108 replies to this topic

[Rediscoveryx]

While I'm personally very much in favor of controlling cost via a cost cap system (rather than say testing restrictions, mandated reliability, penalty-points for component changes etc), there are of course always potential pitfalls and loopholes that will need to be regulated/closed if the system is to function as intended. 

 

One such potential loophole seems to have been exploited used cleverly by Red Bull in terms of floor assignment:

 

https://www.autospor...asons/10365387/

 

Now, my intention is not to discuss this specific case, but just more broadly the implications on the incentives for teams to provide equal equipment to both drivers under a cost cap.

 

It is actually quite obvious that it will often be logical for a team to throw as much money as possible on one of their cars to optimize that, while using the other car as a budget version. Take McLaren for instance, who are essentially already a one-car team given the poor performance/motivation of the departing Ricciardo. Why spend money that could be used on Lando's car to optimize Ricciardo's? And any team that has just one driver gunning for the WDC will of course have the incentive to shift the spend completely in that driver's favor.

 

So, what to discuss?

 

* Is this phenomenon a problem or just the natural progression of things?

* If it is a problem, is it possible to circumvent it somehow?

* Are there other unintended consequences of the cost cap that could be detrimental to the sport as a whole and that also needs amending?

[FirstnameLastname]

Rich car / poor car divide

Was there not issues when Mazepin was at Haas that his father thought he should get the upgrades first as they were helping fund the team?

Could happen more and more. Makes the 2nd Aston Martin seat look a dodgy prospect doesn’t it.

[JimmyClark]

As long as teams are honest about it, I guess its fine. We cannot regulate that equal parts must be given to both drivers. 

[Sterzo]

* Is this phenomenon a problem or just the natural progression of things?

It's a good sign that the cost cap is having an impact. I admit I hadn't anticipated the preference of one car over another, but actually if we'd only glanced back at the days of poorer F1 teams, it was there staring us in the face.

 

There will be unintended consequences, as decreed by the Law of Sod, but whether they matter or not remains to be discovered.

[Risil]

Reminds me a bit of the old motorcycle racing dilemma when it's usually been the less favoured but also less mercurial rider who often gets the development parts.

 

Throws up a really interesting set of technical and management challenges for teams, right? So long as they're transparent and journalists are good at getting to the heart of the differences between cars and how they've come about.

 

I think there's going to be a massive and weird unintended consequence to all this that's yet to be discovered, but in an intense and pragmatic environment like F1 pretty much every rule gets stress-tested in this way. Gives us something to talk about.

[absinthedude]

It's happened before in the days when poorer teams would only properly fund one car....especially in the early 90s after single-car teams were consigned to the dustbin of history. 

 

the problem is....it leads to the second driver being underrated. Nobody knows for sure the degree of favour that the #1 car gets.....let's just postulate that RBR ploughs more of it's limited funds to Max's car because he's their man for the title fight.....Sergio's car might genuinely be less competitive but we don't know that, or don't know the extent. That potentially makes Checo look worse than he is. 

 

Or at a midfield team, what if Alfa were favouring Bottas? Zhou would look less good than he otherwise might....makes figuring out who's really good much more difficult. 

[smitten]

As long as teams are honest about it, I guess its fine. We cannot regulate that equal parts must be given to both drivers. 

Playing Devil's Advocate here, but why not?  We regulate the hell out of the sport in the believed interests of fairness and and level playing fields.  Almost everything has some regs to ensure they are the same for each driver/team - tyres, engines, ECUs, budgets, fuel flow, regen, etc. 

[BoDarvelle]

Isn't part of the reason the RB's run different floors the fact that Perez can't drive one set up to suit Max?

 

*Perez has said himself he can't drive Max's setup competitively.

[Peat]

Unrelated, by I wondered if McLaren were running at some great money surplus* if they can afford teams in multiple championships and to pay off drivers contracts here, there and everywhere. 

* I thought during 2020 disruption they indicated that they were close to going under?

[Sterzo]

Unrelated, by I wondered if McLaren were running at some great money surplus* if they can afford teams in multiple championships and to pay off drivers contracts here, there and everywhere. 

* I thought during 2020 disruption they indicated that they were close to going under?

The two are possibly consistent. Reduce the cost of the F1 team and use your surplus manpower in different series where you can generate some income.

[New Britain]

Unrelated, by I wondered if McLaren were running at some great money surplus* if they can afford teams in multiple championships and to pay off drivers contracts here, there and everywhere. 

