A budget cap after all ?

[Marbot]

Yes, the irony of ironies.

http://www.guardian.co.uk/sport/2011...a-one-red-bull

Are the teams finally seeing sense or should they still be able to spend whatever amounts of money they can get their hands on?

[Joe Taylor]

It's not the most surprising thing I've ever heard, a lot of the furore over the budget cap was due to a) the ridiculous double-standard rules set to be introduced to give a massive advantage to those who stayed within the cap and b) general dissatisfaction with Max.

[cmotd]

I hope they stick to a modified version of the RRA and don't bring in a restrictive budget cap. Or make the cap reasonably high. There has never been a level playing field in F1, and bringing it in will change the whole nature of the sport.

[ECW Dan Selby]

I don't think it's so much about creating a level playing field more than making the sport sustainable.

If this upward trend of spending continues, the lower teams simply will not be able to keep up.

I think a good way around it is the NFL 'soft' budget cap, which involves (wait for it...), sticking to a certain cap, but, if you overstep the cap you must share X amount of money with the rest of the teams.

I'm sure Mr. Montezemelo will be fine with that..?

Selby

[duke_toaster]

That's the Major League Baseball Luxury Tax, not the NFL hard cap (which wasn't in effect in the 2010-11 season, next year has no CBA, unless there will be one there won't be a 2011-12 NFL season).

I think the biggest problem with the Mosley proposed cap was that it is far too low. I do agree that if there is a budget cap, things that are in no way to do with the cars (e.g. corporate hostility) should be excluded.

[Greem]

Originally Posted by duke_toaster

I think the biggest problem with the Mosley proposed cap was that it is far too low. I do agree that if there is a budget cap, things that are in no way to do with the cars (e.g. corporate hostility) should be excluded.

I try very hard not to point out spelling or grammar... but "corporate hostility" is one to be proud of It's certainly not something I think should be included in the budget for any team officially...

[Woolley]

I think you'll find that wasn't an accidental typo. 'Corporate Hostility' is a fairly common term, if not in official press releases.

[Spritle]

Maybe binning all of the constant rules changes, (most of which fail to do anything but cost a lot) would be the best way for the teams to stop spending tons of cash followed by binning the races that cost a fortune for the teams to get to.

Naaaa, that would hit Bernard in the pocket!

[chillibowl]

Originally Posted by ECW Dan Selby

I think a good way around it is the NFL 'soft' budget cap, which involves (wait for it...), sticking to a certain cap, but, if you overstep the cap you must share X amount of money with the rest of the teams.

Originally Posted by duke_toaster

That's the Major League Baseball Luxury Tax, not the NFL hard cap (which wasn't in effect in the 2010-11 season, next year has no CBA, unless there will be one there won't be a 2011-12 NFL season).

the NBA redistributes money from their luxury tax back to teams that maintain salaries under the cap where as the MLB just keeps the money for themselves for a "development fund"....i think

personally i am not a fan of either a soft cap or a luxury tax as the fines levied against violators is still less than the benefits of over spending and redistribution of wealth only serves to keep the owners of small market teams rich while their teams remain comparatively crappy.

its also fair to point out that these caps are only for player salaries...teams are still entitled to spend 1.4 billion on a new stadium if they want.

that was totally off topic so relating this to F1, i cannot imagine Ferrari would ever adhere to anything other than a hard cap (with a penalty being exclusion)...they are simply too well funded by their sponsors to care about fines.

[old man]

Every time this topic comes up I find myself saying it can't work, whatever the teams "agree" there will be those who step outside the agreement to get results needed to sustain their programme.

Motor racing cannot be compared to any other sport that does not depend on complex, up to date technical equipment. The whole point is that a team or entrant develeops the car to get better results and that costs money, you work to get what has been described as "the unfair advantage" and F1 is the pinnacle of that process.

Costs can be controlled in a spec formula where the cars come from one source and are maintaned by one group of engineers but as soon as you get teams owning their own cars costs will inevitably rise as they compete.

I for one find technical development one of the most interesting aspects of motor racing and would really be a bit of a free market person on this argument.

[climb]

My point is: does it make sense to set a rule whose respect nobody can really ensure/verify?

RBR have been rumoured to have spent much more than they should last year, and so what?

If you are not sure about it you cannot punish anyone

[climb]

Originally Posted by chillibowl

....

that was totally off topic so relating this to F1, i cannot imagine Ferrari would ever adhere to anything other than a hard cap (with a penalty being exclusion)...they are simply too well funded by their sponsors to care about fines.

This problem is not only related to Ferrari: McLaren got (albeit for different reasons) a 100 M fine a couple of years ago and it didn't harm them that much

[Marbot]

Originally Posted by old man

Motor racing cannot be compared to any other sport that does not depend on complex, up to date technical equipment. The whole point is that a team or entrant develeops the car to get better results and that costs money, you work to get what has been described as "the unfair advantage" and F1 is the pinnacle of that process.

.

More of a business than a "sport".

Can't be too many 'sports' that are influenced by the toings and froings of market forces.

And generating income is obviously easier for some than others.

Last years winning team did it buy selling vast amounts of a soft drink! And another by 'back door' cigarette sponsorship!? Which leads me to believe that both of these products are still very popular. *He types, as he receives yet another text from Vodaphone offering additional services* Should I help to increase the performance of the McLaren, I wonder?

