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Old 17 Mar 2009, 13:56 (Ref:2417367)   #1
mjstallard
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FIA introduces budget cap

http://www.autosport.com/news/report.php/id/73743

Very interesting indeed - a voluntary £30 million limit in exchange for total technical freedom.
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Old 17 Mar 2009, 14:01 (Ref:2417376)   #2
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Very interesting.
I welcome any design freedom with open arms.
The question of how it will be policed remains however.

Sort of Fantasy F1 becomes reality.
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Old 17 Mar 2009, 14:12 (Ref:2417389)   #3
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I should revise that - it's not 'total' technical freedom, more 'extended'. We won't be seeing the return of a BRMesque H-16 engine, for example...
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Old 17 Mar 2009, 14:12 (Ref:2417392)   #4
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Impossible to enforce. Large manufacture can easily get more money as say it was for road car development.
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Old 17 Mar 2009, 14:15 (Ref:2417398)   #5
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Very very shaky ground. Don't know how they will police this. It is near on impossible. Can see a lot of naming and blaming over this rule in the future. I mean there will be some loop hole that clever lawyers will find which could give one team a big advantage.
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Old 17 Mar 2009, 14:16 (Ref:2417400)   #6
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It'll be interesting to see how it plays out. Could, for example, McLaren or Ferrari set up a 'B' team and give them parts at a knock down bargain basement rate? The FIA seem pretty confident about it working and are involving proper auditors, so you never know...
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Old 17 Mar 2009, 14:19 (Ref:2417405)   #7
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Impossible to enforce.
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
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Old 17 Mar 2009, 14:26 (Ref:2417410)   #8
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I should revise that - it's not 'total' technical freedom, more 'extended'. We won't be seeing the return of a BRMesque H-16 engine, for example...
I'll still take it.
Better than no freedom at all.

But still think it'll be a bugger to police.
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Old 17 Mar 2009, 15:12 (Ref:2417450)   #9
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So that is effectivly 2 sets of technical regulations then. Multi-class racing, but sharing each others points. Why do we have this exactly?
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Old 17 Mar 2009, 15:16 (Ref:2417457)   #10
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I'll still take it.
Better than no freedom at all.

But still think it'll be a bugger to police.
Yes. Yes. And yes.

Agree with all points. Definitely an interesting step, but it's going to be interesting how they follow up on it in practical terms.
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Old 17 Mar 2009, 15:17 (Ref:2417459)   #11
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Yes it will be very hard to police, but think about the inginuity that engineers want to prove they have again!! Remember the good old days, way back when!! I don't...cause I wasn't alive. I've heard about it when marshalling though
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Old 17 Mar 2009, 15:32 (Ref:2417467)   #12
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the.cosmic.pope should be qualifying in the top 10 on the gridthe.cosmic.pope should be qualifying in the top 10 on the grid
A team needs a minimum of about 24 people to operate during a race weekend. If they are on £30k each (which is low for the job they are doing) then you are already at £720. Now you have to add catering accomodation, press, team principles and the "higher up" guys who will command a much larger salary. And that is before you add the crew back at the factory and the drivers. Kimi already has a $50m salary.
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Old 17 Mar 2009, 15:53 (Ref:2417478)   #13
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I'm guessing the 30 million is toward development and testing of the cars themselves. Salaries and at track non-race activities would be hard to fit in that budget and still be able to attract the big sponsors. Will definitely be hard to manage, but will be helped out by HUGE penalties for even the appearance of fishy balance sheets. It has to start with exclusion from races and build from there.
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Old 17 Mar 2009, 16:08 (Ref:2417486)   #14
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I'm guessing the 30 million is toward development and testing of the cars themselves. Salaries and at track non-race activities would be hard to fit in that budget and still be able to attract the big sponsors. Will definitely be hard to manage, but will be helped out by HUGE penalties for even the appearance of fishy balance sheets. It has to start with exclusion from races and build from there.
From the article.

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When asked what was included, Mosley said: "Everything except the motor home (if the team has one) and any fine(s) imposed by the FIA. All expenditure will be included, even the salaries of the drivers and team principal.
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Old 17 Mar 2009, 16:10 (Ref:2417489)   #15
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As stated earlier though - what if....

Mercedes spend millions on the testing for a new engine theory. This then gets utilised on, say, the SLR.
From this knowledge, which is proven to be on a road car, Mercedes then pass the technology details for a minimal fee to the F1 engine team.
I'm pretty certain that in terms of competition, Renault can't demand that they are entitled to Mercedes' engine development for a road car, otherwise more companies would be using a Mazda rotary engine.
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Old 17 Mar 2009, 16:11 (Ref:2417491)   #16
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Impossible to enforce.
2nded.

