Budget caps for F1 in 2010

Posted on Author Keith Collantine

F1 teams will be allowed to run to different technical regulations if they agree to limit their budgets to ??30m (??33m / $42m) under new rules put forward by the World Motor Sports Council today.

According to the FIA:

This figure will cover all expenditure of any kind. Anything subsidised or supplied free will be deemed to have cost its full commercial value and rigorous auditing procedures will apply.

FIA president Max Mosley has argued in favour of budget caps several times in the past but there have always been doubts over whether they could be enforced. The FIA is not allowed to handle commercial matters to do with F1, so how can it involve itself in inspecting the team?s finances?

This ??two-tier? solution where teams volunteer their financial information in exchange for being able to run to more liberal technical regulations may resolve that problem. But it does not completely convince me that budget capping will work. For example, what if a company announces it wishes to compete in F1 in 2011, having already spent ??200m on research and development in 2010?

And it doesn?t take a great cynic to question the FIA?s ability to carry out this rigorous auditing while maintaining the full confidence of the teams. Consider first how many complaints there have been about legitimate interpretations of the technical regulations in recent years.

Mosley?s two-tier solution also creates new problems. The FIA promises to ??adjust elements of these freedoms to ensure that the cost-capped cars have neither an advantage nor a disadvantage when compared to cars running to the existing rules.?? But can there ever be parity between such radically different cars?

Luca di Montezemolo, head of the F1 teams’ association FOTA, voiced his concerns about the plans:

FOTA would like to express its disappointment and concern at the fact that these have been taken in a unilateral manner. The framework of the regulations as defined by the FIA, to be applicable as from 2010, runs the risk of turning on its head the very essence of Formula 1 and the principles that make it one of the most popular and appealing sports.

Given the timeframe and the way in which these modifications were decided upon, we feel it is necessary to study closely the new situation and to do everything, especially in these difficult times, to maintain a stable framework for the regulations without continuous upheaval, that can be perplexing and confusing for car manufacturers, teams, the public and sponsors.

I?m not sold on the budget caps idea either. What do you think?

F1 2010 Season

30 comments on “Budget caps for F1 in 2010”

  1. On any other day, this would be the front-page news. I guess it just shows how big of a deal the new scoring system really is ;)

    Keith dose a good job of pointing out the shortfalls of a potential budget cap. On paper it sounds like a great idea, but the R&D nature of F1 make it very difficult to apply here because of the spending on development. I’ve said in previous posts that budget caps work very well in sports here in America, but in those cases they are “salary caps”- limits on how high a team’s payroll can be. Obviously, in those cases, there is no research and/or development to account for…..

    It’s got the right intention here- the powerbrokers are trying to make it fair and cost-effective to compete. But it’s a very difficult environment to try to cap spending in, no matter what the economic climate may be.

  2. Its terrible! What if a team with a solid car in 2009 opts to go for the budget cap in 2010. They would basically have a huge head start, with freedom to spend their capped budget on enhancing the car in these areas of greater technical freedom. But a new team would have to build a car from the ground up for 30mil? Why would any new teams want to join under these stipulations? Also, wouldnt this give the FiA to much freedom to “equalize” the “disparity” between the capped and non-capped teams, thus affecting the outcome of the championship greatly???

  3. I think this is the really big story of the day, it has the potential to shatter the foundations of the competitive structure of F1. It feels like taking a step back towards the 1980’s and the turbo era with the Jim Clark trophy for non turbo cars. The idea of a budget cap is good, but not by piercing a wedge between those that have fund and those that do not. F1 is about fair competiton and under these complex and mixed regulations the average fan is not going to understand the benefits.

    Keith your point about the teams getting around the budget cap is a good one. Manufacturer teams could disguise development used for F1 as R&D for their auto cars. How could the FIA trace that?

    I cannot but agree with James Allen’s comments that the reality of these new rules today are to stamp the autority of the FIA over the FOTA organisation, knowing that the FOTA teams will need to negotiate some of their power to get a compromise of the rules.

    Either way this casts a very gray cloud of the political arm of the sport yet again and we face a long old summer where we are debating the rulers of the sport and not the actual competiton.

