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FIA has good idea - budget cap


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#1 Blythy

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Posted 17 January 2008 - 16:35

http://www.autosport...rt.php/id/64743

granted they did steal it of honda, but still

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#2 Mika Mika

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Posted 17 January 2008 - 16:38

Fantastic Idea,

I'm sure it's gonna upset some of the bigger teams!!!!

#3 Atreiu

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Posted 17 January 2008 - 16:38

If you mean good as in their usual horrible and clueless ideas, then you're right.

#4 Cheap Wine Alesi

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Posted 17 January 2008 - 16:39

budget cap is a retarded idea. This whole cost-saving is getting out of hand already, stupid.

#5 senna da silva

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Posted 17 January 2008 - 16:40

They have absolutely no chance of policing this.

#6 D A

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Posted 17 January 2008 - 16:44

Exactly how will they police this? What's to stop teams from using external sources for developing parts?


Also, what excatly should the cap include? R&D of all parts of the cars, even those parts that are sold to other teams? Should the other teams use the extra money to develop other parts? What about Red Bull and STR, they use the same car, will they be able to use both teams budgets to develop their cars?

#7 FonzCam

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Posted 17 January 2008 - 17:01

So do the FIA actually want this or is this just part of the usual FIA ploy to get the teams to sign up for what the FIA really wants?

Either the FIA wants this and is threatening wind tunnel limits or they want the wind tunnel limits and are threatening this.

To be honest I'm not sure which the teams view as the lesser of two evils.

My hunch is the FIA want the tunnel bans (because they are easier to enforce) but want to appear reasonable about the matter but know that there's no hope of all teams getting together agreeing by June 30th on terms to cap their budgets.

#8 KWSN - DSM

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Posted 17 January 2008 - 17:02

Mosley outlines details of the budget cap plans in the letter, a copy of which has been seen by autosport.com, and confirms that areas falling outside the budget cap are engine costs, marketing and promotion, plus team principals' wages.


So a this is when a budget cap is not a budget cap.

:cool:

#9 robnyc

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Posted 17 January 2008 - 17:04

very good idea. .. :up:

#10 vsubravet

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Posted 17 January 2008 - 17:06

The budget cap is a good idea but policing it will be a nightmare. More likely this is another grand posturing by MM so that he gets one of his other pet ideas rammed through despite opposition from the teams. The formula has worked like magic before and he wouldn't be averse to using it once again. Good idea but the devil is in the details.

#11 kismet

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Posted 17 January 2008 - 17:09

Why on doG's green earth should a sport's governing body have any say in how the participants are allowed to spend their own money?

#12 Tigershark

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Posted 17 January 2008 - 17:19

I'm sure these kind of ideas will do wonders for the FIA's reputation in North Korea.

#13 Spunout

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Posted 17 January 2008 - 17:24

Originally posted by FonzCam
So do the FIA actually want this or is this just part of the usual FIA ploy to get the teams to sign up for what the FIA really wants?


Bingo ;)

Policing budget cap is...well, impossible. The FIA knows it. There are zillions of ways to go around it, many of them based on fact that most F1 teams are actually smaller parts of huge organizations. F1 cars can be developed via "road car prototypes" (and since FIA is all for road-relevant technology...) or 3rd parties that receive payment NOT in the form of euros or dollars. Hard money, working hours and knowledge can be passed back and forth within the company and its affiliates in more ways than even your average accountant can imagine.

Ridiculous idea, plain and simple.

#14 MarkWRX

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Posted 17 January 2008 - 17:28

I think it's a bad idea for a few reasons. Contrary to Mosley's intentions, F1 is F1 and making it like IndyCar will not be a good thing.

Secondly, as several others have mentioned, how is this going to be policed? Red Bull is, I think, a privately held corporation, so we don't have transparency. Since engine related costs are excluded, how do you detect the sudden movement of resources from the gearbox office to the engine office for example?

#15 Orin

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Posted 17 January 2008 - 17:33

A budget cap might be a great way of encouraging a new era of privateers into F1 (and also provide more security to Williams) - it should help level the competition somewhat. However, they won't be able to cap engine development - KERS is surely going to cost engine manufacturers molto squillions? As such, I can't see that the large manufacturers are going to benefit very much from it.

#16 Spunout

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Posted 17 January 2008 - 17:37

Originally posted by Orin
A budget cap might be a great way of encouraging a new era of privateers into F1


A budget cap would kill privateers, as they have lesser chances to go around it.

#17 Chiara

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Posted 17 January 2008 - 17:37

Well surely the F1 teams can just hire accountants to hide what they are spending?