* I thought during 2020 disruption they indicated that they were close to going under?

 

In 2020, the world didn't know how bad, and how long-lived, the economic consequences of Covid would be. Within McLaren Group, that affected the money available to both Racing and Automotive, but that was because Automotive was a huge drain on cash. As far as I know, there was never any chance that Racing would go under, but for a period of time a disproportionate share of Group money was being used to keep Automotive alive. Hence they did not revive the commitment to create the new wind tunnel until late 2020, after the situation had stabilised.

[New Britain]

While I'm personally very much in favor of controlling cost via a cost cap system (rather than say testing restrictions, mandated reliability, penalty-points for component changes etc), there are of course always potential pitfalls and loopholes that will need to be regulated/closed if the system is to function as intended. 

 

One such potential loophole seems to have been exploited used cleverly by Red Bull in terms of floor assignment:

 

https://www.autospor...asons/10365387/

 

Now, my intention is not to discuss this specific case, but just more broadly the implications on the incentives for teams to provide equal equipment to both drivers under a cost cap.

 

It is actually quite obvious that it will often be logical for a team to throw as much money as possible on one of their cars to optimize that, while using the other car as a budget version. Take McLaren for instance, who are essentially already a one-car team given the poor performance/motivation of the departing Ricciardo. Why spend money that could be used on Lando's car to optimize Ricciardo's? And any team that has just one driver gunning for the WDC will of course have the incentive to shift the spend completely in that driver's favor.

 

So, what to discuss?

 

* Is this phenomenon a problem or just the natural progression of things?

* If it is a problem, is it possible to circumvent it somehow?

* Are there other unintended consequences of the cost cap that could be detrimental to the sport as a whole and that also needs amending?

The penalties for cheating on one's self-reported cost-cap figures are actually quite harsh. That does not prevent a team from arguing along the lines of '"any" does not mean "all"', but in theory cost-cap dishonesty can cause a team big problems.

 

I don't see a problem with a team putting all its eggs in the basket of its #1 driver - why not? By doing that, it might be improving the chances that that driver will win the WDC, but as the same time the team is probably reducing the chances that the team will win the WCC.

 

There was always been a risk of cross-subsidy. The factory teams that supply PUs to other teams have always had that opportunity. The worst case would be Red Bull. They could have AlphaTauri test all manner of aero parts for them under AT's budget and, within the present cost-cap rules, there appears to be no way for the FIA to assign those costs to RBR, as they should do.

 

I have long believed that part of the cost-cap regime should be to have engineers and accountants employed by the FIA and embedded full-time in each team, with the power to ascribe and assign costs as they see fit, rather than relying on self-reporting with all its flaws and potential work-arounds.

 

The other thing is that it makes no sense to exclude items that are patently performance related - such as the salaries of the drivers and top three paid employees - from the cost cap. Then if a team wants to spend its money on a Max Verstappen or Adrian Newey it would be free to do so, but it would have the option of spending those tens of millions instead on doing more computer simulations or hiring more mid-level aerodynamicists.

[Risil]

Unrelated, by I wondered if McLaren were running at some great money surplus* if they can afford teams in multiple championships and to pay off drivers contracts here, there and everywhere.

* I thought during 2020 disruption they indicated that they were close to going under?

They refinanced. I think the relationship between car company and F1 team changed too? Can't remember.

[ARTGP]

The penalties for cheating on one's self-reported cost-cap figures are actually quite harsh. That does not prevent a team from arguing along the lines of '"any" does not mean "all"', but in theory cost-cap dishonesty can cause a team big problems.

I don't see a problem with a team putting all its eggs in the basket of its #1 driver - why not? By doing that, it might be improving the chances that that driver will win the WDC, but as the same time the team is probably reducing the chances that the team will win the WCC.

There was always been a risk of cross-subsidy. The factory teams that supply PUs to other teams have always had that opportunity. The worst case would be Red Bull. They could have AlphaTauri test all manner of aero parts for them under AT's budget and, within the present cost-cap rules, there appears to be no way for the FIA to assign those costs to RBR, as they should do.

I have long believed that part of the cost-cap regime should be to have engineers and accountants employed by the FIA and embedded full-time in each team, with the power to ascribe and assign costs as they see fit, rather than relying on self-reporting with all its flaws and potential work-arounds.

The other thing is that it makes no sense to exclude items that are patently performance related - such as the salaries of the drivers and top three paid employees - from the cost cap. Then if a team wants to spend its money on a Max Verstappen or Adrian Newey it would be free to do so, but it would have the option of spending those tens of millions instead on doing more computer simulations or hiring more mid-level aerodynamicists.

