How to deal with the cost cap - my suggestion

I have been reading that the team adherence to the cost cap for last year is only now about to be certified.  This season is almost over.  I thought last year was done and dusted.  

If teams have been found to have broken the cap, what's going to happen - change last year's results?  Would not be a good look for F1!  

As I don't want a discussion on last year's result, here is my suggestion for dealing with the cost cap

All relevant finances to be reported in the pre-season and on a race-by-race basis. 

When or if a team breaks the cost cap, no more points for the season

And before you say it - Yes, it is not an easy task to do that sort of financial reporting.  BUT this is F1, just put the right processes in place and (like any other compliance requirement) the cost cap can be managed during the season when it is relevant NOT when the next season is almost over.

Spending during the year is both for that season and for the following season.

It would make sense to assume that the extra spend is for the following season, so the completed season is not affected.

Paul di Resta's theory that the budget cap stops teams spending to catch up ignores the fact that teams at the front are stopped from spending to make their cars faster too.

I think that WCC standings must be affected, but if it is about RBR, it could be for this season indeed.

I think that WCC standings must be affected, but if it is about RBR, it could be for this season indeed.

If they do not want to fiddle with the championships for the current year, then they should severly compromise the prospects of any team in breach of the cost cap for the following year (or even two). That's the only way that a team would question overspending.

Personally I think teams should be fined and start the next season on negative WDC and WCC points, say -100 for a major infringement

They will never deduct WDC points, WCC points only.

I think a reduction of wind tunnel & CFD time e.g. 4 times the overspend in % terms. i.e. overspend by 5% and you lose 20% of whatever your allocated time is going to be for the next 12 months.  It needs to be enough to put teams off from doing it. Fines are no deterrent for the big three teams

Of course we don't know the size of the overspend yet, so will have to see.

Personally I think teams should be fined and start the next season on negative WDC and WCC points, say -100 for a major infringement

They will never deduct WDC points, WCC points only.

I think a reduction of wind tunnel & CFD time e.g. 4 times the overspend in % terms. i.e. overspend by 5% and you lose 20% of whatever your allocated time is going to be for the next 12 months. It needs to be enough to put teams off from doing it. Fines are no deterrent for the big three teams

Of course we don't know the size of the overspend yet, so will have to see.

They will never deduct WDC points, WCC points only.

 

I think a reduction of wind tunnel & CFD time e.g. 4 times the overspend in % terms. i.e. overspend by 5% and you lose 20% of whatever your allocated time is going to be for the next 12 months.  It needs to be enough to put teams off from doing it. Fines are no deterrent for the big three teams

 

Of course we don't know the size of the overspend yet, so will have to see.

IMO that's not transparent enough, fines should be loud and clear

CFD limits relies on teams being honest with their self-declarations anyway and we all know how teams like to be completely honesty don't we 

Three issues with the current system spring to mind (IMHO of course...)

1. Punishments should be clear for the various levels of infraction, then it's up to the team how close to the wind they want to sail. At the moment it's all very hand-wavy and unclear.

2. Punishments should be on a progressive sliding scale, not below 5% it's this and above something else. 

3. Some of the teams are massively complex in their business construction. Surely this has been looked at previously and made clear to the teams how the various situations would be regarded. Red Bull specifically have RBT that serves two different F1 teams together with also working for other customers. I would hope/presume that the FIA have agreed with RB how this should be regarded and handled, but I'm not overly confident.

I think that WCC standings must be affected

Then it doesn't matter for the teams most likely to breach the regulations. Red Bull doesn't care about WCC if they can get WDC. Ferrari will likely sacrifice WCC to get WDC as well. Even how much Mercedes talks about WCC being important, I do think they would do that choice too. The ones who really need the WCC money and use WCC as PR, they are the ones that are unlikely to have the money to breach the cost cap.

Then it doesn't matter for the teams most likely to breach the regulations. Red Bull doesn't care about WCC if they can get WDC. Ferrari will likely sacrifice WCC to get WDC as well. Even how much Mercedes talks about WCC being important, I do think they would do that choice too. The ones who really need the WCC money and use WCC as PR, they are the ones that are unlikely to have the money to breach the cost cap.

WDC is for the glory.

WCC is for the money.

Team payments are based on WCC position, so most teams will be aiming to maximise their WCC standings. The top 3 aren't as dependent on WCC money to fund their operations.

I have a genuine question; does the cost cap apply to costs incurred in that season, irrespective of which car the team were developing (i.e working on the 2026 car in 2021), or is the 2021 cap applicable to all work in previous years + 2021 towards building and operating the 2021 season? It seems a bit of a cheat to be developing 2026 car on a 2021 salary basis, avoiding 5 years of inflationary impacts…

The cost cap is for a period between 1 Jan and 31 December of a given year. It does not matter what year the developments are for, the money spent goes towards the budget cap.

