55 replies to this topic

[FirstnameLastname]

https://www.autospor...t-war/10306242/

https://the-race.com...-bull-conflict/

The first signs of paranoia over the budget cap in F1… seems Ferrari are following not only their own budget but looking at the other teams with suspicion when they are bringing new parts/updates to every race while they are being more selective about what they choose to develop and build.

Redbull/Marko then trolling that Ferraris budget is being wasted on rebuilding Sainz cars

If a team overspend and the financial penalty is that they have to give the FIA some MORE money… then the budget cap is going to become a total farce.

At the moment I’d imagine nobody had overspent… YET. Perhaps if the championship battle became as hot as last years, teams would make the calculation that it was worthwhile paying whatever financial penalty was given if it helped them win the championship.

Also - as fans - would you want a decent championship to fizzle out because one of the teams ran out of development cash?

[FortiFord]

Teams will start bringing an accountant instead of a lawyer to the final race. 

 

I'm not really sure the FIA will have the balls to enforce it. The full year reporting deadline is 31 March. If a team has materially overspent, are the FIA really going to change the championship results from the previous year, given that by March we will have already begun a new season?

[ConsiderAndGo]

Did the FIA actually ever publish how the budget cap is going to be checked and enforced? It’s such a minefield!

[FortiFord]

Did the FIA actually ever publish how the budget cap is going to be checked and enforced? It’s such a minefield!

 

Yes

 

https://www.fia.com/..._2022-02-18.pdf

[Bartonz20let]

Also - as fans - would you want a decent championship to fizzle out because one of the teams ran out of development cash?

This is a huge flaw in the rules as it destroys the engineering competition.

Last season was only thrilling because Merc kept throwing things at the car, trying to keep up with RBR, the whole engine, rear wing, rear suspension... such intense intrigue.

The cost cap guarantees we are unlikely to ever have that again for some time, locking in an advantage for 23 races is insane.

Edited by Bartonz20let, 20 May 2022 - 08:46.

[Requiem84]

This is a huge flaw in the rules as it destroys the engineering competition.

Last season was only thrilling because Merc kept throwing things at the car, trying to keep up with RBR, the whole engine, rear wing, rear suspension... such intense intrigue.

The cost cap guarantees we are unlikely to ever have that again for some time, locking in an advantage for 23 races is insane.

 

Not having the cost cap actually was the huge flaw. 

 

Previously teams could outspend themselves out of issues. Not intelligence, but just brute money force to get you where you wanted to get. 

 

F1 is about being smart and efficient. Teams are now required to be smart, efficient and are required to make tough choices. That is much more interesting than seeing which team has the biggest wallet. 

 

The only real issue there is with the budget cap is enforceability and transparancy. Some of the teams have an incredible complex legal structure with so many transactions going back and forth that it's even a big task for a Big4 audit firm to have a clear grasp on the details. Some teams (if not all) will play some smart tricks with the books. All I can hope for is that any smart tricks will be punished really severely as a deterrent, rather than a slap on the wrist....

[Bartonz20let]

Not having the cost cap actually was the huge flaw.

Previously teams could outspend themselves out of issues. Not intelligence, but just brute money force to get you where you wanted to get.

Yeah, much better to restrict it to a point where teams fear bringing upgrades... 🙄

[FortiFord]

They won't overturn the previous year's results - but they'll certainly have an impact on future results and earnings. A team would have to be very short sighted to blatantly ignore the cap.

 

That's not true. Penalties would apply to the reporting years' results:

 

© A "Material Sporting Penalty", meaning one or more of the following:

(i) deduction of Constructors' Championship points awarded for the

Championship that took place within the Reporting Period of the breach;

(ii) deduction of Drivers' Championship points awarded for the Championship

that took place within the Reporting Period of the breach

Edited by FortiFord, 20 May 2022 - 08:59.

[BRG]

Instead of drivers or aerodynamicists, each team's biggest salary item will be its forensic accountant.  We will know all their names and there will be threads about them. 

[FirstnameLastname]

Current most cost effective way seem to be:

See who’s quickest
Copy their car

Bring that upgrade to the first European race

Aston Martin Racing Point seem to have the sensible idea. Let Redbull do the research and development and then just get your mechanics with LiDAR scanners to walk round the car in parc ferme. Job done.

[Requiem84]

Current most cost effective way seem to be:

See who’s quickest
Copy their car

Bring that upgrade to the first European race

Aston Martin Racing Point seem to have the sensible idea. Let Redbull do the research and development and then just get your mechanics with LiDAR scanners to walk round the car in parc ferme. Job done.

