in regards to costs and boundaries and its on the verge of getting boring.

    The real answer is to find alternative revenue for these smaller teams, or find ways for more actual manufacturers to make a come back in the sport. Subsidize the smaller teams, give them a bit of cash at the start. If you can afford to give ferrari 50Billion a year you can give the small teams a chunk of change as well.

    1. CraigD says:

      I think that’s wishful thinking in today’s economy. How can the sport to be seen with spend spend spend attitude, when you’ve got half of Europe in dire straits?

      Also, how can you say F1 is getting boring? We still get plenty of technical innovation news at most races (last year’s EBD, Mercedes double DRS, Red Bull’s damn holes for example)! And the racing itself and competitiveness of the Championship has been better than for many a year.

      I want innovation too and not a spec series but you’ve got to be pragmatic. A lot of the development is often needless and unlikely adds to the fan enjoyment. Who really cars about a new suspension wishbone that’s 1% lighter say?

  29. Koby Fan says:

    Budget/resource/salary caps have generally failed or hindered sports which have implemented them. Well resourced teams will always find ways around it.

    Best way is to lower the entry/level playing field technology operating costs – via the technical rules (get rid of exotic engine/aero/exhaust solutions with high costs & marginal technology transfer benefit to road cars)

    Also, Has anyone suggested shortening the race weekend? Race time to 90min or 1 hour? Drop Friday. Practice on Saturday, qualifying on Sat afternoon or Sun morning and race on Sun afternoon?

  30. IP says:

    personally i’d go to more f1 races if ferrari were no longer competing. f1 is a business, there’s no room for sentimentality. no one driver or team is bigger than the sport

    as for limiting the budget, make them homologate their aero at the start of the season and allow them two bodywork updates only.

    then, loosen the restrictions on drivetrain mods and let them innovate there, which will make f1 more relevant to motoring overall.

    as for the tyres, buggered if i know!

  31. Abhijeet says:

    The budget cap was and remains a great idea. There seems to be a LOT of misinformed people equating the idea to what other SPEC series do, namely IndyCar and Nascar.

    The budget cap is more akin to what the NFL does with it’s salary caps, and that’s a VERY competitive sport. Every few years someone will dominate for 3-4 years (like the Patriots in the last decade). That’s usually the result of many years of careful planning (making the right draft choices being one part of the equation) and coaching and even then no one has dominated for more than a few years at a time.

    I hate the idea of a spec series but the budget cap and very liberal rules (engine capacities, safety requirements, number of tires, tire dimensions, overall car dimensions maybe since the cars have to fit into the starting boxes on the track) and letting the smartest and most innovative teams win races and championships, not the ones who can run the most wind tunnel time or build the most parts to try out.

    1. Ian C. says:

      “The budget cap is more akin to what the NFL does with it’s salary caps,”

      No it isn’t. The salary cap in the NFL is based on a percentage of the total revenue that the NFL teams collective generate, and since TV revenue is equally divided amongst all the teams a salary cap is workable. In F1 TV revenue is not distributed equally and a significant amount goes to CVC.

      1. Abhijeet says:

        I didn’t say “exactly the same as”, I said “akin to”, which it is. The point is that budget cap doesn’t equate to spec series like Nascar/IndyCar.

  32. Chris says:

    For me, talks of budget caps and limiting spending are rather paradoxical given talk of new turbo engines and new chassis designs for 2013.

    Its great that F1 at times drives road car development, we are seeing the first energy recovery systems on road cars now from KERS in F1 and numerous other examples in the past. This is also the reason why Merc and Renault are pushing the new engines obviously.

    Unfortunately if F1 wants to remain in this position then it has to go ahead with the new engines in 2013. But this is where the problem lies. These new engines are extremely expensive to design and then also to supply to teams – talk of 4x more expensive than the current engines.

    Of course changing the regulations every year and leaving grey areas especially in the EBD area of the car – why they don’t just stipulate that the exhaust exits are behind the diffuser is beyond me – teams spend millions still trying to exploit the exhaust gasses.