Regarding the point about the salaries, what prevents the Lewis Hamiltons and Max Verstappens of the world from simply obtaining their salaries by way of endorsements which are crafted in partnership with the teams existing sponsors?

There is nothing stopping Oracle from sending Max Verstappen a 30 million dollar check tomorrow. It would be completely outside of the purview of any account keeping by the FIA because Oracle is not regulated by the FIA and the FIA has no right to tell Oracle what kinds of “gifts” they can send to Max Verstappen.

If a drivers salary comes out of the team’s budget, and sponsorship goes into the team budget, then surely you can see how easy it would be to cutout the middle man who is regulated in order to pay a driver whatever you want with no consequence to the about of money the team itself can spend on the car.

Edited by ARTGP, 08 September 2022 - 21:59.

[New Britain]

Regarding the point about the salaries, what prevents the Lewis Hamiltons and Max Verstappens of the world from simply obtaining their salaries by way of endorsements which are crafted in partnership with the teams existing sponsors?

There is nothing stopping Oracle from sending Max Verstappen a 30 million dollar check tomorrow. It would be completely outside of the purview of any account keeping by the FIA because Oracle is not regulated by the FIA and the FIA has no right to tell Oracle what kinds of “gifts” they can send to Max Verstappen.

If a drivers salary comes out of the team’s budget, and sponsorship goes into the team budget, then surely you can see how easy it would be to cutout the middle man who is regulated in order to pay a driver whatever you want with no consequence to the about of money the team itself can spend on the car.

Yes, such things are possible, although if the FIA had the power (through their own regulations) to ascribe costs to a team, the opportunities to cheat would be at least a bit narrower than they are now. And I don't think that Oracle will be paying Adrian Newey $10m a year to be its Official Software Spokesman.

[ARTGP]

Yes, such things are possible, although if the FIA had the power (through their own regulations) to ascribe costs to a team, the opportunities to cheat would be at least a bit narrower than they are now. And I don't think that Oracle will be paying Adrian Newey $10m a year to be its Official Software Spokesman.

Oracle is paying Red Bull more than that. Oracle don’t even have to acknowledge Adrian Newey, or name him much of anything. Red Bull can simply sell the ad space on the car to Oracle for $1, meanwhile Oracle sends Adrian his 10 million dollar check.

Considering Red Bull has over 150 million in sponsorship coming in each year….all of that money can be diverted into direct payments to a driver or Adrian.

[New Britain]

They refinanced. I think the relationship between car company and F1 team changed too? Can't remember.

Yes. Originally when Automotive was formed it had a shareholder structure different from (albeit some overlap with) the racing team's. Then when they booted Ron they unified the shareholder structure into a single Group. In the 2020 restructuring, which included the sale of 1/3 of Racing to MSP Sports Capital, the two companies again got separate shareholder structures.

[New Britain]

Oracle is paying Red Bull more than that. Oracle don’t even have to acknowledge Adrian Newey, or name him much of anything. Red Bull can simply sell the ad space on the car to Oracle for $1, meanwhile Oracle sends Adrian his 10 million dollar check.

Considering Red Bull has over 150 million in sponsorship coming in each year….all of that money can be diverted into direct payments to a driver or Adrian.

In the case of Newey (or another highly paid employee whose public endorsements would have scant market value relative to his/her F1 salary), declarations could be required. It is obvious that a Newey is not going to work for $1m/year, or whatever.

I'm not saying that this sort of regulation would be invulnerable, but we learn over time what are the loopholes and how they can be tightened if not completely closed.

The starting point must be the principle - that a team's entire performance-related budget should be covered by the cost-cap. Let us start with that and then figure out implementation.

[GreenMachine]

TL/DR

 

Always been that way. 

 

Perhaps not always in every team, but that favouritism/strategy has been a part of Fi/GP racing for as long as I can remember (from the 60s at least).

 

I don't see a problem, but then I am not a No2 driver or a fan of a No2 driver.

[MikeTekRacing]

I think it's part of the game and leading that team I would prioritize Max - saying this a Checo fan.

What we have to be open about is expectations - probably the teams know best what to expect

[Dan333SP]

On a recent This Week in Sportscars podcast while discussing the Ferrari LMH project, it was pointed out that current F1 manufacturers like Ferrari/Alpine can and likely will benefit by having a large number of technical resources moved under the sportscar umbrella and thus not subject to the F1 cost cap, but the expertise and development can still be leveraged in F1. Made sense to me.

