Insight: Why the F1″bounce” and which way is the wind blowing on new F1 rules and budget caps?
Innovation
Posted By: James Allen  |  02 Sep 2017   |  10:39 am GMT  |  68 comments

Monza is a busy paddock every year and this year is no exception, especially with the fresh energy that the new owners Liberty Media have injected into the system.

In recent years the event outside the F1 paddock had developed a slightly stagnant feel, not helped by constant threats to the future of the event being hosted here.

This year the crowds are larger and the rise in enthusiasm is palpable; whether it’s the plethora of banners in the stands or the hundreds – rather than dozens last year – who line the entry to the F1 paddock. Everyone in F1 has to walk past them to get to the paddock every morning, much as at Melbourne with the famous Melbourne walk.

There is a bounce in F1 that insiders can all feel, helped by a proper competition at the front between two of the great names of motorsport, Ferrari and Mercedes and between Hamilton and Vettel. But it’s not just because Ferrari are doing well that we see this enthusiasm. The bounce was evident at Montreal, Silverstone, Spa.

Perhaps the message is slowly getting out that F1 is fun and human again, via episodes like the Raikkonen fan kid who cried at Barcelona or Mick Schumacher swallowing with emotion after driving his father’s Benetton F1 car at Spa.

But there is still a massive amount to be done and the staff at F1 management’s new offices has swelled with new hires in marketing, digital, sponsorship and other departments. They are all focussed on monetization, but one to keep an eye on is Ross Brawn’s department which is developing capability to change the rules of F1 to close up the field, make the cars able to run together and overtake and to bring down the costs.

This process is gathering pace and sources suggest that everything is on the table and being discussed in an open forum between teams, FIA and Brawn’s team. The idea is to find areas of consensus and build around those. But where things will probably deviate from the dysfunctionality of the past is when it comes to actually deciding what the specific rules will be and setting that out.

If there is not consensus with all the teams, then rather than accept failure as so often in the past, the F1/FIA axis will probably over-rule the teams and impose the rules, take it or leave it.

If you think about it, this is the only way the sport can move forward as we have to get past the vested interests that have held up progress in the past.

So at the moment some ideas in circulation, as we mentioned in Spa coverage last week, are a $150m a year budget cap with a glide path down to there (from $250m+) for the top teams to get to that point in three years. The figure doesn’t include drivers salaries, marketing and some other items. Engines are another thorny point as they currently cost too much money and are too great a performance differentiator. They also give the manufacturer backed teams a stranglehold on the sport.

If you look at the F1 field, taking the top three teams out of it, each Grand Prix is a thrilling and close battle; if it was for the win rather than 5th place and back, it would have everyone on the edge of their seats. So it’s a question of how you incorporate the top teams into that in a rules formula that doesn’t artificially punish or handicap great names like Ferrari and Mercedes that are part of the box office draw of the series.

“It (budget cap) needs to be done in a way that it is good for the sport, that it respects the structures that have been created, so it needs a glide path, and it needs to be fair,” said Mercedes boss Toto Wolff.

“We have all different set-ups.. we are organised in different ways. Ferrari is a fully integrated team within the larger road car company. We (Mercedes) are a separate entity in the UK. You look at all the teams; it’s very different. You need a governance that functions and you need a strict set of rules and then it just needs to cover everybody. The discussions that have been happening, at a very early stage, I think there is no big disagreement.”

Ferrari’s Maurizio Arrivabene made the point that if F1 is experiencing a bounce at the moment it is because of the level or competition between his team and Ferrari, that its proving a turn-on for fans,

“We need to take into consideration that this year, thanks to the battle between Mercedes and us, you can see, all the tracks they are full of people and I mean, maybe Liberty have to think about that,” he said.

“There are going to be some tough negotiations, “Brawn told BBC this weekend, “But we have to be sensible and adult and find solutions for the long term future.”

For the independent teams Ross Brawn’s cost cap cannot come soon enough. “Of course we would be absolutely behind the cost cap whatever that may be, ” said Claire Williams. “But from my perspective equally, I would want to see it come in a lot sooner than that (2021).”

