[Rules] FIA introduces budget cap

[Pingguest]

Besides, teams like BMW, Toyota and Ferrari will benefit if the Euro will lose its value on the markets.

[DougK]

No way will it work - when does something become a gift?

Foe example: rather than a major sponsor giving a team money, they give the driver money in personal sponsership and the team pay the driver a token amount (£1k a race?). Team spend the money on the car instead of paying the driver and the driver still gets his £10m from the "ex" team sponsor.

In fact go further the sponsor employs the mechanics and they work free of charge for the team.

It's impossible to regulate this sort of thing.

[ChrisPage]

I may be reading too much into this too soon but...

The article on Autosport suggests 'the FIA has announced plans for a voluntary budget cap to be introduced - offering teams that sign up to limit their budget to £30 million per season the chance to be as competitive as those with unlimited spending power'.

Is this possibly just a tactic to see how strong the FOTA group is? In that they are throwing this in to see if they can split teams from the new alliance and back to the FIA/FOM fold?

Politics, politics, politics...

[Teretonga]

Max could fix a 'commercial cost rate to things like wind tunnel time etc.
But really it will not happen.
Any serious entrant will take the no holds barred route. Some private teams may go to the low cost route, but no one who is technically serious.

It's pandering to the budget idea or setting up FOTA for something else but it is not going to work except for people who want to 'play F1' on the fringes.

[Tourer]

They tried this in V8 Supercars a couple of years ago (I heard that the guy who drove it in Supercars was consulting with the FIA on the principles at one stage).

After several years of going back and forwards on how it would work, how "commercial values" would be assigned and valued etc etc it was introduced at the start of the 2007 season.

Drove the admin people at the teams crazy - huge amount of additional work.

Lasted about 4 months - never to be heard of again. Totally silly and unworkable idea.

[Marbot]

Contrary to my previous post it would seem that the teams have taken a dislike to the new proposals.

http://www.autosport.com/news/report.php/id/73754

I'm beginning to think that this is the FIA's 'Don't say that we didn't warn you' proposal.

[Pingguest]

Originally Posted by Marbot

Not impossible,but most certainly difficult.

The consequences of going over-budget would be certain exclusion from the championship.

Q & A with Max.

http://www.fia.com/en-GB/mediacentre...msc_qa_mm.aspx

Mosley himselfs admits the cap is bullet proof:

How can you possibly check? Won’t there be all sorts of under-the-counter payments and avoidance mechanisms?

MM: We went into all this very carefully some time ago. We involved forensic accountants from Deloitte and Touche as well as financial experts from the current teams. The vast majority of payments are traceable and any benefits in kind can be valued. There were a number of meetings. It became clear we could do it. The problem was getting the current teams to agree a figure. Also, the majority wanted a lot of exclusions such as land and buildings, the team principal's salary and the drivers. We would also need the right to carry out very intrusive audits and impose severe penalties for overspend. However these difficulties no longer arise because each team will now be able to choose whether or not to run under the cost cap.

A 'vast majority' but not all of the payments are traceable.

[the.cosmic.pope]

Originally Posted by Pingguest

A 'vast majority' but not all of the payments are traceable.

A vast majority are traceable when they aren't hiding anything. Imagine when they are.

[ukaskew]

£30m seems ludicrous. Surely that would easily be eaten up by transport, tooling, salaries etc before they even thought about designing a car?

[ivanalesi]

Well, this is the start. I don't like the start so much, it's too low cap and they should force teams to sign up. Also they shouldn't include hospitality and driver wages.
Hospitality because it brings a lot of cash to the sport, through acquiring sponsors.
Driver wages, because some people invest in their kids' career, because they believe the kid will earn like Kimi.
But the budget cap is the way for more technical freedom, more interesting races due to changing balance, more teams and F1 would be profitable investment at the end of the day!

Originally Posted by the.cosmic.pope

A vast majority are traceable when they aren't hiding anything. Imagine when they are.

Do you really think F1 teams would be smarter than huge corporations like Enron?

[Sodemo]

30 million?

Wasnt that the combined salary bill for Ferrari when Schumacher was there?

[Benny1664]

This is another proposperous idea from the FIA.. How teams like Mclaren and Ferrari are sposed to drop to 10% of their current budgets in a year is madness! There will be mass redunancies and not enough money to actually make a car after they have paid staff, drivers, rent, travel, accomodation, etc.. And how do they value teams current technology and premises, things like the Mclaren HQ and the 2 wind tunnels at Williams or the super computer at BMW.. The FIA is on a different planet, so much for listening to the fans... Its a sad sad day for F1..

[Ralf's Girl]

I think the theory of it is good, but like several people have said already, it would be a very difficult thing to police. And the biggest teams that are spending the most money won't just be able to slash their budgets overnight - if it's ultimately beneficial then perhaps they'll do it over time, but I think that would be a process over several years.