If, for instance, Red Bull did overspend in 2021 it will be because of 2021 and 2022 car development. 

It will be brave team to start work on the 2026 car, since no rules have been defined (except for power unit).

You remember that episode of Black Mirror with Rory Kinnear as PM? Oh, and homebrand biscuits only.

Very bad idea: Red Bull could win the title with several races to go so according to your suggestion they could break the cost cap big time when they have or almost have the title secured and use the money above the cap to develop next year's car and maintain an advantage this way.

Also: a team that's for example 3rd in the standigns could go way over the budget cap the momen,t the 4th team can't overtake them anymore because of their point gap.
 

Needs to be 2 pronged IMO. There needs to be punishment for the season it took place in to stop teams from just spending it to have a good season and eating the ongoing penalties. There also needs to be ongoing punishment to make sure any potential gain from the overspend on future cars is mitigated and then some.

For me increasing the minimum weight for a team would nullify the aero advantage gained and then reducing their CFD / Wind tunnel time would allow other teams to catch up on the aero department. So for a 2021 breach I would deduct points or DQ depedning on severity from 2021. As we are already nearly done with 2022 I would do the same for 2022 and then for 2023 I would apply the sporting penalty of a higher minimum weight limit for that team and reduce their CFD / Wind tunnel time. In terms of determining the punishments (number of points deducted, amount of CFD / Wind Tunnel time lost, amount to increase min weight by).

I would have a set of curves so you can have an overspend amount and have it spit out the fixed penalties. I know the FIA said they wanted to avoid this to prevent teams from using the known punishment strategically but where that can be done is with the aggravating / mitigating factors system. This is where the panel would look at the context and circumstances of the breach and apply a % modifier to the baseline punishment. This % modifier would not be known beforehand because each case will probably be unique and it will be based on its own set of facts.

The idea being that a team that overspends by 15M because they had a factory fire and had to spend that to replace parts and equipment that was damaged, and went to the FIA to discuss the way forward prior to the March submission deadline should be treated differently from a team who overspends by 15M on staff and manufacturing to have more spare parts so each part can be that tiny be lighter since it can have a shorter life span, and then hides it until it is discovered in the audit post March submission deadline.

Edited by Timorous, 05 October 2022 - 07:47.

Really tricky one this. Going back and retrospectively changing results of the championship is a very bad look for the sport. 

IMO the punishment needs to be sporting and for the future. A combination on some of the following could be adequate.

*Deduction of future cost caps with a multiplier of previous over spend for example 1m * 1,5.

*Reduced CFD/Wind tunnel time based on previous over spend for example 2% reduced time per million.

*Weight penalty with X kg per million over spend

I have been reading that the team adherence to the cost cap for last year is only now about to be certified.  This season is almost over.  I thought last year was done and dusted.  

 

If teams have been found to have broken the cap, what's going to happen - change last year's results?  Would not be a good look for F1!  

 

As I don't want a discussion on last year's result, here is my suggestion for dealing with the cost cap

 

All relevant finances to be reported in the pre-season and on a race-by-race basis. 

When or if a team breaks the cost cap, no more points for the season

 

And before you say it - Yes, it is not an easy task to do that sort of financial reporting.  BUT this is F1, just put the right processes in place and (like any other compliance requirement) the cost cap can be managed during the season when it is relevant NOT when the next season is almost over.

I can't really see how that would work. It won't ever be obvious that a team is actually overspending until very late in the year anyway, and as long as they're not over the yearly total limit they surely should be able to relocate funds/planning as they feel like, regardless of their pre-season submitted budget?

However I do agree that it's just plain stupid to even have this discussion, now, about 2021. It just can't have been the original intentions with the cap..

Edited by pUs, 05 October 2022 - 09:13.

This so far just seems to be a thread of punishment, instead of suggestions. As I said in other threads, the most logical way to implement a budget cap is to assign a value to a comprehensive parts list.

Each time a team adds a new or upgraded part, the value is deducted from the season budget. It's not perfect but it serves the purpose that big teams cannot endlessly add new parts through the season.

It eliminates creative accounting as well.

Obviously big teams can throw more designs at the wall until the best one sticks, but they can't put each incremental increase on the car, which gradually pulls them away from the small teams.

And the values for each part should still be high enough that a team can't bring a whole new chassis AND new suspension AND a whole new aero package in the season.

The root problem is having any system which relies on teams honesty to self-declare

These same teams have proven time and time again on track they have little respect for sporting rules and will push everything (flexible floors, flexible wings, fuel sensors...etc etc) to the very limit; so why are we suddenly to believe they will act any differently off track?