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All expenditure will be included, even the salaries of the drivers and team principal.
I'm not up on European labor laws, but as there is no sort of collective bargaining agreement as the teams and drivers are not unionized (although I suppose one could say FOTA is a kind of union and I think there's not a standing Concorde Agreement), how could this past muster in court? The only way sports leagues in the U.S. are allowed to have salary caps is because the players are unionized and agree to it in collective bargaining. If the players' unions ever decertified, the NFL, NBA, and NHL for example could not legally have a salary cap.
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Old 17 Mar 2009, 16:26 (Ref:2417500)   #17
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Both codes of Rugby in England have salary caps.
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Old 17 Mar 2009, 16:28 (Ref:2417504)   #18
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Both codes of Rugby in England have salary caps.
Are the players unionized? Because if they're not, that's collusion.
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Old 17 Mar 2009, 16:30 (Ref:2417506)   #19
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There is no labor law issue: The teams are free to decide which salary they pay their employees. However, if the salaries move them over the budget (not salary!) cap, they lose their technical freedom.

From what I know, the salary cap in the US major sports leagues is really a salary cap: a regulation of the team's players (and them only). The other costs remain unaffected. Here it is the other way round: it is a budget cap, with salaries only being affected indirectly.

Besides, different countries, different law systems. You cannot apply US standards to French institutions. Heck, even in Europe we still have hugely different law systems, though the EC is trying to harmonize some aspects.
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Old 17 Mar 2009, 17:00 (Ref:2417533)   #20
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There is no labor law issue: The teams are free to decide which salary they pay their employees. However, if the salaries move them over the budget (not salary!) cap, they lose their technical freedom.
Allright, so if a sponsor on the car pays a driver's salary instead of the team (a la Michael Schumacher with Marlboro at Ferrari supposedly), does that count toward the budget cap?

If not, seems like an easy way to skirt around this rule. The team pays the driver a nominal fee but his real money is coming from the sponsor. Although that's going to open up sponsors having more control over driver selection than they do now.

I understand the intention, I just don't see how they intend to actually do it. How is the FIA going to tell that a team did not budget 30 million pounds but instead 40 million pounds? How are they going to tell that wind tunnel time cost $40000 and not $25000? These teams are controlled by well-off millionaires and billionaires who've made hiding money an art form, all they are going to do is understate costs, i.e. hiding money, and how will that be combatted as the FIA does not have the right to inspect teams' balance sheets? Not to mention we have a ton of carmakers in the series, and they can most definitely hide money in other business arms.
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Old 17 Mar 2009, 17:03 (Ref:2417538)   #21
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Allright, so if a sponsor on the car pays a driver's salary instead of the team (a la Michael Schumacher with Marlboro at Ferrari supposedly), does that count toward the budget cap?

If not, seems like an easy way to skirt around this rule. The team pays the driver a nominal fee but his real money is coming from the sponsor. Although that's going to open up sponsors having more control over driver selection than they do now.
I guess that could lead to creative accounting.

This system does prevent some forms of creative accounting like employing WAGs, as tried in Rugby.

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I understand the intention, I just don't see how they intend to actually do it. How is the FIA going to tell that a team did not budget 30 million pounds but instead 40 million pounds? How are they going to tell that wind tunnel time cost $25000 and not $40000? These teams are controlled by well-off millionaires and billionaires who've made hiding money an art form.
Forensic accounting. Unsure how effective it will be.

Bear in mind this is a voluntary cap. What would be more effective is a supply price cap to privateers.
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Old 17 Mar 2009, 17:14 (Ref:2417548)   #22
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I guess that could lead to creative accounting.
Ya think?

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Forensic accounting. Unsure how effective it will be.
We just had a guy that was able to hide the fact he'd lost $50 billion for 25 years from the SEC with not a cent to show for it when they were specifically charged with looking at his books to determine if they balanced out. There is a bit of nefariousness there, but how is the FIA going to be successful trying to find an extra 5 million euros being spent on the F1 team throughout the entirety of the corporation of BMW? Not to mention if they discover it on some teams and not others, we just opened the can of favoritism once again.

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Bear in mind this is a voluntary cap.
Yes, it is a voluntary cap. But if a team wants to win, it's likely they'd aim to cheat the numbers to try and get the performance advantage on their competition that comes with freer technical rules. This is auto racing after all, if I owned a team it's what I would do.
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Old 17 Mar 2009, 17:18 (Ref:2417552)   #23
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Between this and the wins system I can only assume the FIA meeting was held in an Amsterdam coffee house

My only hope for F1 is that the teams, through FOTA, tell Bernie to call Max off or they will set up their own series.

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Old 17 Mar 2009, 17:23 (Ref:2417555)   #24
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My only hope for F1 is that the teams, through FOTA, tell Bernie to call Max off or they will set up their own series.

It's just another clever ploy by Max.

You can spend what you want but have restricted regulations or you can limit yourself to thirty mil and have a bit more technical freedom.For most if not all the manufacturers the decision is a 'no-brainer'.

I also believe that Bernie and the teams will be fully behind this proposal.
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Old 17 Mar 2009, 18:39 (Ref:2417629)   #25
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£30 million buget is very thight. Don't expect teams to innovate, because teams don't have the money to develop. The technical freedom may well turn out to be an illusion.
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