FIA aims to get all teams to cap budgets using one-sided regulations

Budget-capped KERS users will get a bigger boost in 2010

Budget-capped KERS users will get a bigger boost in 2010

The publication today of the FIA’s budget cap plan for 2010 shows it intends to get every team competing under the spending limit.

Rather than offering technical regulation that would allow cost-capped teams to compete on parity with the unlimited spenders, it seems to me the rules for next year would favour those sticking to the spending limit.

They will have no rev limit on their engines, a KERS with twice the power of their rivals, more adjustable wings and the ability to develop four-wheel-drive if they choose.

Since Max Mosley first mooted the possibility of a ‘voluntary’ budget cap there has been widespread suspicion about how his plan for a ‘two-tier’ F1 could work.

Rather than making budget capping mandatory, the FIA has to offer it as a voluntary option, as it cannot assume the right to inspect the teams’ finances without their permission.

The publication of the new rules today strongly suggests Mosley intends to make the alternative to the budget cap too unappealing for anyone to consider. Here are the advantages that capped teams will be entitled to under the 2010 rules:

Non-capped teams Capped teams
Adjustable front wings Maximum six-degree adjustment twice per lap Maximum ten-degree adjustment any number of times per lap
Adjustable rear element Not permitted Permitted
Engine performance 18,000rpm maximum No rpm limit
KERS power in Max. 60kW No limit
KERS power out Max. 60kW Max. 120kW
KERS energy release per lap Max. 400kJ Max. 800kJ
Transmission No more than two driven wheels Any number of driven wheels
KERS power delivery May only power the rear wheels May power any wheels
Wind tunnel use Limited Unlimited
Testing Limited testing outside racing season Unrestricted
Engines and gearboxes Limited number per season No limit

Source: FIA technical and sporting regulations, 2010

As an extra incentive to comply, the teams have been set a deadline of May 29th to apply to compete in 2010. The total number of entries that may be accepted has been increased to 13 two-car teams. But what is there to stop the FIA from selecting only those teams that prefer the budget capping option?

Several new outfits have already expressed interest in doing so: chassis builder Lola, David Richards’ Prodrive operation, and GP2 team iSport.

As the new cost cap is likely to force most of the teams to make large number of redundancies, these new teams may at least provide some places for out-of-work engineers to go.

The ??40m limit ($59.18m / ??44.73m) will not include engine costs (2010 only), driver salaries, marketing and FIA fines.

Do you think the FIA intends to make budget capping too good an offer to refuse? Will any teams opt for unlimited spending? Have your say in the comments.

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101 comments on FIA aims to get all teams to cap budgets using one-sided regulations

  1. PJA said on 1st May 2009, 11:03

    The FIA have defiantly tried to get teams to compete under the budget cap by making it more attractive that to have an unlimited budget.

    I won’t bother listing all the problems I think there will be with the way the FIA have gone about it, by creating a two tier formula 1, as I did that in a response on another article. However I do think that the £40m limit seems small and it would have been better to start higher and then gradually reduce it season by season, this would have made it more attractive to current teams whose budgets are a lot higher. Also I think the only way a budget cap could work and be a benefit for Formula 1 as a whole, is if the FIA worked with FOTA on the issue to come up with a sensible budget and changes to the rules, rather than the FIA just dictating what the they think should be done

    Despite all the freedoms available to the budget capped teams they obviously can’t exploit all the areas available to them as they won’t have the money. If they wanted to develop their own KERS than that could be all their budget gone straight away for example.

    This was always Mosley’s stated aim with a budget cap to make them choose were to spend their money rather than limit each individual area, one team may decide to do more wind tunnel work during the season but then they wouldn’t be able to do as much testing as another team in pre season as they wouldn’t have the money.