Bob Fernley of Force India agreed: “We would want it to come in as soon as possible,” he said. “The 150m is above our budget but I’d much rather be able to say that Force India was capable of bridging the deficit of 30m than 200m which is where it is at the moment, and I think it’s very important for the sport to have five or six teams that are capable of achieving a podium on merit. At the moment, that’s not possible.

Even the fourth, fifth and sixth teams are only capable of getting it on opportunity at this point and we need to be able to change that round to make the sport the spectacle that it is and to give the competition there.”

Ferrari is enjoying its own bounce; it has been an ever present in F1 but hasn’t always been in contention at the front, as it is today. Mercedes has only been a works F1 team for two short spells in the 1950s and 2010s and has generally found a way to be dominant when it’s been here.

Ironically Williams and McLaren are two of the great ever present names from the last fifty years, but both find themselves outside the top three today and on the wrong side of the performance gulf.

Both teams would like an effective cost cap to be introduced as soon as possible. This proves beyond doubt that F1 is cyclical and the top teams of any given moment always think they will be forever on top, not in the position McLaren and Williams find themselves in today.

This generation of team principals need to understand this and to take a more rounded approach to this important decision.

Policing the budget cap – a question of trust
It will come down to trust, as it always does and there are more sophisticated ways of measuring budgets on the input and output side than in the Max Mosley era at the FIA when he tried hard to bring in budget caps. A pair of forensic accountants working for F1 or the FIA could be installed in each team at a cost of around £300,000 per year per team and, wit modern accounting and procurement tools, would be able to account for everything and be seen to police the budget cap.

The sport has a unique character in this respect; Brawn knows how things work at Ferrari, Mercedes and Honda, having led all three teams technically and also as head of Brawn GP knows the life of an independent. Were he to install such a process and define its scope it should have a fair chance of success.

No timetable is fixed, it seems, but one senses that it won’t be too long before the first official messages about new rules, budget caps and new engine regulations will start to emerge.

The bounce is nice. But staying up in the air, with sustainable teams and close competition, would be nicer.

What do you think? Would you back an F1 cost cap if it could be effectively policed. Do you think that Brawn and his team will succeed? Leave your comments below

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1

“..if there is not consensus with all the teams, then rather than accept failure as so often in the past, the F1/FIA axis will probably over-rule the teams and impose the rules, take it or leave it”

This is WELL over due

2

We talk about cost cutting and everytime this always ends up with the cars on track less. Only have 4 engines for the year? no one heads out for FP1 in the last few races as they all try and limit the kilometres on the engine… Why not let everyone use development engines in the FP then have their 4 designated PU’s for the quali and race-day, and have a ‘young driver’ session added into the mix. That way teams aren’t penalised for being on track, can get some time for younger drivers with penalising anyone’s race day preparation…

3

Trying to mix cost caps and F1 with the current technologies is something that will never work. It’s the same as giving NASA a budget of 100 million and say we wanna go to Venus. It’ll only work when they get rid of the “green” stuff like hybrid an so on. Simplify the engine and use some standardized part here and there works way better. This is racing not Greenpeace.

4

Hi James,
Back in the 80s and 90s we had teams on huge budgets and teams on tiny ones. The podiums were more mixed up, but that is entirely down to reliability. The cars just don’t break down these days, so Merc and Ferrari will generally fill the podium. I think this, more than budget disparity, has reduced the chances of smaller teams.

5

Effrctively policed is problematic.
The top teams will find loopholes and obscure ways to swivel swerve hop skip jump and mask their way in the development battle.
Besides if Liberty really start to mess too much with the whole model of F1. The top teams will drag their feet or decide to create their own racing format. They threatened to do it when Max Moseley tried to push change.

6

I think they need to standardise non key parts. Engines, aero and the driver should be the difference, the rest…does it really matter? The ECU has been done by Mclaren for years and its not been n issue. Aero should still worked on by the teams, but brakes, suspension components, the tubs can all be the same.

7

@Chris_NZ – we’ve got standard tyres in F1 and look at the problems that has caused. What happens if all the cars are using one brand of brakes and for some reason they all fail – as Haas have discovered?

8

ECU…standard?