The bigger spending teams will just "spend" more on engines, team principals and marketing.

Yes there is a need to keep costs down to keep some teams in the sport, but you cant really start dictating to a private company how much they spend and what they spend it on.

#18 jokuvaan

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Posted 17 January 2008 - 17:41

http://forums.autosp...&threadid=98744

#19 Atreiu

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Posted 17 January 2008 - 17:43

It would just be so much easier and cheaper to get GP2 cars and give them a different paintjob and stickers.
And they're even good for racing..

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#20 Buttoneer

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Posted 17 January 2008 - 17:43

This is a great idea. Well done FIA.

Sadly, it just won't work.

#21 xflow7

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Posted 17 January 2008 - 17:43

There's an obvious loophole for the manufacturers in which they spin the team off under some holding company or something and then develop expensive stuff internally and give it to the teams at some silly low price.

#22 Orin

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Posted 17 January 2008 - 17:47

Originally posted by Spunout


A budget cap would kill privateers, as they have lesser chances to go around it.


The budget cap might well be set at a level which privateers would struggle to reach anyway. I see it as an attempt at bringing the multinationals down to a similar level to the privateers.

#23 Jodum5

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Posted 17 January 2008 - 17:49

Funny thing is I tabled this idea on tese boards a few months ago and the number of ppl saying it was impossible to police. It'd be much easier to police spending that windtunnel usage. Anyway, none of the corporate "partners" of F1 teams would be interested in an accounting scandal if their team is found circumventing the rules - imagine in a scandal breaks about McLaren illegally spending more than they could on their program. It'd be a lot more difficult for Vodafone, Santander, etc, to continue supporting the team.

I love the idea. Tell a team to do their best with $200mm a year. That would instantly place all the teams (save torro rosso and Super Happy Fun Aguri) on equal to near equal footing spending wise. Then it's all about how best one manages its resources.

#24 Spunout

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Posted 17 January 2008 - 18:00

Originally posted by Jodum5
Funny thing is I tabled this idea on tese boards a few months ago and the number of ppl saying it was impossible to police. It'd be much easier to police spending that windtunnel usage. Anyway, none of the corporate "partners" of F1 teams would be interested in an accounting scandal if their team is found circumventing the rules.


No need for accounting scandals. First of all, FIA would have to audit the entire company - something that A) would take lots of time and resources B) would NOT be accepted by car manufacturers. Second, let´s say Toyta builds few road car prototypes that happen to have lots of stuff that can be used in F1 cars, after heavy modifications. Who can stop them from using know-how gained in F1 to improve their sports cars - and vice versa!? After all, road-relevant inventions are supported by the FIA. What if McLaren (the company that built some parts for Beagle Mars lander) develops some new materials for their F1...I mean, lunar capsule program. If the materials happen to work in F1 cars as well, who can tell Ron & boys not to use them? I could go on and on. And then you have pricing. Surely companies that are affiliated with car manufacturers can determine how big - or in this case, small - pile of euros they want for their products?

Etc.

#25 Atreiu

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Posted 17 January 2008 - 18:03

Originally posted by Jodum5
(..)Then it's all about how best one manages its resources.


It has actually ALWAYS been about best finding and managing resources and some have been better than others.




The FIA could also hire a team of nutritions and phsysical tutours to make sure all pilots are equally fit and no money is unecessarilly spent to gain advantage over that. It's just so unfair what they do nowadays.

#26 tifosi

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Posted 17 January 2008 - 18:06

How on earthj does anybody believe you can police this. The ONLY way to enforce a budget cap would be to have standardized cars, similar to IndyCar or GP2.

Hey Ferrari, here's your $200M, good luck.
Thanks will get working on the F2009 right away.
Hey, by the way where's Luca?
Oh he's up in Turin announcing Fiat's new Lemans effort and the $600M being poured into R&D for the project.

Meanwhile up in Turin;
"I would like to announce Fiats new Lemans effort. We will be using a 2.8L V8. One of the most amazing things is how similar a Leman's suspension and gearbox apprently is to the F2009. Also our aerospace division just completed a $200M project on a new material, both lighter and strong than carbon fiber with much better aerodynamic efficiancy."



#27 Phucaigh

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Posted 17 January 2008 - 18:18

It won't work, it is easy to see ways around this.