    Capped teams may be able to run engine with no rev limit but does anyone know what problems they would have running an engine at 20,000rpm that has been designed for 18,000rpm, or would it be used like an overtake button, only occasionally. I remember when they introduced the rev limit I read some reports saying some teams were having problems detuning their engines whereas the Mercedes benefitted from the rev limit especially in terms of reliability.

    Are the FIA still going ahead with a standard engine for those who want it, and is it basically going to be the one Cosworth supplied to Williams when they were last in F1.

    Also regarding KERS, there were reports a while ago that a standard KERS unit would be mandatory for all teams, is there any further news on this or is the plan to have it like the standard engine, there if teams don’t want to develop there own but not compulsory.

    Was there any news on the most wins method to decide the championship, because I seem to remember the FIA saying although they needed the team’s permission to introduce for this season they didn’t for next season and so it would be used next year. I think we F1 should stick with a points based championship and just increase the difference between first and second.

  2. CRM said on 1st May 2009, 11:14

    Budget capping could work but surely it needs to be done with the suport/agreement of all teams. Offering technical freedom to teams who take the budget cap is a devious way to force all teams to accept it.

    It is a headline grabbing waste of time offering 4WD, increased power KERS, movable rear wings, unlimited testing etc – teams simply won’t be able to afford any of it on £40million.

    As I have said before all of these constant, never ending changes t the rules/regulations will alienate caual fans and drive them away from the sport!

  3. graham228221 said on 1st May 2009, 12:01

    Any estimates on maximum theoretical laptimes for the two different regulations?

    I’d guess the difference would be at least a second. There’s no way a non-cost restricted team could compete, no matter how much they throw at development.

  4. Rather than offering technical regulation that would allow cost-capped teams to compete on parity with the unlimited spenders, it seems to me the rules for next year would favour those sticking to the spending limit.

    And just how are my capped team supposed to afford unlimited wind tunnel usage, unlimited testing, unlimited fancy transmissions and gear boxes and KERS development?

    Lets say Ferrari, McLaren, BMW, Renault and Toyota decide to go racing uncapped, how is any other team gonna develop an engine that revs over 18,000?

    I’m not againt a budget cap in theory but I think it’s very difficult to enforce it.

  5. Steve said on 1st May 2009, 14:18

    What would happen if say McLaren Road Cars /Fiat / Renault. BMW, etc employed somebody like Newey for an astronomical sum to design a road car for them, and then the race team paid him peanuts to work for them?

  6. gazzap said on 1st May 2009, 15:32

    I am not a fan of any kind of unlevel playing field in sport. something seems very unfair about the whole thing.

    Over the years the big manufacturers have built themselves up based on hard work and success. there is a reason why they are big teams. they deserve to be big teams. while the playing field is level then everything is fair and just.

    It would be like in football, making all the big 4 teams in England start with the score 2-0 to the small team or the other team gets to play with 12 men. for me, its not sport.

    there are other ways to cut costs. they can gradually impose spending limits on ALL teams at the same level. or even impose things like, every team using the same engine. Sport and fairness would remain, thats the key here.

  7. schumi the greatest said on 1st May 2009, 15:38

    Intresting points regarding the salries of drivers. I think in general the drivers are motivated by success, the chance to win races and be on the podium. After all they’ve woorked their ***** off for 10 years to get into the sport and a career in f1 is only 10-16 years for the top drivers so i think they all want to make the most of it while they can. Look at hamilton, 3rd year in f1 1st time hes got a car that cant challenge for wins and hes unhappy, would he leave mclaren for half the money to a team with a winning car, yes!

    This does obviously leave the door open for teams like ferrari to offer crazy amounts of cash to drivers, theyr paying kimi nearly 3 times the amount massa gets….make of that what you will.

    The only driver i can really think off who sold himself for money was ralf, but then again did he have many offers after williams?? and if someone offered you 16 million quid a year (or whatever he was on, you wouldnt say no il have 8million instead would you) but i think thats an argument for a different day

  8. Peter Joseph said on 1st May 2009, 19:54

    It’s crazy. Unlimited testing and windtunnel use? Double power KERS. All the sorts of things that using and developing would suck up loads of cash. What’s the point in being allowed those things if you can’t afford them?