[Marbot]

If you can't get a couple of cars to 17 or so races around the world without having to spend more than £30 million then there is certainly something wrong somewhere.

[rocketracer]

i must admit i dont know much about motor racing budgets, but 30mil seems a very aggressive first offer...

the concept of a budget cap is right however, and ultimately will be good for the sport. "Fringe benefits" to drivers and key personnel will always slip through the net, which doesnt really affect the little team anyway, and doesnt threaten to self combust the big teams.

Putting an accounting cap on the major elements of running a team will be mostly effective, and stop teams from going majorly bust, which is the ultimate goal...

[MikeManNZ]

The problem is the larger teams with the better accountants with have the cash AND the free regs and the smaller teams have the same issue that they do today.

[rocketracer]

Originally Posted by MikeManNZ

The problem is the larger teams with the better accountants with have the cash AND the free regs and the smaller teams have the same issue that they do today.

true. but i dont think anyone would think that a budget cap therefore introduces a "level playing field" for all teams - the big teams are still going to have more resources at their disposal, and are still effectively going to be in an advantageous situation compared with a smaller, lesser funded team.

But at least the smaller teams wont be spending money they dont have, just in order to turn up and race... in fact, in the current economic climate, even the larger organisations like honda, toyota, renault dont have to spend money they dont have in order to turn up and race...

[Pingguest]

Originally Posted by Marbot

If you can't get a couple of cars to 17 or so races around the world without having to spend more than £30 million then there is certainly something wrong somewhere.

I can't see why. Most teams were spending £30 million back in the mid-1980's.

[Marbot]

Originally Posted by Pingguest

I can't see why. Most teams were spending £30 million back in the mid-1980's.

One or two teams were spending that amount back in the eighties.Many teams were not much slower on a fraction of their budgets.

And £30 million is still an awful lot of money.

[Kempi]

There will be mass redunancies and not enough money to actually make a car after they have paid staff, drivers, rent, travel, accomodation, etc..

Mosley pondered on this during an interview with the German magazine "Der Spiegel": Why do you need a staff of one thousand employees to get two cars to race 18 times?

I must agree with him in this point: The staff of the factory backed teams especially are way overblown. You simply can't tell me that you cannot run a team with say 100 folks without any visible difference. Sure, not every last screw might be checked if it is really the absolute lightest available, but who gives a ...?

[Pingguest]

Originally Posted by Marbot

One or two teams were spending that amount back in the eighties.Many teams were not much slower on a fraction of their budgets.

And £30 million is still an awful lot of money.

I don't it was only one or two teams. Back in the early 1990's McLaren was already spending somewhere around $150 million.

Most of the money is spend on intellectual property. Teams invest a lot of money on R&D. Surely teams can make two cars to drive the entire season for less than £30 million but R&D will be curtailed. From this point of view, the budget cap may turn out to be most problematic for the smaller teams. They won't be able to gain more intellectual property.

[old man]

Originally Posted by Tourer

They tried this in V8 Supercars a couple of years ago (I heard that the guy who drove it in Supercars was consulting with the FIA on the principles at one stage).

After several years of going back and forwards on how it would work, how "commercial values" would be assigned and valued etc etc it was introduced at the start of the 2007 season.

Drove the admin people at the teams crazy - huge amount of additional work.

Lasted about 4 months - never to be heard of again. Totally silly and unworkable idea.

I think this sums it up, beurocratic nightmare and impossible to run

The championship will be in doubt until all the teams have been audited. We could have a team ruled out when the accountants have finished 12 months after they "won" the title . Just imagine the fees they will charge, does that come out of the budget as well? Then think of the appeals procedure

Typical of a lawyer, the teams will walk away IMO

[mjstallard]

I note that Jean Todt has just resigned from the Ferrari board....preparing to run against Mosley on behalf of FOTA at the next FIA elections?

[chunterer]

Originally Posted by mjstallard

I note that Jean Todt has just resigned from the Ferrari board....preparing to run against Mosley on behalf of FOTA at the next FIA elections?

Wouldn't be surprised!!!

All this dithering and 'enforcement' is madness though isn't it?

It's like the FIA and/or Bernie are determined to force the manufacturers out?

How on earth do they expect teams like Ferrari and BMW to run to a budget restriction when they're tooled up for much greater expenditure, or run the 'expensive' cars to a restriction?

Is Max really saying to Ferrari 'look we love you but it can't always be all about you!'

[ukaskew]

Originally Posted by Kempi

You simply can't tell me that you cannot run a team with say 100 folks without any visible difference.

At a rather modest £30k a year that's 1/10th of the budget gone already. How much does it cost to book test sessions at circuits, fly the cars all over the globe, feed and house the staff whilst away and all the other 'little' details?

Would be genuinely interested to know how much, say, an efficient WTCC team costs to run over a year without even factoring in the cost of car development, or even a WRC team where the lorry drivers double up as mechanics etc.