#28 AyePirate

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Posted 17 January 2008 - 18:24

I am under the impression that the upcoming aero regs are going to moot a lot the wind tunnel testing anyway.
The way I see it also moots the budget cap to some extent.
I see no harm in letting a stupid team spend 500M/year when the job can be done for 200M/year if they want.
One thing that came to light during Spygate was that McLaren had I believe it was IIRC 8 different groups working on brakes.
Maybe the teams just want someone to save them from themselves :lol:


I'm sure the FIA will enforce this cap with same tenacity they have applied to the ban on cigarette money ;)

#29 Spunout

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Posted 17 January 2008 - 18:27

For some perspective...

Toyota:

Employees: 299,394
Revenue: USD 235 billion
Net income: USD 16,68 billion

Almost forgot: Toyota also has 522 subsidiaries and 226 affiliates.



Hey Max, good luck with that audit :wave:

#30 Buttoneer

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Posted 17 January 2008 - 18:47

Originally posted by Jodum5
Tell a team to do their best with $200mm a year.

Spyker would have killed for a budget like that plus additional for the engine.

And honestly, that's one of the other problems with a budget cap (quite apart from being impossible to police).

#31 Spunout

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Posted 17 January 2008 - 18:53

There is one way to make it work: Big Brother F1 Edition. Lock up 200 engineers + huge pile of goods to closed factories. Nobody gets in or out. All you need is few guards and TV cams to ensure all teams follow the rules.

#32 lythe

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Posted 17 January 2008 - 19:19

Budget caps will hardly be impossible to "police." The teams will, of course, be required to observe any caps and make evidence of the observance manifest. There will be no "you're not looking at our books;" it'll be "you want to participate in F1, then we look at whatever we need to look at to determine the real cost of your F1 endeavours."

Anyone who posts "an easy way aroung it" by "easy" has signalled that is a loophole that will not be available since closing it will be a priority when the rules (or accounting principles) are negotiated. So, any way to get around it will have to be a way none of you can think of. Keep closing those loopholes, boys.

You also need to distinguish between potential loopholes and fraudulent conduct. Good luck to a team that engages in the latter. No doubt, the first caps will have unanticipated loopholes and enforcement issues. Both the rules and enforcement will improve with experience. As I've mentioned in other threads, the science of forensic accounting (http://www.edwardspu...A/students.html) has developed greatly over the last several years and will facilitate both rule-making and enforcement. This is a matter of practical issues to be dealt with over time. Having decided to have caps, they can be done effectively.

#33 tifosi

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Posted 17 January 2008 - 19:31

Originally posted by lythe
Budget caps will hardly be impossible to "police." The teams will, of course, be required to observe any caps and make evidence of the observance manifest. There will be no "you're not looking at our books;" it'll be "you want to participate in F1, then we look at whatever we need to look at to determine the real cost of your F1 endeavours."

Anyone who posts "an easy way aroung it" by "easy" has signalled that is a loophole that will not be available since closing it will be a priority when the rules (or accounting principles) are negotiated. So, any way to get around it will have to be a way none of you can think of. Keep closing those loopholes, boys.


So tell me exactly then.

Fiat Aerospace works on a new compund, lighter and stronger than Carbon Fiber with far superior aerodynamic properties. Afters years of reaserach and 100s of millions of dollars, this product is ready.

Is Ferrrai not allowed to use this product? Effectively what you are saying is that 100% of the car MUST be devleoped within the Formula One team. No outside parts or services whatsoever can be involved.

How do you account for the 5 man Maserati Lemans engineering team working on new more efficient brakes. After developing these wonderous products for Maserati they are then transferred to Ferrari F1. Miraculously after only a few months they have penned a great new braking system.

#34 lythe

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Posted 17 January 2008 - 19:41

Originally posted by tifosi


So tell me exactly then.

Fiat Aerospace works on a new compund, lighter and stronger than Carbon Fiber with far superior aerodynamic properties. Afters years of reaserach and 100s of millions of dollars, this product is ready.

Is Ferrrai not allowed to use this product? Effectively what you are saying is that 100% of the car MUST be devleoped within the Formula One team. No outside parts or services whatsoever can be involved.

How do you account for the 5 man Maserati Lemans engineering team working on new more efficient brakes. After developing these wonderous products for Maserati they are then transferred to Ferrari F1. Miraculously after only a few months they have penned a great new braking system.

It will be costed. Assuming no connection between Ferrari and whatever FIAT division develops the technology, and assuming that FIAT would refuse to sell it to Ferrari competitors, what would Ferrari have to pay to have access to it, what is the fair market price. These sorts of calculations are done all the time.

Same with the brakes. The technology will be costed.

It could happen that the costing is such that making use of the technology would squeeze Ferrari's budget too greatly so that Ferrari could not use it without over-squeezing its budget elsewhere. So be it. A fairer playing field in F1.