    The uncapped teams can just pour millions into making the most out of the limited testing and wind tunnel use.

    Anybody know how on earth the FIA enforces windtunnel testing restrictions?

  9. F1Yankee said on 2nd May 2009, 0:37

    i think a few things are being misunderstood here:

    the fia does not have the right to force an inspection of anyone’s finances. that’s why teams are offered limited and unlimited budgets.

    all of the options available to the teams are exactly that – options. it is impossible to exploit multiple areas at once.

    nothing is being taken away from uncapped teams. the rules are exactly as they are right now, and nobody complained in december.

    • K said on 2nd May 2009, 3:02

      the fia does not have the right to force an inspection of anyone’s finances. that’s why teams are offered limited and unlimited budgets.

      Then how do the FIA know if people are adhering to the capped budget if they agree?

      all of the options available to the teams are exactly that – options. it is impossible to exploit multiple areas at once.

      Not if you have unlimited budget.

      nothing is being taken away from uncapped teams. the rules are exactly as they are right now

      Incorrect.

    • F1Yankee said on 2nd May 2009, 9:26

      Then how do the FIA know if people are adhering to the capped budget if they agree?

      by entering 2010 as a cost-capped team, the team permits the fia to inspect via the costs commission

      Not if you have unlimited budget.

      with an unlimited budget, a team couldn’t exploit any of those areas.

      Incorrect

      please elaborate as to what has changed regarding unlimted budget teams, excluding changes for all cars such as refuelling, et cetera.

    • by entering 2010 as a cost-capped team, the team permits the fia to inspect via the costs commission

      So what your saying now is the FIA do have the right inspect finances where as before you said they didn’t.

      with an unlimited budget, a team couldn’t exploit any of those areas.

      You might need to state what areas your talking about here. I thought you were talking about technical development with regards to the restriction of the budget cap.

      please elaborate as to what has changed regarding unlimted budget teams, excluding changes for all cars such as refuelling, et cetera

      Ok excluding the things that have changed nothing has changed. Having said that uncapped teams will be competing against teams with budget cap perks, that’s a fairly big change for the uncapped teams.

      I’m not sure where this is going! Are you for or against the idea? Personally I’m not against a budget cap in principle but I don’t like the proposal as it stands.

    • F1Yankee said on 2nd May 2009, 19:39

      flavio, is this you? ;)

      So what your saying now is the FIA do have the right inspect finances where as before you said they didn’t.

      they don’t have the legal right, until teams give consent by entering 2010 and later under the cap. an unlimited team can and most certainly will refuse a financial inspection.

      You might need to state what areas your talking about here. I thought you were talking about technical development with regards to the restriction of the budget cap.

      i am indeed referring to the technical areas made available only to capped teams, as summarized by keith’s chart. a capped team may help themselves to 40M pounds worth of the right-hand column, and an unlimited team gets none. i think your statement “Not if you have unlimited budget.” describes a different scenario from what is stipulated.

      Ok excluding the things that have changed nothing has changed.

      the entire left-hand column of keith’s chart describes terms identical to those put in place prior the 2009 season. an unlimited team in 2010 would not be subject to any greater restriction than what has been agreed upon for 2009.

      I’m not sure where this is going! Are you for or against the idea? Personally I’m not against a budget cap in principle but I don’t like the proposal as it stands.

      for the good of the sport, i am for the cap. i was doubtful it would be done or done well, but after seeing the regulations i have more confidence.

      max’s idea is this:
      he cannot brute force the budget cap onto teams, so he leaves the teams the possibility of not changing, to their eventual detriment. he will lure them with technical goodies to play with. if the carrot doesn’t work, the stick takes the form of windtunnel testing and a double-dose of kers.

