Salary Caps: Could it... work?

[golem]

Costs are rising, funds are falling, Ferrari is making it boring and Bernie ain't helping! How do you get interest? Make things more level, but allow for variation which is what makes F1 so colourful.
Hmm, How do other sports manage at the highest level? Same regs as lower levels but because big bucks are involved, the big teams kept getting the bigger bucks and bought all the best people, the best facilities, the best gear? Well, Salary caps got introduced.

Set out a structure for which racing teams must adhere too. 1 team manager, say 6 technicians, 2 car technicians per car, 5 designers, 4 medical / health staff, 2 tacticians, 2 drivers, 10 pit crew. This isn't a necassary step but would simplify things and fans would watch the market like american football fans watch the coach and tactician markets off season. Who's available, who's not, who's hot and who's cold. Everyone has a salary of course.

Then, there's a powertrain costing. All engine and powertrain parts must be supplyable to at least 1 other team for the prices listed in the following season, though this could be restricted solely to engine and gearbox or even just engine. But to me, it seems a good idea. Every team would have to do the Sauber customer-ferrari type thing for the next year if contracted to do so, for the price listed. So if they supply themselves for 2 million, Renault next year might find themselves bound to supply Jordan for 2 mill the following year. If they fail to meet this obligation completely (Or claims of a dulled engine or component are vindicated by FIA's independant technician) then they are fined to the tune of 20 million or so, and must supply the team or pay for a new supplier.

Then chassis, which has a maufacture cost. (It's set to some standard rate ala a more expensive formula SAE type production setup.)

Total Costings Cap: Saaay, 120 million

So take this example:
BMW really just wants williams to be the only team to ever be using their engines. But what's more, they figure their engines are by far the best race engines in terms of power and so want the price listed as such. This leaves them with two options: Make the price high and force Williams to cut back on other areas, or set it lower but be more at risk of other teams deciding to fork out on it too.
I think you'd also see more engine makers actually willing to participate because they could see a set price being paid. Of course, some manufacturers might not like it as clients of some engines may pay more for worse engines for a season. It really then becomes the engine makers prerogitive that their engines represent their cost, and less the teams worry.

Of course everyone who is on payroll would have to be open and willing to be audited to see if they're not getting income from elsewhere in attempts to circumvent the cap. Make breach of the cap severe enough and they'll play ball.

It'd be a messy transition but I think in the long run it would give the FIA more ability to deal with the costs relative to the economic climate of the world at the time. And that, it must be said, is becoming important really fast.

[Champ69]

Yep costs are getting stupid. I like the idea of cost capping both salaries (drivers, designers etc...) and other expense as well.

also it is easier to police than Traction control..

[greg.n]

Traction control is easy to police-produce generic ECU's and rotate them. and ban all pit to car electronic transmissions except perhaps radios. The sticking point is the top teams want to have the right to spend their zillions on stuff that will give them a technological edge over the less well endowed teams and won't give up that advantage unless they are forced to. That is why the idea of having the teams regulate themselves is a farce. same with the big manufacturers. They WANT to be able to gain an edge by outspending the others. Its why the breakaway manufacturers championship will never produce good racing in 2005 or 2007 or whenever.

[Chris Gray]

Wage caps could work, but there are many ways around them. While I was studying economics, I was told of an example where they imposed maximum wages in rugby. This player's wage restricted, but the club employed his wife a part time secretary for £100,000 per year. Perhaps will get Mrs Schumacher doing something similar...?

[Lee Janotta]

Nope... The sponsors would just go and pay for the drivers, tires, and engines directly, leaving the team the entire capped budget to do the chassis and aero development.

[JGM]

There are probably lots of secret off-shore bank accounts in F1 already for all sorts of reasons. Trying to cap pay would just create a lot more.

[Valve Bounce]

Let's not be silly about this. SchM could drive for free for Ferrari, and still make zillions from so called "endorsements" for the different firms which advertise at Ferrari. Let me put it to you simply. Marlborough gets to advertise for $1 pr year at Ferrari; Marlborough pays SchM zillions to wear Marlborpigh logos on his tracksuit. The permutations and combinations on this are endless.
Wonderful to put caps on expenditure, number of personnel, and amount of money teams can spend on testing. Who the hell is going to police all this in the unlikely event all the teams agree to this? Are we going to send accountants into BMW to check their financial sheets to see who had spent X hours working on testing a BMW engine for Y hours?
The, of course, teh Tobacco companies are going to produce their expenditure records to the FIA for auditing. It is nice to lie on the grass and look up at the stars - just make sure you don't lie on a cowpat.

[Champ69]

Salary caps work in Australian NRL. The bulldogs were blitzing the championship Ferrari style and the got busted for breaking te salary cap and they lost so many point that there season was over.

