Rules FIA introduces budget cap - Page 3

Pingguest · 18 Mar 2009, 13:07 (Ref:2418243)

FIA Auditor: "We notice that last year you paid your Chief Designer £2 million, but only £1 million this year. Please explain."
Team Manager: "Simple, he took a pay cut."
FIA Auditor: "50%? We don't believe you."
Team Manager: "Tough, it's true, and our figures prove it."
FIA Auditor: "We have reason to believe that one of your sponsors is paying him directly. We consider this to be against the spirit of the rules."
Team Manager: "Not at all. I believe that he does some consulting work for them. Part of the agreement for his salary reduction was that he be allowed to take on outside consultancy work. In his own time of course."
FIA Auditor: "So what consultancy does he do for them?"
Team Manager: "No idea, that's between them and him, none of our business."
FIA Auditor: "Well how many hours does he work for them?"
Team Manager: "No idea, that's between them and him, none of our business."
FIA Auditor: "Well how much do they pay him?"
Team Manager: "No idea, that's between them and him, none of our business."

FIA Auditor: "We've decided to fine you and throw you out of the championship anyway."
Team Manager: "What for?"
FIA Auditor: "For going over budget."
Team Manager: "But we haven't."
FIA Auditor: "Yes you have. Your Bridgestone contract is in U.S. dollars, the FIA budget cap is in Pounds Stirling."
Team Manager: "So?"
FIA Auditor: "So the exchange rate changed this morning. You're over budget!"

Sev · 18 Mar 2009, 13:21 (Ref:2418250)

Either way, now truly is a sucky time to be doing a masters in CFD with the aim of breaking into F1

veeten · 18 Mar 2009, 13:43 (Ref:2418261)

don't be so sure that FOTA has any room to manoeuver here. Looks like the manufacturers may like what Max and the FIA is offering...

http://www.grandprix.com/ns/ns21253.html

ECW Dan Selby · 18 Mar 2009, 14:15 (Ref:2418286)

/\ Fair points there. I agree with this budget cap proposal - it's a great idea.

Selby

**Adam43** · 18 Mar 2009, 14:25 (Ref:2418293)

Quote:

Originally Posted by Pingguest

FIA Auditor: "We've decided to fine you and throw you out of the championship anyway."
Team Manager: "What for?"
FIA Auditor: "For going over budget."
Team Manager: "But we haven't."
FIA Auditor: "Yes you have. Your Bridgestone contract is in U.S. dollars, the FIA budget cap is in Pounds Stirling."
Team Manager: "So?"
FIA Auditor: "So the exchange rate changed this morning. You're over budget!"

No laughing matter. This last one is dealt with by businesses that import and export every single day. It doesn't throw them out of a championship, it effects their profit/loss and can send them under.

We saw a simialr idea in principle at Le Mans. You could spend millions developing a race enigne, or use a road car engine and get a performance break in terms of a bigger air restrictor.

old man · 18 Mar 2009, 15:10 (Ref:2418324)

Quote:

Originally Posted by veeten

don't be so sure that FOTA has any room to manoeuver here. Looks like the manufacturers may like what Max and the FIA is offering...

http://www.grandprix.com/ns/ns21253.html

Interesting piece but as I understood Max's comments driver salaries paid by sponsors would be included in the budget. If not then all drivers will be paid nominal fees and get the money direct from sponsors. If true then they will have to define who can and who cannot be included in the budget as the engineer scenario set out by Pingguest clearly shows.

In Manufacturer teams what happens about ideas, say from the WTCC team being brought into F1, who determines the value to be included in the budget? In cases like this the FIA auditor would have to be the person, God (or Max) forbid that the auditor is bidding for the main account at the manufacturer...... mine field.

When testing was restricted the teams spent a fortune on test rigs so that much work could be done without going to a circuit. I can see universities getting big industrial sponsorship for research, not a bad thing at all but difficult to cost, police and administer as part of a capped budget in a sport.

There used to be "boot money" in football when there was a limit on wages and in rugby when it was an amateur sport. I was on the same Board of Directors in an industrial firm with a former England Rugby international of some repute. In the amateur days as a younger employee he was given time off by the Chairman to train and had a company car even though he was office bound, unusual at the time. This cap proposal is impossible to work, lawyer/accountants charter.

Bah! Humbug etc

Teretonga · 18 Mar 2009, 20:41 (Ref:2418630)

In actual fact the amount paid by team sponsors would be included in the cap. However if a team gave a driver permision to have private sponsors (as some of them do) then that is a private arrangement outside the team budget, its different.