    Finally is it not a sensible idea to co-ordinate the movement of the F1 circus as it plots it’s way around the globe every year? As much as possible keep the European races together – Asia-Pacific together, middle east and finally the Americas/Canada. Would this not cut the logistical costs substantially?

  33. iceman says:

    We know the FIA struggles to regulate relatively simple things like how much a rigid piece of bodywork is allowed to bend, or what a hole is.
    We know all the teams agreed to the current budget cap, and signed up to as a legally-enforceable contract, yet it doesn’t work.
    Do we really believe the FIA can successfully impose and enforce a budget cap? It seems like fantasy to imagine that the wealthy teams won’t find ways around it.

  34. alexyoong says:

    I fail to see how they would police it meaningfully. Also, all this talk of innovation- regulation stability allows small teams to catch up with the bigger teams. Regulate rule changes costs everyone a lot.

    Budget caps are not workable or the way to go. Allow periods of general regulation stagnation, along with regular tweaks excluding expensive off shoots and materials. Then, when you do make big rule changes every half decade, let teams know well in advance

  35. While there are countries (like Holland) that don’t allow companies to submit accounts to third parties without tax office consent, others that need a full year to complete a tax cycle even if companies fully comply and many others that allow expenditure to be hidden one way or another quite easily, the idea of a budget cap remains unfeasible for a global sport.

    Those sports which only have to take the rules of one or two countries into account can manage budget caps quite well (especially when the EU is not involved). The obvious loopholes can be patched and infractions become relatively easy to detect, given sufficient accountants and lawyers. F1 doesn’t have that option.

    It would be easy for teams to go over the limit simply because they spent in a different currency to the one the FIA chose as a benchmark, or simply because no single person knew the full extent of every single financial transaction it had done over the past 12 months. To avoid those, the FIA would have to force all teams to have fewer than about 15 people in them, make all teams use the same country (or countries with very similar tax systems) for tax purposes and reduce total staffing to about the number of people currently involved in a pit stop.

    A more viable alternative would be to do a slight variant on what is done in the Finnish Masters.

    Let everyone spend as they wish, innovate as they wish (subject to reasonable safety requirements) – but say that any team may buy any other team’s chassis, in the state of development at the time of the race just finished, for a certain amount, and use it in future races (subject to any modifications demanded by new safety regulations). This would be done on a “first come, first served” basis, a team could only buy one chassis per race (to stop them hogging an entire grid’s worth at a time) and only chassis actually raced could be bought (so teams don’t end up with no chassis at all at any given time). Buying chassis at the start of a back-to-back sequence would probably also have to be banned, and transport for replacement chassis paid for by Air Bernie. But these are small costs, and the Air Bernie issue could be sorted through an “admin fee”, split between the FIA and Air Bernie.

    Teams won’t put excessively expensive gizmos on the car if they are going to be bought and used afterwards by teams for a fraction of the cost, but cheap innovation will proliferate as teams will be able to first improve themselves and then make a profit on their work.

    Naturally for F1 the chassis cost would have to be fairly big, even at the end of the “glide path” that would be appropriate. However, it would be extremely simple to enforce – a team wishing to buy a chassis would do so by filling in a form during post-race scrutineering and paying the fee there and then. Everyone would know before leaving the circuit who needed to bring new chassis and who’d have “imported” upgrades to try. It would not be possible to get around such a simple rule and difficult to carry an advantage bought purely by excessive money for long.

  36. NJB13 says:

    Didn’t see that coming – one of the “mom & pop” teams calling for a budget cap.

    The only thing F1 is in danger of with this sort of rubbish is losing its status as the worlds “premier motor racing competition”.

    All this concern about teams falling out of F1, there have been teams, both big and small fall by the wayside. If the eco crisis gets rid of the mom & pop teams from F1 then that would be at least one positive.

    Luca has it exactly right. There are easy savings to be made, no need for caps etc. Keep the current engines, get rid of the aero reliance and limited customer cars. Hi quality racing with sensible cost reductions and innovative freedom.

  37. I loved it, found all the discussion fantastic, including how elusive he was surrounding where the teams would get funding if the budget cap were introduced! Something tells me GE have a large research capability…

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