Budget cap question

So what happens if you spend more than the budget cap in a year?

Imagine your team is at race 19, and both your cars crash out and the only way to get them on the grid next race is to spend more than you are allowed to.

Is there a provision in the rules for this situation, where can I read up on what the Budget Cap rules are?

F1 is about maximising everything, so my guess would be that teams have an "unforseen spending" budget - but it would be as low as possible. So getting into a situation where you have to spend more than your budget might not be unklikely.

Mercedes was already complaining about the Budget at Imola, but it being already early in the season it's possible to limit spending the rest of the season.

Details still to be sorted. If its a points deduction wonder if it will be just the WCC points.

It would be stupid. You could spend twice as much as the budget cap and then win most of the races and the WDC.
 

It would be stupid. You could spend twice as much as the budget cap and then win most of the races and the WDC.
 

How would that work, if it only applies to extra expenditure due to crashes and can only be spent on repairs?

Edited by Ivanhoe, 09 June 2021 - 19:51.

Think it was going to be just a monetary penalty, but they are now looking at a sporting penalty. Details still to be sorted. If its a points deduction wonder if it will be just the WCC points.

Monetary penalty would make zero sense as the big money teams can afford any penalty you give them. It would have to be sporting or there is zero reason to have the cost cap

We’re talking about extra money spent due to repairs of crashed cars. There’s no room to abuse the rules, nobody crashes a car so they can spent more money than the budget cap.

If they do incur a monetary penalty it should increase exponentially after crossing the budget cap and come to the benefit of the other teams. 

Race bans. The end 

Teams are more than capable of managing this. Don't fly so high that you hit the ceiling next time.

Edited by ARTGP, 09 June 2021 - 20:09.

Race bans. The end 

 

Teams are more than capable of managing this. Don't fly so high that you hit the ceiling next time.

So you always have to reserve some funds for possible crashes in the last races? Maybe they should exclude necessary repairs due to crashes from the budget cap. Repairs don’t improve the car as it was after all.

Edited by Ivanhoe, 09 June 2021 - 20:12.

Like it always is with these kind of things, you would have thought that they would have decided before they introduced the cap what the penalty would be for exceeding it and told everyone about it. But, of course, they have most likely just decided what the cap should be and assumed that everyone will follow it.

So you always have to reserve some funds for possible crashes in the last races? 

I think that is reasonable otherwise teams can claim "damage" or "over mileage" on an otherwise good part in an effort to deliberately overspend on "new" parts which may no longer look or weigh the same as the ones that were "damaged"   . They need to strongly discourage over spending.  The FIA cannot have minions at the team factories verifying "damaged" parts. It's not feasible.  If a driver is so crash prone that they sail through the budget cap, then perhaps he needs a time out anyway.

Edited by ARTGP, 09 June 2021 - 20:19.

I think that is reasonable otherwise teams can claim "damage"  in an effort to deliberately overspend on "new" parts which may no longer look like the ones that were "damaged"   . They need to strongly discourage over spending.

Don’t know, I think it’s pretty hard to seriously damage parts on purpose without consequences in the WDC/WCC. Which team would want to do that? It’s also pretty easy to prevent abuse, just allow them to only replace the exact same part.

Edited by Ivanhoe, 09 June 2021 - 20:21.

Don’t know, I think it’s pretty hard to seriously damage parts on purpose without consequences in the WDC/WCC. Which team would want to do that?

I agree. We aren't going to see teams telling drivers to crash.  But one can easily have an "oopsie" at the factory, or even simply claim a good part is "damaged". How could the FIA verify anything?

I agree. We aren't going to see teams telling drivers to crash.  But one can easily have an "oopsie" at the factory, or even simply claim a good part is "damaged". How could the FIA verify anything?

You could simply only exclude repairs from damage clearly attributable to incidents and accidents on track and only allow replacement of the exact same parts.

Edited by Ivanhoe, 09 June 2021 - 20:23.

where can I read up on what the Budget Cap rules are?

How would that work, if it only applies to extra expenditure due to crashes and can only be spent on repairs?

Sorry, I didn't catch the context.