[GreenMachine]

... or into the B team 

[GregThomas]

The most creative evaders of a cost cap I know of are the Australian Rugby League clubs. From having sponsors pay players an "advertising" retainer direct to the many other ways around the salary cap they've proven very inventive. Occasionally a club receives an emormous fine - when the League catches on to the current evasion.

I suspect that there's some sort of relationship between a cost cap limit and the amount of effort put into evading it.

[absinthedude]

Playing Devil's Advocate here, but why not?  We regulate the hell out of the sport in the believed interests of fairness and and level playing fields.  Almost everything has some regs to ensure they are the same for each driver/team - tyres, engines, ECUs, budgets, fuel flow, regen, etc. 

 

Different divers prefer different parts in some cases. That's the difference between equal and equitable treatment.

 

Sorry Driver B, we gotta give you the suspension spring system that Driver A uses. We know you can't achieve much with it, especially with Driver A's floor too, but tough. 

[New Britain]

The most creative evaders of a cost cap I know of are the Australian Rugby League clubs. From having sponsors pay players an "advertising" retainer direct to the many other ways around the salary cap they've proven very inventive. Occasionally a club receives an emormous fine - when the League catches on to the current evasion.

I suspect that there's some sort of relationship between a cost cap limit and the amount of effort put into evading it.

Yes, and another factor in that relationship would be the extent of the potential punishment if the rule were broken.

 

For a major breach of the cost-cap, the FIA already has the ability to:

 

- lower a team's future cap

- limit a team's wind tunnel and other testing time

- deduct the team's WCC points

- deduct a driver's WDC points

- bar a team from entering a race(s)

- suspend a team from participating in the competition (the season or a portion of it)

 

That is some pretty serious stuff, with the potential effectively to put a team out of business. Whether the FIA would ever go all the way with such sanctions, rather than allow a cheating team to get away with a slap on the wrist, is a different question.

The only instance so far of a cost-cap sanction was earlier this year. Williams knew in advance of the reporting deadline for 2021 expenses that it would not have its accounts ready for submission by that deadline. They informed the FIA in advance. For missing the deadline the FIA fined the team $25,000. The fine was small because the breach was minor and Williams had let the FIA know beforehand (not that it was something that the team could have kept secret). I'm not sure that we can conclude from that how the FIA would react to a major breach committed for the purpose of gaining a performance advantage.

Which of the sanctions would be imposed might depend on whether the FIA were being led by reasonable people or by a drooling lunatic such as Max Mosley.

[BerniesDad]

I wonder if in a few years we will see the drivers (and possibly engineers etc) contracted to the sponsor directly, rather than to the team.

So it will be : "Fernando Alonso, the Cognizant driver, in the Aston Martin" / "Oscar Piastri, the McDonalds driver, in a Mclaren" (or whatever - no, I'm not breaking news here)

And their services will be leased to the team for $1 per day, to make sure they are under the cost cap.

[BoDarvelle]

Drivers don't count against the cap.

[Clatter]

Drivers don't count against the cap.

 

They might in the future though.

[Primo]

They should be forced to run identical cars. B-specs can ruin a career. Only exception would be crashes/breakdowns during FP or Q.

[Roadhouse]

They should be forced to run identical cars. B-specs can ruin a career. Only exception would be crashes/breakdowns during FP or Q.

 

Good luck proving which car is B-spec, sometimes new parts don't work like intended and sometimes drivers have a different preference.

[Primo]

Good luck proving which car is B-spec, sometimes new parts don't work like intended and sometimes drivers have a different preference.

They do not need the same setup. of course, just the same conditions. If they develop different parts depending on preference, it basically guarantees B-spec since due to the cost cap. 
And yes, it would be difficult to police, but must parts that are developed during the season are visible. And the drivers would know.

[SenorSjon]

With the cost cap in place, why do we still have PU-part limits? Everyone is getting grid penalties the last couple of races to stack on parts.

Edited by SenorSjon, 09 September 2022 - 14:31.

[Tenmantaylor]

They need to have done with it and take constructors points for constructor related transgressions.

 

Making it a % of your points tally would make more sense, IE the more successful/richer your team is the more pain in the title race.

[Clatter]

They need to have done with it and take constructors points for constructor related transgressions.

 

Making it a % of your points tally would make more sense, IE the more successful/richer your team is the more pain in the title race.