Again sponsor "SPAM" may to decide to sponsor for 30 million driver A.N. Other , who is at Renault and the team charge him 10 million for the privilege of driving their car.... The balance is his to use as he wishes....
His salary is not from the team...... and the team gets 33% of their budget...

Alan52 · 19 Mar 2009, 01:29 (Ref:2418859)

Nearly all the people doubting the feasibility of a salary cap on this forum are from Europe where such a concept is unknown in football.If you follow the NFL in America or the NRL in Australia you will know that salary caps can work to level sports competitions.The auditors do not accept figures given to them by clubs as being necessarily truthful and any amount that seems too low can be "adjusted".For manufacturers kudos will come by "winning smart" rather than by outspending the other manufacturers.F1 needs more teams and this is the most viable plan yet to encourage them to enter.

rocketracer · 19 Mar 2009, 03:06 (Ref:2418881)

One question someone who knows more than me about the proposed system might be able to answer:

i presume the auditing would be of the f1 team only, and not the parent company / shareholders, which would have much broader (and probably confidential) spending.

what would stop, let's say a board member of fiat (who had no shares / role in the f1 team) starting a technology company which develops f1 technologies. He receives payments from fiat, based on research grants into car technology, which get channelled into the f1 technology. This develpoment technology then gets sold back to ferrari f1 for a substantial loss.

That way, ferrari f1 get their uncapped development. There is no money trail from ferrari f1 to the tech company, only from the parent company (fiat) to the tech company.

then, if fiat is a shareholder in the ferrari f1 team, any dividends or profits can be paid back (as i believe i read that shares of profits are not included in the budget cap spending).

Surely that would escape the f1 auditors, unless they had powers to audit fiat (ie the shareholders of the f1 teams) as well, which would be a massive task.

Alan52 · 19 Mar 2009, 03:18 (Ref:2418885)

The auditors would place a value on the research technology even if no money changed hands or the amount was not realistic for the time and resources involved.Again this is done all the time in the NFL and NRL to stop clubs paying star players under their market worth.Concurrently all third party transactions are also monitored and also included in any payment cap.

old man · 19 Mar 2009, 11:51 (Ref:2419209)

Quote:

Originally Posted by Alan52

The auditors would place a value on the research technology even if no money changed hands or the amount was not realistic for the time and resources involved.Again this is done all the time in the NFL and NRL to stop clubs paying star players under their market worth.Concurrently all third party transactions are also monitored and also included in any payment cap.

Could you please explain when all this auditing is done in the NFL or NRL? Is it a permanent, on going function with an auditor in every team or is it done at stages through the season or when a dispute or problem arises or at the end of the season before the final championship is ratified?

We already have results published "subject to confirmation", a system like this could add a little to the ratification time perhaps?

The other posts here suggest just a few ideas to "get round" the matter and those involved in F1 have long shown their ability to be creative in all matters. As I understand it the NFL and NRL are concerned only with player salaries and if F1 was to cap driver retainers then the comparison would work but that is not the case, the cap is on a very complex budget and would be a nightmare to police

To say we in Europe have no experience of salary caps in sport is not true, the English FA abandoned the idea of fixed wages for soccer players over 50 years ago because it did not work and Rugby League has some sort of system now but, as I say, it just applies to players wages and is still abused if what we see in the press from time to time is true

IMO the teams will resist this strongly, I would not be at all surprised to see some sort of ultimatum, possibly in Australia when all the teams are in the paddock

ivanalesi · 19 Mar 2009, 11:56 (Ref:2419216)

If we change FIAT with construction company and technology with house - it's already been tried

Come on, the auditors can lose their license if something bad and public happens as Enron! Do you really think they would risk it for a 3-4 bln industry, when their clients may have trillions in revenue!? Look at this: http://biz.yahoo.com/ic/40/40120.html - 165 thousands employees! These guys have seen all kinds of crooks. What about the car companies and their shareholders, you're basically stealing from your shareholders and damaging the image of your company!

Marbot · 19 Mar 2009, 12:06 (Ref:2419225)

Quote:

Originally Posted by old man

IMO the teams will resist this strongly, I would not be at all surprised to see some sort of ultimatum, possibly in Australia when all the teams are in the paddock

It seems unlikely to me that the manufacturers in particular will dismiss the new cost cutting measures out of hand.They are all still in deep trouble regardless of what PR blurbs they may issue from time to time.Even now boardroom executives will be mulling over what's viable and what's not viable in order to keep themselves and everyone else in a job.