 

Scanning competitor cars is strictly prohibited I believe?

 

Besides, copying a car usually doesn't make you as fast as the car you copy. 

[Seanspeed]

Current most cost effective way seem to be:

See who’s quickest
Copy their car

Bring that upgrade to the first European race

Aston Martin Racing Point seem to have the sensible idea. Let Redbull do the research and development and then just get your mechanics with LiDAR scanners to walk round the car in parc ferme. Job done.

Yep, this ONE single example, where we haven't even seen how fast the car even is, is totally now the defacto example of how to do things.  

 

Totally not an incredibly reactionary take....

[FirstnameLastname]

Yep, this ONE single example, where we haven't even seen how fast the car even is, is totally now the defacto example of how to do things.

Totally not an incredibly reactionary take....

Welcome to the AUTOSPORT bulletin board. We specialise in HOT TAKES on race weekends.

[RA2]

Does anyone believe Ferrari can build anything in a cost effective manner? it is just not in their DNA.

[Requiem84]

Does anyone believe Ferrari can build anything in a cost effective manner? it is just not in their DNA.

Actually I think labor costs, materials etc should be a bit cheaper in Italy than in the UK.

The cost cap doesn’t take into account in which country teams are established….200 milion USD is much less effectively in for example Norway compared to let’s say Portugal.

[Hellenic tifosi]

I really don't understand how the budget cap can be policed effectively.

[P123]

The budget cap is just another avenue for creating never ending squabbles.  It will be the new traction control.

[Sterzo]

I really don't understand how the budget cap can be policed effectively.

I have no doubt there are already transgressions, and no doubt there will be undetected offences in the future. Just like the technical rules, really. Rules will never be perfectly applied, but they do improve things.

[RA2]

Actually I think labor costs, materials etc should be a bit cheaper in Italy than in the UK.

The cost cap doesn’t take into account in which country teams are established….200 milion USD is much less effectively in for example Norway compared to let’s say Portugal.

 

 

Ferrari would be spending more manhours on perfection of its manufactured parts.

[Paa]

This is a nice article about budget cap details. Unfortunately it is in Hungarian and google translate is not the best, but at least 85% of it is still understandable I think. This is by the Hungarian TV commentator, also an ex-racer, he is not perfect, but mostly solid and reliable.

https://webergabor.b..._a_koltsegsapka

 

 

On a different and more lightly note.... I guess Binotto is now busy calculating McLaren's, AM's and Alfa's budget as they brought really substantial upgrades. 

[Bloggsworth]

Do bears...

[Zoe]

Does anyone believe Ferrari can build anything in a cost effective manner? it is just not in their DNA.

 

I think it was Lauda many many years ago (before the Schumacher years) who warned taking Ferrari not serious. The problem, at least at the time, was not the Italians at Ferrari not working hard enough, but too many political fractions and everyone working in a different direction. Once they got that aligned and well managed, they ran away with the titles.

[GrumpyYoungMan]

 locking in an advantage for 23 races is insane.

if not longer...

[Fastcake]

It should be no different to the technical regulations. If the teams aren’t pushing at the boundaries and looking for ways to break the rules and get away with it, they’re not doing their jobs right.

Hopefully the enforcement is good, better than scrutineering perhaps, because unlike someone cheating with bendy wings the financial rules keep the sport existing as a viable entity, and will eventually overcome the massive advantage three wealthy teams have over the others.

[Requiem84]

Ferrari would be spending more manhours on perfection of its manufactured parts.

That depends, who knows what level of quality control there is in Maranello vs Milton Keynes?

[Requiem84]

It should be no different to the technical regulations. If the teams aren’t pushing at the boundaries and looking for ways to break the rules and get away with it, they’re not doing their jobs right.

Hopefully the enforcement is good, better than scrutineering perhaps, because unlike someone cheating with bendy wings the financial rules keep the sport existing as a viable entity, and will eventually overcome the massive advantage three wealthy teams have over the others.

The problem is that finance is vastly more grey than black and white compared to technical regulations.

[theblackangus]

This is a huge flaw in the rules as it destroys the engineering competition.
 

It doesn't destroy it, it enhances it. Engineering with limited resources is more of a challenge.

When you can just throw money at it the person with the most money usually wins.

 

There is still a loop hole here.