 

They could also add points to teams that do stay within the limits for the season. This could benefit the smaller teams as they will be ones who try the hardest not to incur any extra costs.

[ColeTrickle44]

Introduce a rule that both cars are fundamentally the same. Problem solved

[Tenmantaylor]

They could also add points to teams that do stay within the limits for the season. This could benefit the smaller teams as they will be ones who try the hardest not to incur any extra costs.

 

They wouldn't need to as those who've scored few or no points wouldn't get penalised. They should still be subject to the same or other penalties however to deter breaking the rules.

 

But they have to break the link between spending and performance. If they can keep taking grid penalties and win from the back due to the performance increases then they'll do that. That link needs severing.

 

Different parts could be a different number of points or % of WCC tally. Anyone facing a drop in the WCC standings will work harder not to replace parts and save money. They'll find somewhere else to spend it though.

[Clatter]

Introduce a rule that both cars are fundamentally the same. Problem solved

 

Define fundamentally the same. I would say that is already the case, and running a different wing or floor would fit within that.

[ColeTrickle44]

Define fundamentally the same. I would say that is already the case, and running a different wing or floor would fit within that.

Only set up can be varied between cars. Can’t afford to put it on both cars then can’t afford it

Edited by ColeTrickle44, 09 September 2022 - 15:51.

[ARTGP]

Only set up can be varied between cars. Can’t afford to put it on both cars then can’t afford it

What if teams want to experiment between the 2 cars? Wouldn’t that hurt all the teams that are behind?

Edited by ARTGP, 09 September 2022 - 15:57.

[George Costanza]

Introduce a rule that both cars are fundamentally the same. Problem solved

Wouldn't that be a spec series?

[Clatter]

Only set up can be varied between cars. Can’t afford to put it on both cars then can’t afford it

 

If there were in-season testing I might somewhat agree.

[pdac]

They should be forced to run identical cars. B-specs can ruin a career. Only exception would be crashes/breakdowns during FP or Q.

 

The whole field.

 

Seriously, I have no problem with each driver in a team running different spec cars. They are obliged to run 2 cars but, really, they are supposed to be creating the perfect car/driver combination, so it makes no sense to have each team field more than one car, really. Of course, for the spectacle and, indeed, the cost, that's not feasible. But if they have limited resources then why not distribute those resources asymmetrically.

Edited by pdac, 09 September 2022 - 17:54.

[New Britain]

With the cost cap in place, why do we still have PU-part limits? Everyone is getting grid penalties the last couple of races to stack on parts.

I believe that in future there will be a cap on how much a PU supplier can spend on its total program, but that limit is not yet in place (or is very high).

There is a cap on how much a PU supplier may charge a supplied team for the season (a cost that counts towards the cap), and there are separate categories for the individual PU components that fall within the cost-cap (the so-called 'perimeter').

However, if there were no limits on numbers of PU components, a PU supplier could operate at a big loss, charging its works team (and the others) an artificially low price for loads of components that would generate more performance but last for only a short time.

[ColeTrickle44]

What if teams want to experiment between the 2 cars? Wouldn’t that hurt all the teams that are behind?

Give and take. Stop teams like RBR who heavily favour a single driver

[bibliophagos]

Give and take. Stop teams like RBR who heavily favour a single driver

'Stop teams like RBR' is what you mean? Because nr 44 isn't running away with it again? Typical...


Edit: I didn't hear you complain last year when Bottas was demoted to dyno for nr 44

Edited by bibliophagos, 09 September 2022 - 19:29.

[JtP2]

Drivers don't count against the cap.

 

I thought the 3 highest paid team members outside the drivers were also excluded from the cap.

[bibliophagos]

One such potential loophole seems to have been exploited used cleverly by Red Bull in terms of floor assignment:

How on earth is this a loophole, let alone an 'exploited used cleverly' one?

First there is whining about how on earth RBR is able to afford upgrades, now there's whining that they can't afford something. All the bitching against RBR because they're the ones running aqay with it for once is getting a bit tiresome.

[ARTGP]

First there is whining about how on earth RBR is able to afford upgrades, now there's whining that they can't afford something.

😂😂

[New Britain]

I thought the 3 highest paid team members outside the drivers were also excluded from the cap.

That is correct - three highest-paid non-drivers plus all drivers (top two plus reserves, academy, et al.).

[Primo]

 But if they have limited resources then why not distribute those resources asymmetrically.

Because the old truth "first you must beat your team mate" is still true.