#35 Group B

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Posted 17 January 2008 - 19:43

Originally posted by Cheap Wine Alesi
budget cap is a retarded idea. This whole cost-saving is getting out of hand already, stupid.

:up:

#36 hobbes

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Posted 17 January 2008 - 19:46

Very simply Fiat tells Ferrari the details about this compound and Ferrari miraculously discovers it after 1 month of research and 1/100 of the money Fiat originally spent. Or if you want to be more realistic, Ferrari devotes a proportion of its budget on research and after a year or so, it 'discovers' the compound.

#37 Group B

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Posted 17 January 2008 - 19:50

Originally posted by Jodum5
I love the idea. Tell a team to do their best with $200mm a year. That would instantly place all the teams (save torro rosso and Super Happy Fun Aguri) on equal to near equal footing spending wise. Then it's all about how best one manages its resources.

Soooooooooooooooo boring; no giant killing, no mid field movers, no exciting new sponership deals :yawn:

What next, a driver talent cap? Success ballast? Suing teams that beat you for emotional distress?

#38 djellison

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Posted 17 January 2008 - 19:52

Originally posted by Mika Mika

I'm sure it's gonna upset some of the bigger teams!!!!


Hell no, they're the ones with multiple wind tunnels, hundreds of millions already invested in infrastructure. The tail enders now have neither those facilities, nor will they be allowed a budget that would let them build them. They can't play catchup.

The principle seems good - but totally impossible to police. Oh look, Honda's research devision have done aerodynamics research that just happens to be usefull for formula 1, and they sell it to the Honda F1 team for 20 pence. What do you know, Renault Special Projects are working on new differentials that just happen to be usefull for F1 and sell them to Renault F1 for twenty quid and a signed Alonso shirt.

Doug

#39 alg7_munif

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Posted 17 January 2008 - 20:00

How about the idea of getting a new governing body for F1?

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#40 Spunout

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Posted 17 January 2008 - 20:06

Originally posted by lythe
It will be costed. Assuming no connection between Ferrari and whatever FIAT division develops the technology, and assuming that FIAT would refuse to sell it to Ferrari competitors, what would Ferrari have to pay to have access to it, what is the fair market price. These sorts of calculations are done all the time.


And whenever the result of such calculations has significant importance, this stuff leads to expensive court battles. And who´s to say FIAT invented the brakes? Perhaps Ferrari, without any help from FIAT whatsoever, invented almost similar brakes almost at the same time. Of course, if we are talking about prototype stuff...nobody would know about FIAT version until months or years after Ferrari used their version to win both championship titles.

Same with the brakes. The technology will be costed.


But the brakes are new invention. Do you have any clue how difficult, expensive and time-consuming it would be to "cost" every single F1-relevant part these mammoth international companies managed to develop? Just think about the figures I posted earlier. Toyota has almost 300.000 workers and I don´t even know how many plants - not to mention the facilities of their 500+ subsidiaries and 200+ affiliates. How do you think small organization like FIA is going to police where and by whom each component or piece of material was invented and built? Even if they had the access, that is. It would be little better than me auditing Microsoft with paper and pen.

Or perhaps FIA should leave it to the teams to do the math? Count every facility, component, tool, etc. "Cost" used stuff the main company happened to have on sale. Every team would spend half of their budget on accouting. And even worse, the entire system would depend on honesty ™ and integrity ™ of the teams. Sounds great:

"Did you drain all fuel from the car?"
"Yes, we did..."




Need to say more?

#41 Orin

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Posted 17 January 2008 - 20:07

Originally posted by lythe
It will be costed. Assuming no connection between Ferrari and whatever FIAT division develops the technology, and assuming that FIAT would refuse to sell it to Ferrari competitors, what would Ferrari have to pay to have access to it, what is the fair market price. These sorts of calculations are done all the time.

Same with the brakes. The technology will be costed.

It could happen that the costing is such that making use of the technology would squeeze Ferrari's budget too greatly so that Ferrari could not use it without over-squeezing its budget elsewhere. So be it. A fairer playing field in F1.


Exactly. :up:

They get the brakes, the FIA says "Ah, you got those off a subsidiary, we'll need to deduct what it cost them in terms of development". Anyone trying to circumvent the rules in this way is going to be stamped on hard by the FIA. Of course, there may be scope for the FIA being more lenient towards some teams than others, but I doubt they'd want to shoot themselves in the foot so publicly - the other teams would be in uproar. I'm sure the teams in conjunction with the FIA can devise checks and balances to ensure the system works as promised.