  10. wasiF1 said on 2nd May 2009, 3:16

    FIA & FOM R MAKING F1 BORING

  11. BNK Racing said on 2nd May 2009, 16:59

    im a little confused….the capped teams with sooo much technical freedom. how do they exactly expect to pay for all this freedom if they are capped at 40m? isnt the reason why the big teams now spend so much is because they exercise their current technical freedom so much? i would have thought that with the cap, teams would have less technical freedom because they have less money to spend on it…

    but as F! yankee stated….i suppose they could focus on a couple of the options based on their budget and not expect to venture into all of the options given their limited budget…..

    so what happens if say the big spenders of the sport enter as uncapped teams and they absolutely rape the capped teams all season? will there be another wave of restrictions etc following the 2010 season?

    • F1Yankee said on 2nd May 2009, 20:38

      i think the additional windtunnel and track time pretty much guarantees a capped team a quicker pace all season long.

  12. Firstly, let it be known that I am a fan of F1 and have been for several years, but am not well-versed in the nuances and deeply complex (and seemingly arbitrary) ways in which rules are created and implemented. But I do understand professional sport from a business perspective, having competed and administered teams in a non-motor-racing sport. That said, with my background (a non-F1 specialist, but a true fan of the spectacle of the sport), this budget cap would seem to be a classic example of a good idea/concept being poorly executed by an incompetent leadership team that failed to get buy-in from some of the sport’s major stakeholders.

    A budget cap makes sense from the perspective of sustainability and longevity, if the operative assumption is that there would be more teams participating in F1 over a longer period if there was a limit to what they had to source in sponsorship dollars each year, and that this greater participation of lesser-funded teams year in and year out is of more value than a potentially smaller, possibly-less-stable grid that includes works teams like Ferrari that have exceptional (read, unlimited) budgets. But what I wonder is who is the value of the budget cap accruing to, and what are the actual costs of implementing it (such as seeing Ferrari quit, for example…F1 w/o Ferrari? What kind of impact would that have on the F1 brand?)?

    So like, what is the equation, the valuation, the metrics that are being relied upon to come to the conclusion that capping team budgets is “best” for “the sport”, and what does “best” mean quantitatively and qualitatively, and what segment of “the sport” are the rules changes being implemented on behalf of (after all, F1 the sport includes, teams, manufacturers, sponsors, fans, the governing body, commercial rights holders, TV and other media, etc)?

    Something that jumps out at me is the fact that it will be very difficult to police a budget cap…what capacity does FIA or F1 mgmt (or whoever it is that’s in charge) have to force open the books of an entity like Ferrari SpA to check that its adhering to a budget cap? Is that even legal under EU rules?

    The survivability of the sport is key, as is its sustainability during a massive global economic recession. But part and parcel of the debate is the question “What degradation to the F1 brand are we [the stakeholders on the rules-making side] willing to tolerate in order to ensure the longevity of the sport?” It seems like that analysis is not being done w/ sufficient rigor and foresight and inclusiveness.

    For F1 to say that it doesn’t need Ferrari is true to some degree (the sport is bigger than any one particular manufacturer/team, would be the argument), but there is also a limit to what sponsors and fans will accept with regards to standardization of technology and suppression of technical innovation – a characteristic of F1 that has set it apart from all other motorsport disciplines and given it massive cache with the public. After all, the F1 brand is built on the notion of supreme drivers utilizing the most advanced, cutting-edge technology.

    Unfortunately, it costs money to develop, refine and implement new technologies. F1/FIA might consider what many others here have suggested: allowing some time to pass – at least more than one season – without constantly shifting rules. Teams might not need to spend so much money then adapting to significant shifts in rules…so there might not be such a need to cap budgets because innovation could happen for innovation’s sake, instead of in response to seemingly-arbitrary rules changes.