As Max says,he has to make rules for a "worst case scenario" in the hope that the teams that are already in F1 will be able to stay in F1.

DougK · 20 Mar 2009, 10:09 (Ref:2420081)

To me budget caps are a bad thing... in economic terms it means staff cuts which is bad for everyone.
What would be more sensible is ban the use of wind tunnels etc to cut costs in those areas, maybe cap driver salaries and change the technologies used...

Ban the use of front wings (they will never be allowed on production cars as they are dangerous) and this will inject new life into the sport.

Also who cares if teams go bust as long as it is easy to start a new team (which currrently it isn't).

old man · 20 Mar 2009, 10:29 (Ref:2420091)

Quote:

Originally Posted by Marbot

It seems unlikely to me that the manufacturers in particular will dismiss the new cost cutting measures out of hand.They are all still in deep trouble regardless of what PR blurbs they may issue from time to time.Even now boardroom executives will be mulling over what's viable and what's not viable in order to keep themselves and everyone else in a job.

As Max says,he has to make rules for a "worst case scenario" in the hope that the teams that are already in F1 will be able to stay in F1.

I think you misunderstand me, what I am talking about is the £30 million buys you some technical freedom idea. This would be impossible to police and lead to lots of confusion and work for lawyers and accountants.

The cost cutting measures in general will be accepted and indeed welcomed, of course, so long as they apply to everybody but with some exceptions it becomes a major problem

ChrisPage · 21 Mar 2009, 15:59 (Ref:2421091)

I asked people's opinions on this on the first post of this thread, but no-one seemed to think likewise so I assumed I'm just a conspiracy nut. However, my thinking is going deeper, so I'm reappraising my 'Area 51 esq' conspiracy...

I believe the FIA are currently just employing whatever tactics they can to split the teams up and break FOTA. I think FOTA has scared them, but they think it is weak...

This budget cap reaks of a way of pulling FOTA apart - on Autosport Mosley is quoted as saying he has already been speaking to Williams and Force India and they are responsive to his ideas. In cooperation with their refusal to sort out the diffuser debate (which they could have done in a stroke with a simle yes or no - I won't believe otherwise) they are aiming to split the teams apart.

Full story here

The full quote reads - "The complaint was that we didn't consult them. Well, we've been talking a lot to Force India and Williams, both of whom were very supportive."

He may as well say 'ohhh whats that FOTA, we didn't consult you? Well, we left a message with Franky W and Vijay and they promised they'd pass it on....'.

Politics, politics politics.

I'm open to still being simply a mad conspiracy nut, but come on....!

Rory · 22 Mar 2009, 09:45 (Ref:2421897)

Quote:

Originally Posted by ChrisPage

I asked people's opinions on this on the first post of this thread, but no-one seemed to think likewise so I assumed I'm just a conspiracy nut. However, my thinking is going deeper, so I'm reappraising my 'Area 51 esq' conspiracy...

I believe the FIA are currently just employing whatever tactics they can to split the teams up and break FOTA. I think FOTA has scared them, but they think it is weak...

This budget cap reaks of a way of pulling FOTA apart - on Autosport Mosley is quoted as saying he has already been speaking to Williams and Force India and they are responsive to his ideas. In cooperation with their refusal to sort out the diffuser debate (which they could have done in a stroke with a simle yes or no - I won't believe otherwise) they are aiming to split the teams apart.

Full story here

The full quote reads - "The complaint was that we didn't consult them. Well, we've been talking a lot to Force India and Williams, both of whom were very supportive."

He may as well say 'ohhh whats that FOTA, we didn't consult you? Well, we left a message with Franky W and Vijay and they promised they'd pass it on....'.

Politics, politics politics.

I'm open to still being simply a mad conspiracy nut, but come on....!