#42 metz

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Posted 17 January 2008 - 20:08

Originally posted by KWSN - DSM


So a this is when a budget cap is not a budget cap.

:cool:

And driver's wages are excluded...Huhhh :eek:
Team salary caps, but not for the captain....typical, :

#43 Spunout

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Posted 17 January 2008 - 20:08

Good points by djellison and hobbes :up:

#44 Yellowmc

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Posted 17 January 2008 - 20:09

McLaren and Ferrari (possible BMW) have been investing heavily in creating the best simulator possible, the initial cost is quite high but after launch, it doesn't cost much to maintain and upgrade. Such is the technology that they can effectively downscale their wind tunnel operations and still maintain the same advantage, being able to test new parts than have not yet been created.

The idea is good in principle but will not work, as many others have mentioned, the teams will just "outsource" R&D to their sponsors and will be an advantage for the manufacturers. Can't see it helping anyone!

#45 lythe

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Posted 17 January 2008 - 20:13

Originally posted by hobbes
Very simply Fiat tells Ferrari the details about this compound and Ferrari miraculously discovers it after 1 month of research and 1/100 of the money Fiat originally spent. Or if you want to be more realistic, Ferrari devotes a proportion of its budget on research and after a year or so, it 'discovers' the compound.

You don't think the rules will require teams to document research projects sufficient to enable their value to be determined?

There seems to be a strange assumption that teams are going to engage in fraud. Wow. I would think the goings on from the past season would make that a very risky proposition. (I notice also that Ferrari is continually raised. Why all the scepticism about Ferrari's bona fides?)

#46 Yellowmc

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Posted 17 January 2008 - 20:15

Originally posted by Orin


Exactly. :up:

They get the brakes, the FIA says "Ah, you got those off a subsidiary, we'll need to deduct what it cost them in terms of development". Anyone trying to circumvent the rules in this way is going to be stamped on hard by the FIA. Of course, there may be scope for the FIA being more lenient towards some teams than others, but I doubt they'd want to shoot themselves in the foot so publicly - the other teams would be in uproar. I'm sure the teams in conjunction with the FIA can devise checks and balances to ensure the system works as promised.


So, who will be monitoring such deals?

The FIA will certainly not be able to do it themselves and when you think of how large F1 teams are and the various deals they have in place, it's almost impossible to do such things.

For certain mechanical parts, all it takes is a call from someone at Fiat to an engineer at Ferrari explaining how a certain parts works, Ferrari then have a head start on R&D and effectively cut their costs immediately.

#47 Orin

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Posted 17 January 2008 - 20:15

Originally posted by djellison


Hell no, they're the ones with multiple wind tunnels, hundreds of millions already invested in infrastructure. The tail enders now have neither those facilities, nor will they be allowed a budget that would let them build them. They can't play catchup.


Say they're restricted to one wind tunnel operating 8 hours a day - it would then be possible for the privateers to rent spare wind tunnel capacity off them.

#48 lythe

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Posted 17 January 2008 - 20:16

Originally posted by djellison


Hell no, they're the ones with multiple wind tunnels, hundreds of millions already invested in infrastructure. The tail enders now have neither those facilities, nor will they be allowed a budget that would let them build them. They can't play catchup.

I don't see how no catch-up. Assuming no exceptional budgetary allowances respecting standard baseline facilities (which I doubt), current tail-enders and new teams would have to skew their budgets toward infrastructure development, but over time things would improve. In any case, they should have more sponsorship money available and would have cost certainty and could plan accordingly.

#49 Orin

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Posted 17 January 2008 - 20:19

Originally posted by Yellowmc


So, who will be monitoring such deals?

The FIA will certainly not be able to do it themselves and when you think of how large F1 teams are and the various deals they have in place, it's almost impossible to do such things.

For certain mechanical parts, all it takes is a call from someone at Fiat to an engineer at Ferrari explaining how a certain parts works, Ferrari then have a head start on R&D and effectively cut their costs immediately.


You're talking of FIAT setting up a secret research department to feed developments to the F1 team? Imagine if an employee spilled the beans on that little enterprise? Bye-bye FIAT/Ferrari from F1, branded cheaters and sued for fraud. I don't think the risk/return ratio is worthwhile.

#50 Josta

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Posted 17 January 2008 - 20:20

It is no coindidence that it is the manufacturers that are applauding this idea the most. There is no way in this world that the FIA can monitor what resources the likes of Fiat, Honda, BMW etc are using for F1 related development, as opposed to their road car development. Budget caps will be far easier to police for the likes of Williams.

IMHO, budget caps will be the final nail in the coffin for privateer teams.