Surely history tells us they are far more likely to push the rules on self-declarations (on costs, on CFD/wind tunnel time...etc) to the limit

If F1 is serious about controlling costs and in a way that is trusted F1 must come at the problem in a completely different way

My approach would have been to remove the reasons for teams to spend money, for example by using spec components (eg spec floor) and simplifying technology (eg simple powertrains)

Edited by KeithD68, 05 October 2022 - 11:49.

The root problem is having any system which relies on teams honesty to self-declare

 

These same teams have proven time and time again on track they have little respect for sporting rules and will push everything (flexible floors, flexible wings, fuel sensors...etc etc) to the very limit; so why are we suddenly to believe they will act any differently off track?

 

Surely history tells us they are far more likely to push the rules on self-declarations (on costs, on CFD/wind tunnel time...etc) to the limit

 

If F1 is serious about controlling costs and in a way that is trusted F1 must come at the problem in a completely different way

 

My approach would have been to remove the reasons for teams to spend money, for example by using spec components (eg spec floor) and simplifying technology (eg simple powertrains)

Maybe we should learn a lesson from parenting. Penalizing hardly ever works, you need to stimulate positive behaviour.

So what about just letting go of the cost cap, but introduce a new way for smaller teams to score WCC points.

For instance: 100 WCC points for the team that had the smallest operating budget, and all others will be scored less, gradually and proportionally from there. So someone with 110% of the lowest budget will receive 90 points, and all teams above 200% will receive no points.

Just a random number now, you'd have to research the possible effects and see how it would give smaller teams the opportunity to strive for efficiency and get a decent rating in the championship. If there'd be a risk of throwaway teams being run purely to get WCC points that way you could also link it to points scored or average finishing position (which is better imo because it takes into account places 11 and down) and derive an efficiency score from there. So make it impossible to get a lot of points if your average finishing position is 20th.

Obviously there could also be bonuses in CFD/wind tunnel time etc.

So basically your solution is turning F1 into a spec series and as such stop being F1?

Is it still F1 with a cost cap, CFD/wind tunnel limits and frozen engines?

Besides isn't it an improvement to the sport if more of the performance % was down to the drivers and less down to the cars as F1 once used to be?

Edited by KeithD68, 05 October 2022 - 15:09.

Like most penalties, all that needs to be done is to understand why a team would spend more than the cap. Then the penalty is simply something that makes the reasons for overspending cost more than it's worth.

Clearly, the primary reason why teams would overspend is to increase their chances in the championships. So simply dock championship points for the current season and the next season. That has the side-effect of reducing their income too.

If they do not want to fiddle with the championships for the current year, then they should severly compromise the prospects of any team in breach of the cost cap for the following year (or even two). That's the only way that a team would question overspending.

But that ^ is not really possible. If the cap rules have been violated, not fiddling is in fact fiddling. 

This so far just seems to be a thread of punishment, instead of suggestions. As I said in other threads, the most logical way to implement a budget cap is to assign a value to a comprehensive parts list.

Each time a team adds a new or upgraded part, the value is deducted from the season budget. It's not perfect but it serves the purpose that big teams cannot endlessly add new parts through the season.

It eliminates creative accounting as well.

Obviously big teams can throw more designs at the wall until the best one sticks, but they can't put each incremental increase on the car, which gradually pulls them away from the small teams.

And the values for each part should still be high enough that a team can't bring a whole new chassis AND new suspension AND a whole new aero package in the season.

Edited by Deeq, 07 October 2022 - 18:57.

Take overspending and fines from the following years budget.

Take overspending and fines from the following years budget.

This would be reasonable (in addition to other penalties), but the problem is the FIA aren't releasing results of the certifications of the prior cost year until the end of the current year at which point even if a team wanted to adjust their budget for 2022, it would be far too late as they wouldn't have been aware of a breach until there's only 3 o 4 race weekends left.  If we want to apply this, teams need to know in March, whether they are compliant or not for the previous season in order to give them time to adjust their spending for the current cost year. 

Edited by ARTGP, 07 October 2022 - 19:51.

Take overspending and fines from the following years budget.

All that means is that the overspend costs you 3 times as much. But if you're in a position where that money is less important than the spending brings, that's still not a deterrent. You can't penalise overspending with monitory penalties - it won't work.

Edited by pdac, 08 October 2022 - 10:26.

All that means is that the overspend costs you 3 times as much. But if you're in a position where that money is less important than the spending brings, that's still not a deterrent. You can't penalise overspending with monitory penalties - it won't work.

Quite - and when the 5 years of carried forward and accumulated penalties end up being bigger than the budget you've been ignoring anyway, what then?

Is it still F1 with a cost cap, CFD/wind tunnel limits and frozen engines?

Besides isn't it an improvement to the sport if more of the performance % was down to the drivers and less down to the cars as F1 once used to be?