Tend to agree with you on this one. It just smacks of Mosely doing anything he can to annoy the teams. Add this to a list that includes comments on diffusers, points scoring systems, etc etc. They want the power back and aren't happy that the teams are so united now.

the sniper · 22 Mar 2009, 15:04 (Ref:2422050)

I love to see pre-qualifying back, it'd be interesting to see how they do it now they 'care' about the little guys. Thing is though, Bernie can't make up his mind whether he likes the idea or not. On Wednesday he said:

Quote:

"I want to see pre-qualifying again. I want 26 people on the grid, of which 16 are competitive."

http://www.autosport.com/news/report.php/id/73762

The today he's said:

Quote:

"I'm hoping we can get 26 cars, that's how it used to be," he said. "I think one of the engine manufacturers has got four orders already. The thing that disturbs me a bit is that there will have to be pre-qualifying."

http://www.autosport.com/news/report.php/id/73840

Make up your mind Bernie, you've got to tell Max what you want the entry limit rule to be...

duke_toaster · 22 Mar 2009, 15:48 (Ref:2422064)

26 cars wouldn't need pre-qualifying on a modern circuit if they were to give teams a normal mumber of garage slots - with the possible exception of Monaco. I'd like to see fifteen teams with thirty cars, but that hinges on customer cars not budget caps.

andybg40 · 22 Mar 2009, 18:02 (Ref:2422117)

What interests me the most within Bernies current rant is the last paragraph. The part about and engine manufacturer have four team orders already. The way that he has phrased that sounds to me like four new teams? USF1 and Prodrive would be the obvious suspects, but who would the other two be?

Oh, and i would like to add that i agree with the post further up. Max and Bernie are most definitely on a mission to split FOTA before the season is over. I would expect to hear a rumor of a break away series again at some point.

Marbot · 22 Mar 2009, 18:21 (Ref:2422129)

Quote:

Originally Posted by andybg40

Oh, and i would like to add that i agree with the post further up. Max and Bernie are most definitely on a mission to split FOTA before the season is over. I would expect to hear a rumor of a break away series again at some point.

It will be interesting to see what budgets are allowed in the 'new' series,bearing in mind that the 'old' series seems to be suddenly becoming very popular.

I can understand that FOTA needs to stay together,but some teams,particularly the new ones,would actually welcome the budget cuts and a little bit more technical freedom.

"It is set at £30 million, it's not (a question) of if it's going to be - it is," he said."

A statement worth remembering methinks.

bestfit · 22 Mar 2009, 21:38 (Ref:2422247)

Quote:

Originally Posted by andybg40

Oh, and i would like to add that i agree with the post further up. Max and Bernie are most definitely on a mission to split FOTA before the season is over. I would expect to hear a rumor of a break away series again at some point.

Which would throw the series into crisis and require an experienced captain to navigate through the troubled waters. It would then be irresponsible for Max to stand down under such circumstances wouldn't it?

old man · 23 Mar 2009, 10:14 (Ref:2422570)

The fact is I think that the current siruation with budgets at hundreds of millions cannot continue in the present economic climate. The manufacturers will be unable to justify the expense with sales levels where they are and sponsors will be harder to come by and when found will have less to spend. TV revenue and circuit fee income to FOM will fall and so the prize and appearance/travel money will also drop for the same reasons.

FOM and the FIA have two options, they can either let market forces operate and see the grid diminish in 2010 after which we may see new, smaller teams come in using standard customer engines and even possibly chassis. This could take a little while and perhaps we would have a season or two with small grids until people realised they could compete with achieveable budgets but the whole thing would not die IMO, it would change slowly.

The alternative to market forces is to manage the situatuation and that is what they may be trying to do by encouraging the USF1 or Prodrives of this world to come in with restriced budgets and some technical freedom.

I just think that managing a budget cap is impossible and most of the people posting on this forum appear to agree, but then, who are we?

On the other hand if the new season is a great success and the world economy picks up because of the measures put in place by our various Governments this may all go away because we do not need it.

For the record, I too would like to see full, even oversubscribed grids again but am not holding my breath. A season with lots of different teams scoring wins would help

old man · 23 Mar 2009, 11:07 (Ref:2422600)

Sorry for another post immediately but prompted by a comment on another thread by teretonga I have just read the piece on Pittpass from last week about the CVC debt control and its current "worries", fascinating stuff, thanks teretonga

Must get a copy of the FT from the previous Friday.

veeten · 23 Mar 2009, 15:01 (Ref:2422809)

what may result from this is a return to the previous practice of manufacturers being engine/powertrain suppliers and teams doing the building of chassis.

Renault may not be the only ones leaving as a constructor after '10, and Honda may return as a powertrain supplier. It's the reason Mercedes has been in F1 for over the past decade as they function as a supplier and partner to McLaren and not own them, and has the freedom to supply Force India and now Brawn GP.

It's a cost-saving medium that works and makes for an increase in teams in the grid for '10 and beyond.

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