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Gascoyne calls for budget cap as FIA promises action on costs
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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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1

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…

2

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.

3

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.

4

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

5

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.

6

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?

7

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.

8

“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.

9

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.

10

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!

11

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?

12

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.

13

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?

14

“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.

15

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.

16

“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.

17
tom in adelaide

Well said.

18

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.

19

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

20

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…

21

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.

22

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.

23

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.

24

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!

25

‘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.

26

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?

27

‘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.

28

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?

29

“…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.

30

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.

31

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!!

32

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.

33

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!

34

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

35

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!

38

So will tickets be cheaper ?

39

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

41

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.

42

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?

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