Engineering work time should be enforced too so you dont have one team working all the engineers 18 hours a day all year long, while another team is gives their engineers a better work life balance.

Edited by theblackangus, 20 May 2022 - 11:39.

[theblackangus]

The problem is that finance is vastly more grey than black and white compared to technical regulations.

If the FIA are serious about it they need to be the middle man for all purchases, know all the salaries, etc

This is the only way to really be serious about this, even then there are still loop holes.

[PayasYouRace]

This is a huge flaw in the rules as it destroys the engineering competition.

Last season was only thrilling because Merc kept throwing things at the car, trying to keep up with RBR, the whole engine, rear wing, rear suspension... such intense intrigue.

The cost cap guarantees we are unlikely to ever have that again for some time, locking in an advantage for 23 races is insane.

Nobody is having their advantage locked in. The lower teams who haven’t even reached the level of the cap haven’t had development halted.

If anything, it just means the leading teams no longer have their advantage locked in. If they burn through their budget and the lower teams who are more used to operating on the lower budget can catch up, that’s only good for competition.

[sgtkate]

Oh no:

 

https://www.bbc.co.u...rmula1/61551759

 

If you can't afford to get to races, perhaps you need to spend less on developing the car, which is the whole point of the cap!!!

[Muppetmad]

I can see the argument for increasing the cap in line with inflation. While I doubt we'd see seven teams missing the final four races, as Horner warns, it'd certainly not be in F1's interests for one or multiple teams to miss any of the final races due to the cap not being increased in line with inflation.

[Sterzo]

'Horner, whose Red Bull team lead the drivers' championship, through Max Verstappen, as well as the constructors' championship, said F1's governing body the FIA "needs to address" the problem.'

 

Or maybe Horner, whose Red Bull team lead the drivers' championship, as well as the constructors' championship, needs to address the problem.

[Heyli]

'Horner, whose Red Bull team lead the drivers' championship, through Max Verstappen, as well as the constructors' championship, said F1's governing body the FIA "needs to address" the problem.'

 

Or maybe Horner, whose Red Bull team lead the drivers' championship, as well as the constructors' championship, needs to address the problem.

There was quite a lengthy discussion about the amount of the cost cap, because it should be a balance between what the big teams had to reduce and to come closer to the budget of the littler teams. For the teams that were still below the cost cap anyway, obviously they dont care much. But I think it's quite logical with the current inflation (and especially in logistics the costs increased massively) that they need to review the exact cost cap levels. 

 

From that article it seems that it's not just Red Bull, but 5 other teams as well. 

[FirstnameLastname]

But that means there’s 4 teams that are managing ok… and those teams would benefit if the non compliant teams had to skip races (spoiler: they won’t)

Penalise those who operate under the cost cap by raising the cap to allow the ‘top teams’ to spend more to maintain their places at the top

Not sure the paddock fully understands what the cost cap is meant to achieve.

[Heyli]

But that means there’s 4 teams that are managing ok… and those teams would benefit if the non compliant teams had to skip races (spoiler: they won’t)

Penalise those who operate under the cost cap by raising the cap to allow the ‘top teams’ to spend more to maintain their places at the top

Not sure the paddock fully understands what the cost cap is meant to achieve.

the inflation this year is really unusual(and areas like transport are hit even worse). I‘d day it‘s not something they tool into account while setting up the cost cap and I dont think it‘s unreasonable to make some adaptations purely based on the inflation.

[ThadGreen]

Yes

 

https://www.fia.com/..._2022-02-18.pdf

 

Thank you for posting that. I probably should spend some time reading and digesting the document however I am reminded of what my tax guy tells me from time to time -"Figures don't lie but liars figure". 

[Sterzo]

We really need to see some figures to understand how real this problem is.

• Parts of the budget - premises, car build and staffing costs - are probably not significantly affected by inflation.
• There will be provision in budgets for some inflation, and if it's less than five or six per cent, they need to sack their accountants.
• There will also be contingency in the budget, a sum set aside for unforseeable expenditure. If not, they should save millions by sacking the team principal.
• Part of the budget - development upgrades - is discretionary. If you're committed contractually to turn up, you don't spend your travel money on upgrades.

On the other hand, there's a massive percentage increase in travel costs. What we do not know is (a) what those costs were last year and (b) what they're likely to be this year. It's conceivable they coud be so much higher than reasonably anticipated that there really is a problem. It would be interesting to know.

[FortiFord]

We really need to see some figures to understand how real this problem is.