Yet Mercedes have killer unique engine maps. How?

9

Tubas are all the same still some tuba players are better than others.
The ECU is just a tool as a brand new computer from stock. Your knowledge in programming make the difference in how your web page will look

10

Standardized parts will actually lead to an escalation of costs. Instead of spending $X on barge boards research, the big boys will spent the double on a paint that enhances the standard one by 1%. The example may be forced but you got the idea- I hope

11

‘Cos they make the engine.

If you had greater knowledge of F1, you’d know Red Bull had bespoke software made for their V8 engine, which was better than that of other users of the same engine. But that’s okay in your world.

12

A spending cap is totally unenforceable as any analysis would show. F1 is at the leading (often bleeding) edge of technology, there is no price list for pretty much any involved. Some simple examples;

How much should RedBull charge Toro Rosso for their gearboxes?
Should it be what they cost, include a margin, if so what %.
It could be net, less any costs Toro Rosso have for running RedBull drivers.

The same could be asked of Merc customers where they have Merc drivers on board.
How do we charge for releasing say someone like Bottas from Williams to Mercedes and can it be offset against their engine costs.

What about Honda who not only supply the engines for free but also pay McLaren to take their engines, isn’t that a negative cost.

How do you place a spending limit on Honda, Ferrari, Mercedes or Renault when they can easily insource to their road car engineers the costs of certain development e.g.; Ferrari have a gearbox issue so they get their in house gearbox experts to solve not. Compared to HAAS who have to pay Ferrari for the same gearbox upgrades.

I could go on for pages, to put it plainly because of the very nature of F1 it’s simply unenforceable.

13

@Gary – Further to all that… People from all over the world are working for F1 teams. Does a draughtsman in Japan earn the same money as one in the US, Italy, Germany, Switzerland, France or UK? Are site costs the same across the globe? The concept is impossible to implement and if FOM push it forward, they’re going to spend £lots attempting to police it.

As for a cost cap creating more competition, those who keep repeating that mantra are not living in the real world.

14

It would be interesting to know exactly what ‘punishments’ there might be for going overbudget, especially since- let’s assume – final accounts wouldn’t be published until long after the last race was finished. What happens if Vettel wins the title and then over the winter it emerges that Ferrari overspent by 10m? Or Hamilton… would those titles be taken away? Of course not, it would make F1 a mockery. So what is the punishement? Fines?

15

Wasn’t the problem the Bernie formula that the top teams got paid more?

Not sure that a cap is going to work. Sponsors invest money to see a return. If there is no return, then they are just as likely to drift away.

I think the FIA can allocate its own funds to even out the playing field by favouring the teams without as much sponsorship.

F1 is interesting when there is a human battle and a technology battle. A lighter hand of “government” is a better thing for innovation and interest – let the market do its thing.

16

There is only one reason for a cost cap. To cut the total payout by LM, so they can pay off the huge loans they took out to buy F1 – and increase their profits. It’s exactly the same reason why the Little Man attempted it push it through with his mate Mosley.

17

Then it is necessary to Liberty and F1? And spectacle would stand to benefit from fairer competition?

Seems like goals are aligned.

18

Happy days for the drivers now they can demand as much as they want

19

I don’t like budget caps as there is no way to police it, especially when some teams are manufacturers. Those teams could shift some of their team spend over to engines. A bit like FFP in footy, where team owners use their own companies to sponsor the team, thus raising revenues in order to increase their spending.

What I’d rather see is team staffing limits. That’s a soft cap, not a hard cap. If you limited the teams to 350 personnel, then 300 in 2 yrs time, then 250 in 3 yrs time. One, it would force the largest teams to cut staff, reducing spending, but with fewer staff, there’d be fewer R&D projects, which reduces spending, etc. Plus, you’d have more quality staff available from the top teams for the smaller teams to hire. Of course, the manufacturing teams would get a separate allocation for engine staff. There might be possibility of abuse, but less than if it were a hard budget cap. Easier to count people, than find where the accountants hid the 2nd set of books.

20

Couldn’t the team outsource the part developments? I think it’s easier said than done for cost cap.