[Valve Bounce]

Yes!! But with the NRL, we are talking about a National series. In an international sport, spanning I don't know how many countries financially, who the hell is going to keep track of expenses from China to Brazil to Japan to Italy to how many other countries? You can pay the drivers in many off shore countries (like Switzerland) where you have as much chance of checking their financial records s Alex Yoong would have in winning the WDC
An NRL ( that's National Rugby League in Oz) team's salary cap for one whole year wouldn't even pay the salary for one single half decent F1 driver.
As I said before " Let's not be silly about this."

[Champ69]

Some thing does need to be done and as we have seen changing the technical regs do not make the sport cheaper.

The only thing that will make the sport cheaper is limiting spending, or changing the way the money is distributed to the teams eg... the concord agreement. So yes VB lets not be silly about this, lets be realistic about makeing the sport more stable, any ideas?????

[Spudgun]

Ok, some salaries are getting hilariously stupid, but just to throw another perspective on the fire, the drivers are risking their lives every time they step into the car.

I know there have been leaps and bounds in safety in the last few years, but the risk is still there. Look at McNish in Suzuka, it was lucky his car went in backwards and Senna, if it wasn't for the stray piece of suspension he would have survived.

The teams know what they're finances are. If they couldn't afford it they wouldn't pay it.

[Champ69]

I think that the may be a little overpaid . The risk they are putting themselves in is no worse then those in formula ford or F3, in fact I would say that F1 is far safer that Formula ford or F3.

I must also say that I do not watch racing for the crashes and I am amazed that there are some people that do

[Spudgun]

Originally posted by Champ69
must also say that I do not watch racing for the crashes and I am amazed that there are some people that do

Too true. I suspect that is true by quite a percentage of the casual viewer with the 'thrills and spills' thing.

I take your point about the loer formuale, but if you look at it in a first person perspective, if you got offered a wowza deal and the team were prepared to pay I wouldn't say no. Most F1 careers are over before the age of 40 and you have to have something to fall back on to maintain your yauchts and helicopters..

[Valve Bounce]

One of the biggest costs in F1 is the development/testing component. Most of you know me as the forummer who regularly advocates banning all electronics and on board batteries. As soon as you do this, you eliminate Trax, launch control, electronically controlled gearboxes and clutches and diffs, electronically controlled and very complicated engine management systems and the operation of all of the cars running parts that are integrated through the black box. This requires a tremendous investment in development and testing time and testing miles. And would it affect the racing? Not one iota.
The only control the cars would require is a mechanical governor to keep the pit lane speed down to the specified 50 kph.
So there you have my suggestion. And would it affect the racing? Not one iota.
I was quite serious about the control of all the international accounts that the teams can resort to in order to overcome any salary cap. And to audit that would be an impossible task. You may as well audit the finances of "The Family". Let's face it, you wouldn't even be able to audit the vatican's expenditure.

[Armco Bender]

Wasn't that one of the reasons the GPDA was set up to "launder" the drivers earnings through various tax havens.If me memory serves me right there was enquiries into it years back,Colin Chapman had a big finger in it.Nothing came of it,it was too "murky" to find anything,so a salary cap would be a waste of time because they have been hiding the money for years.

[Valve Bounce]

For drivers working for international companies, as long as they don't do the Boris Becker tax dodge in a strict tax environment like Germany, then there really is no way that any limited audit cn keep check of all staff salaries. Especially when many live in places that are tax free like Monaco. Before anyone goes any further on this salary cap thing, just ask yourself how and who is going to audit the salaries of the F1 drivers, or the expenditure of the teams.

[Champ69]

The only way that you could not keep track on how much someone was paid was if TW was involved, as that man knows how to hide assets and income.

[golem]

The teams know what their finances are. If they couldn't afford it they wouldn't pay it.

Arrows

I think it'll have to come down to something like this sooner or later, because as you say, teams keep dodging the cost cutting measures. 1 engine isn't going to help any. (In fact it favours ferrari and sauber more than anyone at a glance.) A draconian 14000rpm rev limit would have. (Ok, it should be fairly easy to make a motor reliable for 4000rpm lower than currently used.)

The way I was thinking, the FIA can just say: If the costs involved with something are not disclosed, then you don't get to use it.

As for who, the FIA would have to form a team of accountants and auditers.

Examples:
1. Hmm, Castrol icon on your car, but we see no money being paid for this. Explain?

But as for salaries being hard to manage because of the international nature I can't really combat that.

Still, Maybe the technical cost side of things can be done as was said with respect to testing and so forth. For example, any testing done on track costs so many thousands per hour. The gearbox, engine and other parts all have costs and short of chassis/body and suspension, all parts have to be suppliable the year / 2 years after for the listed costs.

Doing this may at least mean that the BAR's and Jordan's can get a leg up towards the Ferrari and McLaren end of the scale.

I particularly like the idea of the this years proprietry - next years tech. If a company comes up with anything they definately don;t want someone else to use they'll have to scale down the budget on other parts. And some parts their suppliers won't drop prices for. (Because another team will come up with the minimum money and by providing a part to an F1 car they are obliged to do the same next year for that amount of money and not a dollar more.) Which forces them to use a lesser part.