I have another question. Excuse me if it has been answered before or if the answer is easy to find, but there is something I don't understand: AFAIK, most cost-capped sports are American, where all or a great majority of each sport (yes, I know there are some Canadian basketball teams in NBA) live in a dollarized universe.

However, F1 teams spend in different currencies. For most of them, the GBP and the euro are the main currencies, but USD and yen are also present. For example, most or nearly all of the salaries at Ferrari are paid in euro, while the salaries at McLaren are paid in GBP and different suppliers are paid in different currencies. Same happens for the income from sponsors. How does the sport deal with that? It would be simple to say that you could apply the current exchange rate, but by no means it reflects the difference in prices between two economic areas, not at least on the short term. And that is even more worrying for salaries, which by its own nature, must have a stable baseline.

The GBP/euro exchange rate has had an amplitude of difference of 6% in the five first months of 2021, which means 7 M€ or 7 M£ more or less in relationship to the 145 M$ M budget cap. Far from irrelevant.

Edited by DeKnyff, 10 June 2021 - 12:50.

I admit I haven't read the rules around the budget cap but I would assume it's given in euros, given the FIA is based in Paris. I would also assume there is some sort of mechanism for force-majeure. If a team had allocated or even spent it's budget and had both cars wiped out and rendered unrepairable in a late season accident there ought to be some sort of allowance for them to build new cars. 

I am also in favour of saying "Here's your budget. Do what you want. If you want to test, go test. As long as it's within the agreed budget".

I admit I haven't read the rules around the budget cap but I would assume it's given in euros, given the FIA is based in Paris. I would also assume there is some sort of mechanism for force-majeure. If a team had allocated or even spent it's budget and had both cars wiped out and rendered unrepairable in a late season accident there ought to be some sort of allowance for them to build new cars.

I am also in favour of saying "Here's your budget. Do what you want. If you want to test, go test. As long as it's within the agreed budget".

I admit I haven't read the rules around the budget cap but I would assume it's given in euros, given the FIA is based in Paris. I would also assume there is some sort of mechanism for force-majeure. If a team had allocated or even spent it's budget and had both cars wiped out and rendered unrepairable in a late season accident there ought to be some sort of allowance for them to build new cars. 

 

I am also in favour of saying "Here's your budget. Do what you want. If you want to test, go test. As long as it's within the agreed budget".

I admit I haven't read the rules around the budget cap but I would assume it's given in euros, given the FIA is based in Paris. I would also assume there is some sort of mechanism for force-majeure. If a team had allocated or even spent it's budget and had both cars wiped out and rendered unrepairable in a late season accident there ought to be some sort of allowance for them to build new cars. 

 

I am also in favour of saying "Here's your budget. Do what you want. If you want to test, go test. As long as it's within the agreed budget".

The FIA are very skittish about opening up the regs again under the budget cap. The reason is because every variable that you introduce, increases the likelihood of gaps between the competition. The hope in confining them is that it's not possible to stray far away from one another in terms of ideas and laptime.

Also, it's given in USD.  

Edited by ARTGP, 10 June 2021 - 08:57.

We’re talking about extra money spent due to repairs of crashed cars. There’s no room to abuse the rules, nobody crashes a car so they can spent more money than the budget cap.

We are talking about hyper-competitive teams trying to exact the smallest margins from everything they do. With an attitude that if you ain't cheating, you ain't trying.

Do you really think they wouldn't crash or damage a car in a heartbeat if it somehow gave them a competitive advantage? How about Team A having designed a new aero package but they can't afford to build it for the final few races.....Why not crash the car during a late season promo day and petition the FIA to be allowed the car to be rebuilt. With new aero parts obviously because there mysteriously aren't enough old parts......
 

We are talking about hyper-competitive teams trying to exact the smallest margins from everything they do. With an attitude that if you ain't cheating, you ain't trying.

 

Do you really think they wouldn't crash or damage a car in a heartbeat if it somehow gave them a competitive advantage? How about Team A having designed a new aero package but they can't afford to build it for the final few races.....Why not crash the car during a late season promo day and petition the FIA to be allowed the car to be rebuilt. With new aero parts obviously because there mysteriously aren't enough old parts......
 