• Parts of the budget - premises, car build and staffing costs - are probably not significantly affected by inflation.
• There will be provision in budgets for some inflation, and if it's less than five or six per cent, they need to sack their accountants.
• There will also be contingency in the budget, a sum set aside for unforseeable expenditure. If not, they should save millions by sacking the team principal.
• Part of the budget - development upgrades - is discretionary. If you're committed contractually to turn up, you don't spend your travel money on upgrades.

On the other hand, there's a massive percentage increase in travel costs. What we do not know is (a) what those costs were last year and (b) what they're likely to be this year. It's conceivable they coud be so much higher than reasonably anticipated that there really is a problem. It would be interesting to know.

 

Not sure about the bit in bold. Cost of raw materials (e.g. base metals) have gone up significantly. There is also the cost of electricity for running the wind tunnel, simulator. 

 

BTW, team principal's salary is not part of the cost cap. 

[shure]

We really need to see some figures to understand how real this problem is.

• Parts of the budget - premises, car build and staffing costs - are probably not significantly affected by inflation.
• There will be provision in budgets for some inflation, and if it's less than five or six per cent, they need to sack their accountants.
• There will also be contingency in the budget, a sum set aside for unforseeable expenditure. If not, they should save millions by sacking the team principal.
• Part of the budget - development upgrades - is discretionary. If you're committed contractually to turn up, you don't spend your travel money on upgrades.

On the other hand, there's a massive percentage increase in travel costs. What we do not know is (a) what those costs were last year and (b) what they're likely to be this year. It's conceivable they coud be so much higher than reasonably anticipated that there really is a problem. It would be interesting to know.

they've been travelling since F1 was created, so that's one part of the budget they should reasonably be able to anticipate with a fair degree of accuracy

[shure]

I'm sure when the budget cap was finalised there were reports that only five teams were actually spending above it anyway, and two of those were borderline.  What the teams are really saying is they want the freedom to pile money into development

[cbo]

Yeah, much better to restrict it to a point where teams fear bringing upgrades... 🙄

They need not fear bringing upgrades. But they need to be clever about it and not just go by trail and error.

The cost cap makes the sport much more interesting and sustainable. It gives smaller teams a fighting chance and makes it more likely that larger teams may fail and take longer to recover. That is a good thing.

Edited by cbo, 25 May 2022 - 12:57.

[Heyli]

they've been travelling since F1 was created, so that's one part of the budget they should reasonably be able to anticipate with a fair degree of accuracy

And that is exactly the point. With the recent developments the costs in some areas increased significantly above what you could have reasonable anticipated. Just an example looking at Shipping rates. In our area I was aware of costs increases of about 4 to 500%, but it seems to be even up to 800% on some routes. https://www.hellenic...duced-capacity/

[SophieB]

Fwiw and without knowing anything about whether it was accurate then, or accurate now, I will share a memory* of watching Eddie Jordan chatting to Martin Whitmarsh and Christian Horner on the subject of budget caps and Eddie waved the whole thing away dismissively saying can always get round these, squirrel people away, hide them in cupboards, in Personnel, to which Christian Horner was all no, no, Eddie. And then Martin Whitmarsh snapped a bit and told Horner how this was rich because Red Bull were spending well over their allocation to which Horner smirked a bit about how Whitmarsh had no evidence at all. I remember thinking how I’m not sure they remembered it was still going out live on tv, albeit on the BBC Fan Forum red button channel. This must have been in 2011.

 

 

 

*You can rely on this recall, because as I demonstrated yesterday by remembering it was Grosjean who took a heavy crash into the Monaco barriers when actually it was Verstappen, it is plainly bulletproof.

[MikeTekRacing]

they've been travelling since F1 was created, so that's one part of the budget they should reasonably be able to anticipate with a fair degree of accuracy

That’s exactly the issue. All the past data is useless with the current crazy prices.

They can’t control the logistical nightmare 2022 is

[JimmyClark]

As someone who works with a lot of travel budgets on my projects, and who has always added in a few percentage points of leeway in my budgeting, I can confirm this year has been a nightmare for overspending. When you multiply that across a whole team of F1 personnel and freight shipping, I can see how this is becoming a problem.

[Rinehart]

The financial rules in football havent worked at at all, certain teams blatantly financially doping or flagrantly breaking the FFP rules knowing the punishment will never overcome the benefit. Evidently the teams have better lawyers than the regulators who are struggling to hand out any meaningful punishments at all. And in some cases don't want to, for political reasons. 