    I’m not sure if it was in this forum or another where someone noted that here in the USA, the NFL (national football league) doesn’t change its rules every year just for the sake of changing rules. They’ve found a model that works, and they stick to it – and they leave the teams to invest in hiring, training, managing, and in some cases even doping their athletes; while employing the best support staff possible to create the most efficient, effective on-field effort. NFL is not motorsport, but the point is that once the NFL developed a model that delivered value to its clients – the fans and advertisers – it’s stuck with it wherever possible. On the contrary, F1 seems to constantly be engaged in a process of not just rule-tweaking, but something worse…like, arbitrary, capricious rule re-writing w/o considering the costs to the teams, the fans, the sponsors, of those rule changes.

    I can’t IMAGINE F1 without Ferrari. I’m sorry, but I would rather see 18 cars on the grid, two or three of which were Ferrari, rather than the addition of new teams like Lola or Prodrive – if in order for those teams to participate, the “spectacle” of F1 was diminished in the name of “equality” between teams (achieved through artificial limits on spending) and Ferrari’s entries were suddenly less-unique and individual and more similar to the cars fielded by new teams.

    Winning costs money! Can’t FIA/F1 (excuse my ignorance…what I want to say is “the governing body” or “whoever makes the rules”) instead come up with some system requiring a minimum bond or bank guarantee that any team (new or not) that wants to compete in F1 would have to post before the start of the season, which would gain them entry to the series (and would ensure some level of professionalism and sustainability by mandating a certain MINIMUM level of resources, rather than thinking like they are now, about limiting the MAXIMUM resources a team can deploy in ‘010), but then allow these new teams to buy technology from any manufacturers willing to sell it to them so that they could save on development costs? The new teams would KNOW that they had less chance of beating a works team like Ferrari (though maybe not this season! ;-) lol) if the only variable in the equation was money, but the fact that they could access some significant level of performance through technology-transfers in exchange for cash to willing developers would keep them in the game and that would be the bargain they’d make.

    Anyway, admirable goal to reduce costs, especially in a global recession. Admirable to encourage and facilitate the participation of more teams in the sport. Not so admirable when that participation is encouraged through stifling innovation, limiting the competitiveness of established, marquee teams like Ferrari (which I would think would suffer under the budget cap) or otherwise preventing companies that have money to spend from spending it as they see fit, and worse still when cost-cutting seems to lead to homogenization of cars – which is the opposite of the technical supremacy and innovation that are hallmarks of F1.

    • Keith Collantine (@keithcollantine) said on 3rd May 2009, 1:31

      Wow epic comment!

      what capacity does FIA or F1 mgmt (or whoever it is that’s in charge) have to force open the books of an entity like Ferrari SpA to check that its adhering to a budget cap? Is that even legal under EU rules?

      This is the crux of the ‘two tier’ matter. As I understand you’re quite right – the FIA can’t simply come along and demand everyone go with budget capping and assume the right to investigate their finances.

      Therefore they offer budget capping as something the teams may choose to have, on the understanding that they can then inspect the teams’ budgets.

      But as we’ve seen, the FIA has made budget capping an offer the teams can’t refuse, as it offers them so many technical advantages. It does make me wonder if anyone will consider a legal challenge.

  13. Ronman said on 2nd May 2009, 22:09

    Although i am one who relishes the idea of f1 being an unlimited formula in terms of technicalities, i really like the format in which they have presented the Budget Cap option…

    however what will that do to fans? will we have a capped favorite and a non capped favorite?

    in anycase i have a feeling the races would be really interesting if these rules go through

  14. Sean said on 3rd May 2009, 18:26

    It’s beyond belief. And I can’t believe that we are sitting here debating whether it will “work”.

    1. At face value, it’s a handicapping system, plain and simple. The reason we used to feel F1 was superior to NASCAR or Touring Cars. But those series just adjust a flap or add some ballast, this is much worse because it’s a multi-faceted system, front and rear wings, engine specs, KERS specs, transmission specs, parts longevity and testing. They really threw in the kitchen sink there, didn’t they? But if it was ONLY a handicapping system, we could debate its merits (as if there should be any deba…). Sadly, it’s much more (and much worse) than that.