  4. Funny thing is that I regard this bit of the WMSC decisions far more important than the points-versus-wins discussion elsewhere on this site. But I’m all but alone regarding that view, it seems.

  5. “adjust elements of these freedoms to ensure that the cost-capped cars have neither an advantage nor a disadvantage when compared to cars running to the existing rules.”

    Doesn’t this defeat the purpouse of the proposal??? I don’t get it. The proposal is all about enticing teams to lower their budgets with the promise of lesser restrictions on technical development, as I understand it. Isn’t the quoted passage basically saying: “Look, spend less, and you’ll have an advantage over those that spend more, BUT we’ll keep you in check to make sure it’s not really an advantage.”? Perhaps I’m dense – if so, maybe someone can explain the logic.

  6. “Look, spend less, and you’ll have an advantage over those that spend more, BUT we’ll keep you in check to make sure it’s not really an advantage.”? Perhaps I’m dense – if so, maybe someone can explain the logic.

    That’s how I read it. No ‘prime’ team will stand to lose against any ‘sub-prime’ team. Why should manufacturers invest a ton of money making the car as fast as possible with harsh restrictions if you can spend a fraction on a car just as quick, because it doesn’t have to be a proper F1 car.

    I always thought F1 was supposed to encourage pushing technology. I was already disappointed by a plea for a standardized KERS system – probably the most directly applicable F1 technology to normal vehicles in some time – but this is getting ridiculous.

    They’ll either **** off the teams actually building cars or introduce some filler junk poisoning the ‘most prestigious form of motorsport’. I don’t see how they came to two such terrible conclusions in such a short amount of time. :D

  7. Look closely at Brawn GP. They appear to have a wining car for 2009. But that car was developed (and paid for) in 2007 and 2008. So while their £30 M budget for 2009 might be possible to achieve, they spent way over that figure in years before.
    Next try this. I start Company A and you start Company B. Company A develops an F1 racer. Company B leases the complete car from Company A for £29.95 million per season. All the sponsorship deals are written with Company A, so the income never touches Company B.
    Next season we reverse the development/leasing arrangements so that Company races the car at less than £30 million while Company B pays to develop it – and takes the income.

  8. To me, the idea of tinkering with performance parameters as the FIA is proposing, ie. penalising budget-capped cars if they are too fast, smacks of the sort of artificially induced spectacle that is employed in touring cars by means of ‘success ballast’. This is not the sort of route Formula 1 should be going down in my view. Besides which, doesn’t the idea that excessive advantage will not be tolerated undermine the claim that increased technical freedom will encourage innovation, as it appears by my reading of the proposal that any team which comes up with some genius idea worth a significant amount of lap-time will be forced to remove it in the name of ‘equalisation’. So what will be the point of devoting part of your precious £30 million to developing a bold new concept if you’re not allowed to reap the reward?

    This assumes, of course, that the ‘high-end’ design brains will not just up and leave the budget-capped teams and take the mega-bucks on offer from the bigger teams not inhibited by the cap. For those with only £30 million to play with, staff wages will inevitably come down, as well as perks currently enjoyed by many F1 team employees such as private health cover, so it will become even more difficult for smaller teams who opt for the budget cap to hold onto their best people.

    It seems to me that this whole idea is motivated primarily by politics, with the result being not so much a ‘two-tier’ F1 as full blown apartheid with the budget-capped teams in the FIA camp and the rest, presumably under the FOTA banner, in the other, thus counter-balancing FOTA’s strength. When will the FIA learn that this sort of politicking creates nothing more than than instability, which will only drive people away from the sport. As usual Max is talking the politician’s talk, dressing everything up in such terms of logic and reason its almost impossible to refute him when you read his arguments, but in essence his ideas mean a dilution of the F1 concept. I only hope that the net result isn’t akin to unholy mess he’s made of the World Rally Championship.

  9. seems ridiculous when we’re already in the middle of implementing new regulations and budgets. Surely it would be best to wait for a few years, see how things have progressed, and then consider more. I understand there’s a need to reduce costs, but is 90% really necessary?