21

The cost cap comes up seemingly every year, I won’t hold my breath on much happening in the next few years.

But as others have said if you want standardised parts I would go with the front wing and barge boards for starters.

22

The cost cap may be moot soon. If Liberty seek new ways to ‘monetize’ the business (I’m particularly looking forward to the day when I can buy a can of Formula 1 air) then the share of the spoils will keep everyone fat and happy for years to come.

Fans on the other other hand will end up feeling like the proverbial plucked goose (if they aren’t already). Even more so if the show fails to improve.

23

Great idea! …about the air.

But it could be a whole range. You can buy air from each Grand Prix, canned the previous year. Collect all 20..ish each season.

Red Bull can include it in 4 packs of Red Bull. No, you’re not getting 25% less Red Bull, you’re getting F1 air. Will you open it to smell it? It’s worth more not opened!

24

..pressurized cans that fit in the standard air freshener device then…Some water should be added ( agitate well before use) for the previous year wet races

25

How about smoke too? Honda or Renault flavour?

26

I am not a great believer in artificial price controls. History has shown that they do not work in practice, eventually leading to dysfunction and a large black market. F1 has some of the finest technological brains working in it, but it does not need to add the finest accounting brains to find financial loopholes. Better to more evenly distribute the prize money and, although it may sound like heresy, I say standardise some of the more common components on the cars.

27

So let’s not even try?

28

Budget caps are unenforceable for an F1 team. And the top earning teams are always going to spend every last Euro they can. Even if it’s money spent on promotion, hospitality and driver salaries.

FIA designed simplified standardized wings, front and rear, should be mandatory. Add to this strict and easily enforceable bodywork regulations that do away with all of the idiotic and costly winglets and aero gee-gaws and television aerials.

This shall greatly reduce the cost of aerodynamic design and manufacture and allow the FIA to tune the cars towards more mechanical grip and easier passing.

Finally, a more basic engine formula is required. For many reasons. TV Jim doesn’t know what an MGU is. And doesn’t care. A 1.6 or 2.0 or even 2.5 litre four cylinder. And one turbo. Or hybrid. But not both. And, this is the kicker: any engine manufacturer must supply a minimum of six cars. VIA the FIA. Sealed engines would be distributed to the six or whatever number of cars by the organizers. This would put an end to “works” or “factory” teams/engines.

Cosworth had a good little earner with their DFV, and it did the trick. I’m certain Mercedes and Renault and Ferrari and any others could knock out a run of F1 engines and spares for a reasonable price, and still make a profit.

Or keep F1 how it is. Either way.

29

Does TV Jim know what a V8 naturally aspirated engine is? Does he know what a 3litre inline 4 with turbo means? Does he care? TV Jim wants to see a spectacle of racing so the engine shouldn’t matter – TV Jim wants fast cars, overtakes and close competition. BUT the manufacturers care about the things Jim doesn’t. They want to dominate, they want to develop engines that suit their road going counterparts (or have technology crossover). Do they care that TV Jim decides to go golfing instead of watching F1? as long as his clubs go in the back of his Merc that he bought because he heard that they win lots of races so must be good, I think they’ll be happy.

30

TV Jim should view car brand reliability ratings instead of F1 wins.

He’d learn Merc are in 17th spot in 2016. Far behind Kia and even American brands. Ain’t that something? If memory serves me right, no F1 manufacturers cracked the top 10 except, funny enough, Honda!

31

In the Monza rain delay – Heard Gene Haas lament on competitive nature of current F1 regs., not mentioning $$ sharing. Go back to my comments 2 days ago – let Haas run an actual racing engine ! Ha. Also this is a test to see if my comment will make it into the James Allen column in AutoSport.

32

So the answer is more micro-management. Are we going to have grid penalties for teams that go over some ill defined notional limit. Lewis you’re losing pole because of Toto and Nikis lunch bill! I think F1 needs simple engines and simple aero. A ban on teams supplying other teams with engines would bring independent engine builders back to benefit the sport.

33

the best way to level the playing field is the share the moneybequally, then introduce cost cupping…
or better still, ban engine manufacturers from running their own teams so that all teams will be independent. they’ll then choose whichever engine the wish to use..