 

I don't know how the FIA are gonna stop development happening in some far corner of a global corporation and then only putting a small proportion of the work through the race teams books - making it look like they arrived at a solution quickly. Or making redundancies due to the cost cap but actually moving half a department to a subsidiary but still doing the work. Anyone who knows what it would take for a forensic look at any F1 team would know the FIA simply don't have the staff and are not outsourcing it at the level necessary. To be fair the costs would be absurd. 

 

I think the BC system is little more than an honesty box. It's all going to come down to "interpretations" of the rules plus the big teams such as RB, Merc and Ferrari will as usual know that at the end of the day, F1 can't afford to lose them and FIA don't have the wherewithal to properly investigate and punish them. At best we might end up with a "secret agreement" if ever there is a case.

 

Tbh it doesn't really change much. Before certain teams had more money than others, now they still do, they just have to pretend they don't!

[shure]

And that is exactly the point. With the recent developments the costs in some areas increased significantly above what you could have reasonable anticipated. Just an example looking at Shipping rates. In our area I was aware of costs increases of about 4 to 500%, but it seems to be even up to 800% on some routes. https://www.hellenic...duced-capacity/

Container shipping has indeed been fluctuating wildly; road freight significantly less, although depending on the region we've seen year on year increases of between 10-20%.  And air freight has seen much less volatile rate movements, with some analysts even predicting a drop in rates there.  Does F1 do a lot of sea freight?  I thought most of it was air and truck. Given that average global inflation is running at around 7.5% on its own, the non-shipping figures are less scary than they might at first appear. And much of this was predicted last year anyway.  Our company spends obscene amounts of money on transport, including a hefty amount of seriously heavy shipping volumes globally, and yet we are still within 3-5% of forecast so far.  So while I agree that costs have gone up, I think some of the TPs are grabbing some headline figures to plead poverty by making it look like they are the victims of completely unpredictable events, whereas in reality it's largely a smokescreen and what they really want is the license to spend their way out of trouble in car development

[JimmyClark]

 Does F1 do a lot of sea freight? 

 

Yes they do, as part of a mixed approach.  

 

This article is a good explanation of the challenges F1 faces: https://racingnews36...est-ever-season

 

The process is that FOM arranges and consolidates the freight, with F1 corporate sponsor DHL handling the formalities. Freight consolidated, then transported across a number of aircraft, being cargo flights, charters or belly loads on passenger flights. Bulky and non-time-sensitive stuff such as garage equipment and hospitality kit is sent by sea – with teams rotating up to six identical sets.

Last year, a number of teams found themselves on the back foot in Brazil after inclement weather grounded flights from Mexico in Miami - a torturous route, but, tellingly, the most time-efficient alternative - and a fortnight ago technical issues delayed a consignment bound for Bahrain by three days, forcing Haas to work triple shifts to prepare for testing, then run late into evenings to complete its crucial pre-season test routines.

Of course, there were grossly unfair sniggers such as "It's only Haas" - as there were when the team was affected last year - but also delayed was a Formula 1 shipment: fortunately bound for Jeddah; thus the series promoter's proceedings were unaffected. The bottom line is, though, that the delayed shipments could just as easily have hit Mercedes, Red Bull and/or Ferrari – and imagine the outcry had that been the case.

Such incidents occurring twice in three (racing) months provide major cause for concern, and teams are increasingly worried that they could become the norm rather than being rarities: multiple sources told RacingNews365.com that airfreight out of Australia could be delayed by up to four days; imagine if Melbourne's race was twinned with, say Shanghai as in the past. Fortunately, there is a one-week buffer to Imola, but not through foresight.

[Sterzo]

Horner's vagueness on this does raise suspicions of a smokescreen, and according to a new article in Autosport:

 

"In response to Horner's claim that teams would miss races, Szafnauer insisted that they will simply have to scale back their development budgets to stay within the limit."

 

And unlike Horner, the unpronounceable Mr Szafnauer does give some sample figures: “So when freight costs go up by $2.5-3.5m, but your development budget is $20m, can you not make your development budget $17m and still be under the cap?"

 

Here's the article:

https://www.autospor...t-cap/10310379/

[SenorSjon]

Yes

 

And the electric bill quadruppled, so there is more cash gone.

 

If inflation and costs keep rising, you end up with a negative development budget. And a big chunk of it is wages for the guys making the new molds and stuff.