[Marbot]

Originally Posted by climb

My point is: does it make sense to set a rule whose respect nobody can really ensure/verify?

Forensic accounting has moved on quite a bit in recent years. Made all the more easier by having prior knowledge of who you are investigating.

Red Bull's accounting discrepancy apparently came about because some German journalist looked into their business accounts and made two and two make five.

[duke_toaster]

As a sidepoint, on the North American leagues, using the Wikipedia statistics for 2010, only one team (the Yankees) exceeded the luxury tax figure of 170M USD, fourteen out of thirty were above half that. The Yankees spent six times more than the Pirates, who spent around 34 million. I think if there is a cap it has to be a hard cap.

[JeremySmith]

Who started this thread? I see now...

[Marbot]

Is it not relevant to F1?

Money seems to be an 'ethical' subject right now.

Maybe if it didn't need so much of it.............

[wnut]

The irony of a resource restriction agreement is that it would prevent the establishment of another team like RBR, as a new team could not spend enough money to become competitive.

If HRT suddenly found a billion dollars US, they would not be able to buy a wind tunnel and establish the necessary personel to make themselves a serious challenger.

Also if RBR decided to share Adrian Newey with Toro Rosso, how would you allocate the costs? 50 / 50 each?

If Renault supplies the engine and gearbox free, how do you calculate the cost?

The resource restriction agreement is just a lawyer and accounting picnic to drive the costs of competing higher with no benefit to the sport.

F1 = money, deal with it.

The only way to deal with costs is to control the development paths when they become unsustainable and no longer provide a proper reason for continuing down a particular path.

[Marbot]

Originally Posted by wnut

The irony of a resource restriction agreement is that it would prevent the establishment of another team like RBR, as a new team could not spend enough money to become competitive.

Currently the RRA doesn't prevent that, but it still prevents people like Prodrive etc, from being tempted back into F1. A true budget cap would also restrict the ability of teams like RBR from spending money where it needn't be spent. Or at least make them think about where it needed to be spent.

Originally Posted by wnut

If HRT suddenly found a billion dollars US, they would not be able to buy a wind tunnel and establish the necessary personel to make themselves a serious challenger.

If all of the other teams are similarly restricted, HRT would find themselves not having to worry about things like wind tunnels too much, since there use would be further restricted or they could go down the same path as Virgin. But anyway, they currently have the use of a very good wind tunnel, which is far cheaper than having to buy your own.

Originally Posted by wnut

Also if RBR decided to share Adrian Newey with Toro Rosso, how would you allocate the costs? 50 / 50 each?

Salaries were never intended to be part of any budget cap. Only the cost of designing, developing and building of the car was.

Originally Posted by wnut

If Renault supplies the engine and gearbox free, how do you calculate the cost?

It would be free, but why would they do that? Would other engine manufacturers do the same?

Originally Posted by wnut

The resource restriction agreement is just a lawyer and accounting picnic to drive the costs of competing higher with no benefit to the sport.

The RRA has currently brought down the cost of competing in F1 quite significantly. The problem it has is that it doesn't go far enough in areas where most money is spent. It certainly hasn't driven the costs higher.

Originally Posted by wnut

F1 = money, deal with it.

The problem is that most F1 teams can't find any money or they have to employ 'pay drivers' to boost the funds.

Originally Posted by wnut

The only way to deal with costs is to control the development paths when they become unsustainable and no longer provide a proper reason for continuing down a particular path.

Which is what is happening now. But some are dragging their heels.

The mere fact that a proper budget cap is even being considered and worked on, gives you some idea of just what a bad financial state most of the teams in F1 are currently in. Some are even saying that HRT is 'not' the team with the least amount of financial resources!

[duke_toaster]

Obviously if F1 had a budget cap, I would suggest that it would not be as simple as blanket expenditure. Engine development and engine supply costs would be difficult to be part of the cap, as some teams develop their own but most use customer engines. I'd suggest that they should be excluded, have a separate cap on the cost of engine supply, and possibly a development cost cap. Also, in the AFL (as in Aussie Rules), the new franchise they are adding IIUC will be given a higher salary cap. Perhaps new teams (I.E. Lotus in 2010, not Mercedes in 2010), should be able to have a higher cap in their first few years. Any spending that isn't to do with the design, construction and operation of the cars shouldn't really be capped (things like corporate hospitality).

[old man]

The very fact that Marbot and wnut in post 19 can discuss it like this shows the difficulty of managing expenditure from outside. How deep is the forensic accounting going to go and who pays for it? Who decides the value of free components, if driver salaries are excluded what might a well paid driver bring with him "free". Salaries in general are the biggest expenditure when you get down to it and cannot be excluded, struggling Williams "only" have had a maximum of 530 staff in recent years according to Patrick Head (Autosport 17th Feb), he quotes Honda before Brawn at 700 and Mclaren at "huge" numbers, who knows what the Ferrari figure is? If you exclude these salaries it makes a nonsense of the attempt to limit expenditure.

Personally I consider 530 staff "huge" to run a two car race team!!

As wnut says, it is an accountant/lawyer fest and teams would have to employ suitable extra numbers of their own professional advisors to prove that they are working to budget and have you seen the fees these guys charge!

Can never work as intended, even by "agreement", there will always be a way round it