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.