8 replies to this topic

[Ali_G]

Time and time again we see budget cap proposals go down in flames. For the good of the sport, I personally believe it is the only way to create a level playing field of such, but most importantly, create an environment where the small teams can continue to compete in the sport without financial difficulties.

My proposal is simple and is partly inspired by baseball. This proposal both helps the smaller teams and will be much more acceptable to the bigger teams than just a normal budget cap.

My Proposal
A standard budget cap limit would be put in place. The budget cap would cover car development spending but would exclude the likes of driver salaries, promotion and hospitality.

A general budget cap would be put in place. Say €100m per year. However, this wouldn't be a strict limit. All teams could still go over this budget cap. However, to do so would result in a luxury tax to be paid by the team who does so. So if a team were to go over the budget cap by €20m in the year, they would also have to pay €20m in luxury tax.

All payments of this luxury tax would then be pooled for the year. The total luxury tax take, would then be divided up equally and given to each team which did not break the budget cap in that given year.

IMO, this situation would let big spenders still spend big. It would also provide additional funding to smaller teams. The luxury tax would also limit the bigger teams, big spending in the hope that it would create a much more level playing field. Such a setup would hopefully result in the end of long life engines and gearboxes, engine development, the return or the T car and a more reasonable level of in season testing which aids greatly with driver development as much as car development.

[sabjit]

I think because its so difficult to police spending caps. I think it's easier to cap money spent on certain areas first to bring down the costs.

[scheivlak]

I can't see a budget cap being succesfully enforced. Especially with two engine suppliers (Renault and Honda) not being part of the grid. For Mercedes and possibly Ferrari too as well it would be very easy to place development costs under other parts of their company.

 

Far more important is a more equal sharing of the overall F1 income. No more extra money for Ferrari, RedBull and McLaren just for being on the grid regardless of their performance. And less difference in prize money.

 

All the talk about budget caps is just  a diversion from the real problem which is that CVC is just amassing far too much money for themselves and distributes what's left in the wrong way.

[sabjit]

All the talk about budget caps is just  a diversion from the real problem which is that CVC is just amassing far too much money for themselves and distributes what's left in the wrong way.

 

Hit the nail on the head. There is more than enough money in F1 to pay for it's costs. It's just it is not given to the people who need it.

[pdac]

Budget caps  will not work because those with money will always find ways to circumvent the rules in order to spend it. And if they can't they probably won't complete in F1 anymore.

 

The only possible solution to making F1 affordable to a healthy size grid is to accept that they are all part of a show and, as such, should receive money for taking part - not just for winning or having historical or commercial importance. The money that is brought in by the commercial rights holder needs to be distributed equally to anyone taking part. If you win the WCC then you get a trophy.

 

That then leaves the team free too find their own personal sponsors to add money to their budget or even pump their own money in, if they want to (e.g. manufacturers may think that the exposure and marketing prospects of doing well may be worth investing their own money in).

 

Finally, suppliers (e.g. PU and tyre suppliers) need to be strictly controlled so that they are obliged to supply the same products to all teams at a fixed, regulated, price (based on ensuring that the money being distributed will be enough for a team to comfortably run a reasonably competitive, non loss-making, operation). Again, the suppliers can decide whether they can meet the dictated price and still be profitable, or they can choose to run at a loss for the prestige and exposure the get from being involved in F1.

[aguri]

It is too hard to police spending caps in F1. To paraphrase what LDM said when they proposed limiting wind tunnel time further "maybe I call my friends at chrysler in detroit and get them to check some stuff in their wind tunnel".

 

What would work is more standardised parts and less frequent regulation changes. 

 

FIA spec safety cell is my favourite concept so far. Every team gets it free as part of the grid entry and then they have to build a car around it. Combined with price celling on customer engines that would knock a 10+M off the required budget overnight. 

[aguri]

I also mooted an engineers salary cap in the past. Say the 5-10 highest paid (non-driver) employees of the team can earn no more than a combined 15M or 20M etc.

 

It would keep salaries in check and spread the talent around. 

[ExFlagMan]

The cost breakdown given to Todt by the mid-field teams gave a figure for $20m salaries for the team, so a 15-20m cap on engineers salary is certainly not likely to cut the budgets those teams, given that they have 100-200 staff.

Edited by ExFlagMan, 02 November 2014 - 14:55.

[johnmhinds]

It is too hard to police spending caps in F1. To paraphrase what LDM said when they proposed limiting wind tunnel time further "maybe I call my friends at chrysler in detroit and get them to check some stuff in their wind tunnel".

 

What would work is more standardised parts and less frequent regulation changes. 

 

FIA spec safety cell is my favourite concept so far. Every team gets it free as part of the grid entry and then they have to build a car around it. Combined with price celling on customer engines that would knock a 10+M off the required budget overnight. 

 

How does making the FIA give out free safety cells cut down costs? They'd still need money to produce the safety cells, money that would come out of the sport in some way.

 

You're not cutting down costs if you're just pushing those costs over onto someone else.