Which makes things interesting and gives other component suppliers a way of getting in on the scene.

[Valve Bounce]

I'd like to know how many people will be organised to check the accounting of all the firms involved in the financing of all the F1 teams. Who is going to say that Marlborough only paid X dollars to Ferrari? Who is to determine that Marlborough did not channel millions into the Swiss, Channel Islands, Virgin Islands, Vanuatu, etc accounts of either Ferrari or their drivers? Now multiply this by 10, and the logistics become incredible. Besides, are the FIA going to legislate that individual drivers cannot have individual sponsors? This will then become a legal minefield.
Then of course, how will anyone be able to go into the factories to check how much is being spent on engines, testing, how many technical staff they have doing this testing?
Nope, we are not talking about the Bulldogs salary cap here. We are talking about companies and individuals who can live in tax free havens and can have bank accounts nobody knows anything about.
Sure any team can say they have disclosed all their expenditure to the FIA!! Who is going to check this? and how will anyone know this has not been understated?

[R]

For crying out loud, the teams have to find out themselves how much they can afford to pay in salaries. They must be expected to be professional enough to be in control over this themselves. You cannot have a set of rules on this and some sort of "police" to enforce them.

This resembles communism far far too much for my liking.

[golem]

Sure, slary capping in this is unmanagable owing to the nature of the game. Fair enough.

But there has to be some implementable way of cutting back the amount manufacturers spend on this to a point where we can get 10 teams running two cars each minimum, up to about 14 teams maximum and all fairly competitive. (Most international grids can handle 30 cars right?)

That's the ideal. And sure it's communist but you can argue limiting supposedly the world's fastest cars is in the first place, stupid, because then it becomes possible to build faster cars. I'm sure with direct aerodynamic mounting to the cars wheels and ground effect fans, as well as no engine capacity limits with turbochargers and fuel composition limits they could lap fairly briskly.

But the limiting point on speed is always cash. If you start thinking of ways of cutting that back just a little then it's helping. Technical regulations don't help because big teams can always spend more on working within the restrictor. Tech regs mainly help safety, not cost.

And I can see many ways the next year's tech idea cannot be implemented either. (Basically the cars would have to be open for detailed inspection, and this would effectively mean one race ready car would need to be built just for regulators to use next year. Or alternatively last years best car at the end of the season be immediately turned over for technical comparisons until their part was no longer used (2 years later maximum for example.) and then it could be returned. But i can't see many of these people doing it.

The exchange of testing time for friday practice is a good rule btw. Only other way I can think of helping is this...

The TV revenue dollars be split evenly per event per team participating or no team gets any of the revenue bucks. People will ***** until the cows come home about it but I realised that the leading teams earn more anyway without getting a share of the TV dollars. Let's face it, their sponsors provide them with the dollars but only if they win. Right? And the people involved with F1 do have some kind of control over it. Right?

I dunno if that's how it's worked out as is, but the way I read it the dollars are worked out depending on finishing positions. I know some would say that this rule is there to stop people just getting in for the cash, but truth is, the 107% rule does a better job at that. (Which for now I see being used on the practice runs, not the shootout qualifying.)

I dunno. We need rules that directly affect the amount of money being involved. Because everything else seems to be able to be circumvented. (Supercomputers and simulations are one such circumvention tool of the here and now that can only become better for those with the cash in the future.)

[Dutton]

Perhaps the prize money should be given in a reverse order? For the higher up the table a team finish, the less they need the money(for it really isn't much in comparison to their over-all budget me thinks). An argument could run that would you may see some lower-midfield teams deliberately doing badly in order to finish last if they had no chance of gaining real success, in order to get a bit more cash. It is possible, but I think it is unlikely: they would gain more from achieving higher results in the long-term, from the sponsor point of view etc. I haven't really thought this through much because it has just this minute popped into my head, so it is most likely got some funadmental flaws. Everything has flaws that can, and will, be manipulated.

Just a thought.

[Valve Bounce]

Dutton, I think the best way is to divide the money evenly.

You can cut costs dramatically by banning all electronics and on board batteries.

[Spudgun]

One of the problems, of cutting the electronics was that the FIA are unable to police it, but I've had an idea. I know this is a little OT, but the electronics are being mentioned on this thread.

The FIA legalised T/C and L/C because they couldn't police it. The reason being that teams were uploading their programs in the engine management into RAM to do their work which would be lost when the car was switched off, hence their would be no evidence.

My idea would be that they could still use electronics to operate the car, but a data logger (on board the car so it couldn't be tampered with) that was sealed by the FIA which would record everything the electronics did including RAM, like an audit log, which could be analyzed when the car had completed the race.

This way, if the teams were doing suspect things in the car's RAM, it couldn't escape the logger and a driver aid ban could be enforced.

I was just toying around with the idea and wondered what others thought.

[Valve Bounce]

I suggested banning all electronics so that we can dramatically cut down on costs, especially the costs related to testing of the electronics system's controls on all running parts. If we banned all electronics, the only testing necessary would be for aero and tyres.