34

All the teams money must be given to a legal and accounting firm to be held in trust, all expenditures come through that legal and accounting firms accounts, no cheating can take place. Any spending outside of these accounts makes for a penalty of 100 constructors points for that team.

35

Should a cost cap be introduced? Yes
Can it be monitored effectively? No
(Don’t try and tell me that the teams really shut down for the summer because that’s just nonsense)
Ross Brawns new technical department looking into the key areas is the most sensible approach. An actual structured well thought out plan will come out of it.
Ultimately though, I’m not convinced it will make that much difference. But it will at least be based on a scientific approach rather than the whim of megalomaniac billionaire.

36

Toto says Mercedes didn’t introduce 4th PUs at Spa to circumvent new 0.9L/100km oil burn limit. Look at him pedal and spin below.

I say put your money where your mouth is and commit to having your engines burn 0.9L/100km from now on Toto!

>>
“It was completely blown out of all proportion,” the motorsport boss said.

“The reason we introduced it early was in order to bring some performance to the track, with the risk of having to do many [more] races until the end of the season than our direct competitors.

“Also you lack time for further development. The longer you wait for the last introduction of engine the more you can probably add the upgrade.

“These are the reasons we brought it and not in order to extract a performance advantage out of the capability of burning more oil.

“So if you ask the FIA, you will be quite interested to see what the results are.”

37

Sebee, the Mercs ran the 0.9 limit in Spa, and will do for the rest of the season.

38

That’s fantastic. But that’s not how it should be. EVERYONE should run the new limit, not just Mercedes.

Where did you read this? Is this a recent development?

39

Not a recent development, just a lot of internet commenters got their knickers in a knot and mistakenly thought Merc were getting some sort of advantage. They had the choice of running the updated unit they had planned for Monza a race early, and decided it was better than the old one even while running the lower oil limit.

40

This all sounds optimistic, but it is unbelievable that the sport has to wait almost 4 years for these straight forward changes.

In 4 years the automotive world may look very different and F1 will be in a bigger hole I believe. The bounce you speak of is not showing in viewership and ratings, is it? And we have more races to play out still in 2017, which stand a great chance of leaving a bad taste with fans thanks to penalties.

Would you like a new iPhone? Apple will introduce it…in 4 years. They know what’s wrong and what needs to be improved, but wait 4 years for it?

41

Amazing piece James! Hooked to it until the last word.

It is about time to focus on having sustainable teams and close competition, current expense of top teams are out of proportion…. but probably Ferrari and Red Bull will be the biggest obstacles to achieve that and will both threaten to leave the sport. I expect really hard negotiations from 2018 onwards.

42

it doesn’t matter who leaves f1. f1 will not change just because one or two teams have left.

43

I disagree with you Aveli.
Like it or not if Ferrari leaves F1 then F1 as we know it today will end. No track will resign a new contract and the series will shrink to only be raced in England where most of the teams are based, I suspect that even the likes of Maclaren will stop racing eventually.
This may make a lot of English people happy having your own F1 championship with an all Brit driver line-up.
Be careful for what you wish for, you may just get it.

44

I’d love to see a cost cap but don’t believe one could be fully enforced where a team is part of or associated with other entities. For example Ferrari develop technology for their next hypercar and license it to the F1 team for a fraction of the deveolpment costs. How do you decide what is allowed in the grey areas and how will you punish going over budget?

45

All this seems pointless to me. Do you want a race with affordable cars which can follow each other at inches thus inch close battles by 3 in a single turn? THEN jut watch the GP3 race.
If you want “The Pinnacle of Motorsport” then do not limit expenses directly, do it implicitly.
What I mean is a study group of AUTO engineers could easylly come with some regulations that will make a further R&D worth a billion give only a 1-2 % increase in performance, so nobody will invest. Today rules made mostly by old school enthusiast ( as I am sure they are) lead to a base project susceptible to let’s say, 20% upgrade for top spenders , but only 5% for the rest. So spending race is encouraged. To end this , paradoxically F1 should relax rules not tighten them. Just make them more rational technically.

46

I get the idea but are the clever boys really clever enough?

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