Simple, only allow replacement with the exact same parts.

Edited by Ivanhoe, 10 June 2021 - 09:10.

Simple, only allow replacement with the exact same parts.

Agreed, but how would the FIA police a part like the floor?

Agreed, but how would the FIA police a part like the floor?

All the designs of the parts being used should be available for FIA. I mean if Alberto Fabrega is able to detect all new bits on the cars, FIA certainly should be.

All the designs of the parts being used should be available for FIA. I mean if Alberto Fabrega is able to detect all new bits on the cars, FIA certainly should be.

That be an IP nightmare. Besides there is the Internet hacking issue. The FIA needs info on the internet, as there is no way they transport all the IP data to each and every race.

I doubt Fabrega is able to detect all new bits.

And there are perfectly fine reasons for different wings for different races, even after a crash wanting to use another wing. To make things work it seems to me the FIA needs to assign one designated scrutineer for an entire season to each team.

Yeah, you may be right. I still fail to see that a team would be prepared to seriously damage a car (which would probably also cost them points), just to be in a position to introduce new parts.

I would say extra ballast on a sliding scale proportional to the overspend for the following season. 

The loss of speed will mean both sporting and financial penalties, and is severe enough to put teams off. 

I do think crash damage should be excluded from the cap though. 

So you always have to reserve some funds for possible crashes in the last races? Maybe they should exclude necessary repairs due to crashes from the budget cap. Repairs don’t improve the car as it was after all.

Don't do something that has a high risk of damaging your asset, if you can't afford to repair the asset (yet expect to keep using it).

Don't do something that has a high risk of damaging your asset, if you can't afford to repair the asset (yet expect to keep using it).

Sorry, maybe I'm missing something here, but are you saying the teams should race at eight tenths?

Surely the teams can't be expected to budget for damage due to tyre failures - (Stroll and Verstappen - Baku).

I can't imagine  a way to "police" how entities like Mercedes, Ferrari, etc are conforming to budget cap.

How to check if noone else in these corporations works for the F1 team?!

I can't imagine  a way to "police" how entities like Mercedes, Ferrari, etc are conforming to budget cap.

How to check if noone else in these corporations works for the F1 team?!

All will be auditted by independent external accountants of the FIA, that should give them some assurance.

One obvious question comes to my mind- can't they lower the budget cap by the amount the teams spend on repairs yearly on average and then make the repair costs not count to the budget cap? Could this be abused by the teams in some ways?

Why you all want to open those loopholes ?

If you crash late in the season and have no budget for new pieces, you probably should just put some old spec ones on.

Its a very simple solution, mazapin has to drive your car in the next race

All will be auditted by independent external accountants of the FIA, that should give them some assurance.

Are you joking?

Whats to stop corporation A from moving people "away from F1", other building, other job-name and still make them work on F1 project?!

On papers these people have nothing common with F1.

Regulation freeze can lower needed budgets, but budget cap depends on good will.

"Ok, we will no longer try to find loopholes"

We all know how it worked before, why should be different today?!

That be an IP nightmare. Besides there is the Internet hacking issue. The FIA needs info on the internet, as there is no way they transport all the IP data to each and every race.

 

I doubt Fabrega is able to detect all new bits.

 

And there are perfectly fine reasons for different wings for different races, even after a crash wanting to use another wing. To make things work it seems to me the FIA needs to assign one designated scrutineer for an entire season to each team.

Do what Cup does.  Impound the physical parts and inspect them using 3D scanning as a measurement basis.  Then penalize as they do in Cup with heavy fines, loss of points and race bans for TPs, engineers and car chiefs.

Are you joking?

Whats to stop corporation A from moving people "away from F1", other building, other job-name and still make them work on F1 project?!

On papers these people have nothing common with F1.

 

Regulation freeze can lower needed budgets, but budget cap depends on good will.

"Ok, we will no longer try to find loopholes"

 

We all know how it worked before, why should be different today?!

Other forms of motorsport have figured it out.  If F1 is the “pinnacle” they think they are it shouldn't be an issue.