  10. this is a through back to the “customer cars” bernie had preposed in the past.The current teams couldnt and wont change to this scheme.Eddie jordon made the comment it was costing him 100mil in the ninties to run a team things are just a little more exspensive now.also anyteam taking up this opportunity will only run at the rear of the field who’s going to be interested in sponsoring a team all ways running last.

  11. I wanted to say more. F1 hasn’t seemed to do a great job of appealing to fans in the few years since I started watching, but they’ve really dropped the ball here- on a whole new level. Its a shame cos I’ve been planning my career and life at uni in the hope of ending up in Formula 1. I find it very dissapointing that something I’ve hoped will be a big part of my future is making things so unnecessarily complicated and difficult.

  12. The reason is CVC taking the money. If there where a more reasonable distribution of revenues, these crazy things would not be proposed.

  13. It seems to me that a great deal of development work is done on computers and simulation programs. I suppose these can be farmed out, in a hidden way, and then the resulting info can be sent back to the factory.
    Would be very dificult to police.

  14. I think this budget cap idea just won’t work. Apart from the obvious problems of how to identify a teams expenditure if they try to hide it in another company, I have a few other points which I have just come up with off the top of my head. I am sure if we all thought about it a bit we could come up with a lot more.

    The figure of £30m seems low but then we are used to budgets a lot bigger, I would like to know what a team like Williams think would be a realistic amount, as they are the only independent team not backed by a billionaire.

    What are penalties will be applied if a team goes over budget, simply points deduction for £x overspend or disqualification from the championship?

    Due to the different level of costs in each country such as wages, materials and exchange rate differences, it would not be equal for 2 teams in different countires

    What if team develops super duper new piece of tech but the FIA change the rules to equalise performance as they have said they will, would the team be refunded the extra costs incurred, and will it still count as part of their £30m budget? Also when will the rule changes to equalise performance occur during the season or at the end of the season.

    According to the Autosport report


    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.
    “If the team is profitable, it can pay a dividend to its shareholders, who may well include a chief engineer, team principal or even a driver. But we would make sure the team was genuinely making enough profit to cover the dividend.”

    The £30m budget cap includes all salaries including drivers, some drivers have relatively low basic salary and big performance related bonuses what if team performs better than they thought they would so they have to pay their driver more and end up going over budget?

    What about promo work for advertisers such as the viral ad McLaren helped do for the Blackberry lately (the remote control car one), or the F1 experience attraction BMW took to some GPs in the last couple of years with simulators for the fans and a test driver doing donoughts in an F1 car. Will these be included in the budget, as these are the sort of things that advertisers pay their money for and the things teams should be doing for fans.

    Like I said these are just a few of the potential problems which will crop up and I just can’t see a budget cap working in a sport as complex Formula 1.

  15. The option presented by Max and his minions is to present no choice at all, Each team will have to go the cap route for the potential of innovation as opposed to a static rules package.

    I truly hope the 30 mill cap is just the opening shot and a real budget, somewhat higher, will be settled on. How much is enough? Around twice the stated number, say 60-70 million Euros.

  16. Looks like FOTA don’t seem too keen.

    I wonder if some tme this year we’ll see the announcement of the FOTA Grand Prix World Championship, with its first season commencing in 2010?

  17. According to Max, “these rules will encourage clever engineering”.

    Yes, until the car is better than the others and the FIA ‘adjusts’ the rules to make it fairer. How can a team be motivated when it knows that as soon as it does better than the opposition the rules will be tweaked to remove the advantage?

    This will not work, the FIA have gone to silly measures to get one over on the FOTA, possibly at the cost of the sport.

    1. I don’t see how it encourages better engineering. F1’s so competitive now that the engineering is already in constant development and it’s very clever as it is. Restricting the guidelines will make it more difficult and after a point will surely just limit the new developments for the top teams.

  18. The idea is that all the teams will be forced one way or another to go for the budget capped ‘innovative’ scheme, then Max will enforce his catch all clause and restrict their design freedom.

    Now is the time, FOTA. Break away.


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