Budget caps for F1 in 2010

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

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30 comments on Budget caps for F1 in 2010

  1. 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

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

    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.

  2. 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.

  3. ajokay said on 18th March 2009, 14:34

    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?

  4. Andrew White said on 18th March 2009, 17:23

    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.

    • matt said on 18th March 2009, 22:56

      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.

  5. Aquatic Mammal said on 19th March 2009, 9:17

    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.

    AQ

  6. Dear Friends,
    I am not novice in F1 subject but I really have problem with understanding “the principal technical freedoms:

    1. A more aerodynamically efficient (but standard) under body.
    2. Movable wings.
    3. An engine which is not subject to a rev limit or a development freeze.”
    - what does each of these points really mean, is it so vague as I think????
    I would be grateful for bringing more clarity :=))

  7. Bigbadderboom said on 19th March 2009, 14:49

    What we are witnessing as most of us know is a power struggle between the FIA and FOTA, When you consider the amount of revenue created by the f1 circus inc Tv Rights, track revenue, branding and all other commercial revenue streams a £30 million caps seems ridiculous. Everybody is aware that the kind of money toyota was throwing around is no longer sustainable, but we are going from one extreme to another, F1 should be inventive, glamorous and the pinnacle of motor sport, perhaps as GeorgeK said earlier its just a starting point in a negotiting process.

    Personally I am beggining to think that FOTA should throw their toys out of the pram and demand parity for the teams. F1 should be far mor self regulating and muppets like Mosley should stick to what he knows……and we all know what that is!!!!!

    This all stinks to me fo Max trying to get a new mechanism in place for him and the FIA to continue medaling in formula 1 issues.

    Are we beggining to witness the demise of our sport?

  8. “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?”

    Someone once said a little revolution is a good thing. To that I would add sometimes major revolution is essential to survival. This will truly test the mettle of FOTA and their will to control what rightfully should be their sport, not Max’s.

    As an aside does anyone have a clue as to what the teams travel costs for a season are? Has to be in the extreme with all the fly away races.

  9. Chaz said on 21st March 2009, 20:06

    This is going to be a veritable walk through a mine field to try sort out.

    Another big question (and perhaps an article in the making) is – “How the heck do you reduce your teams budget from $400m plus dollars to $42m”. This may sound silly but I imagine its far more complicated than it sounds…

  10. mertyazan said on 30th April 2009, 17:28

    I’m only angry for after 2010 no refuelling in the race.Why don’t they asking us ,formula 1 fans.A couple year before they forbidden tire change and all us sought very bad results.Some beauty of f1 race is pit stops .tire change & refuelling and refuelling strategies.Why they are playing with rules contuniously.Best of the rules at Schumacher times.Qualifiynig sessions alot better than now.point system also a lot better.

  11. jrg said on 24th May 2009, 23:38

    I think the budget cap is bad, mostly due to the two specs of cars that will result and the intrusion into team finances. Let teams spend as much as they want. Penalties for premature component failure seems good and provides some cost savings, but this is an expensive sport and makes a lot of money. That all feeds the spectacle.

    I would like to see fewer rules, and rules more about the effects of the car, not their specifications.

    Instead of detailed engine specs just limit the amount of fuel used in each race. Use the fuel in anything you want but once its gone its gone and you don’t finish.

    Instead of detailed areo specs just have a set of rectangular shapes that can not be exceeded (as is used already) and the wheel attachment points. But add a set of specs on the turbulence produced. So as long as the car stays within the physical constraints and the resulting air flow is inside the spec, make it any shape you want.

    I’d let them use any tire compound or construction as long as its in the size spec. If they can make it all the way on one set of tires and be faster then the guy that takes the time to pit to put on new ones, let them do it. Same for fuel I’d say. I’m not sure about banning it. now teams don’t have to refuel, other than you have the free time during the at least one demanded tire change so why run with the extra weight. Personally I think the pit/fuel/tire strategy does add a lot to the sport. I very much like the technical aspects of F1 and that sort of bleeds over into the strategy aspects which I like too. It was better with two tire suppliers too.

  12. FIA 2018 regulation change.

    A: To expand on our brazilian trophy program all car body parts will be constructed of no less than 45% recycled pop bottles.

    B: Any team that retains 20 or more of the original milk float subframe, Or can prove that the car is still used to deliver dairy products between races will be allowed to have 2 team crew to push start from the grid.

    C: To preserve our European fan base All F1 teams must retain their orignal name and logo’s, Teams keeping a small office, staffed by at least 2 people in their original country will be allowed to change batteries mid race.

  13. The right way to organise your precious party would be to hire a church hall somewhere.

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