    2. Because it effectively railroads the big teams into massively downsizing, laying off their people and submitting themselves to an accountancy exercise in order to compete, we face the real possibility that accountants and lawyers will decide titles. Bloggers will become lay accountants, debating GAAP and pro forma accounting practices, fiscal years, Sarbanes Oxley and LIFO vs. FIFO. This is particularly ironic post-Enron, Fannie and Freddie, the collapse of banks and the Madofff scandal. Could F1 be made more boring or impenetrable than to introduce accountancy and grey men in suits called Cecil? But of course, having established that the FIA can’t even police a single-tier, (mostly) technically based set of regulations, where intractable debates about the width of a tyre, the size of a barge board or the purpose of a damper can decide a world championship, we now decide to make the whole thing massively more complex on a technical level, AND introduce accountancy. Just unbelievable. Do we honestly believe that teams will not be able to hide potentially very large expenditures, making creative accountancy the order of the day, with the spoils going to the team that can most effectively hide its spending (unless Max happens to dislike that team, that is)? Surely we do not, and this brings me to what it’s really all about:

    3. If by “work” you mean: will it succeed in dividing the teams comprising FOTA, thereby ensuring that Max continues to wield absolute power over the teams – the standard divide-and-conquer strategy that he wheels out every hour on the hour, which always succeeds but to which we seem to be collectively blind as a fan base – then, yes, absolutely, it will work handsomely. Watch the weaker teams fall in line first, followed by the others, knowing, as they will, that resistance is futile (one could also argue that the team managers in F1 are puss1es, and this was proven when Bernie bribed Ferrari to the tune of $400M, plus the rest, starting in 2003, and the other teams did exactly NOTHING about it).

    When Max resorts to this, you have to conclude he’s given up even on the façade of a level playing field. It’s just another area where he will be able to selectively prosecute teams as he wishes, vastly complex and therefore impossible for anyone, least of all the casual fan, to hold him to account on his decisions. We’ll just hear that such-and-such team has been caught cooking the books, they blew the catering budget and they’re really naughty boys and have to be be fined and disqualified. He has already said he wants a continuous moving brief on the regulations and therefore on the competitiveness of teams. That everyone simply accepts the idea is a reflection that we all see that he claimed this moving brief already, of course. Max has already been enforcing a 10-tier set of regulations these last several years anyway. Of late, McLaren has the toughest regs and is called to account for the slightest thing, and has a much higher burden of accountability. Ferrari has had the least stringent regs for many years, and can exit a pit box as dangerously as you like, or drive around with an exhaust pipe hanging off its car without being black flagged. But now that Max has scalped Ron and is having a spat with Montezemolo, maybe they will be brought into the pack and someone else will be picked on or favoured. Let’s not pretend that’s not how it works. The change perhaps is that Max has been feeling a bit constrained by having to have his people argue about why one 25-second post race penalty is not subject to appeal when another one was, and having to make up lies about it. After all there’s only a certain number of times you can say that 10mm is really 5mm, and 5mm is really 0mm, or that a damper inside a tub is really an aerodynamic device, or that a former steward said something he clearly denies. Introducing the world of accounting is the perfect way to fix that, isn’t it? It’s the ultimate coarse control knob. Will it work? Absolutely? Do you even care about what competition means in motorsport?

    • nicb said on 3rd May 2009, 22:07

      @sean here, here! i think you’ve described the problems with the two tier system perfectly. whilst I like the idea of greater technical freedom but in these regulations it is a mirage. i don’t want a world championship decided in the offices of price waterhouse coopers! let’s hope the poorer members of FOTA can be convinced that it’s not in their long term interests either.

  15. SonyJunkie said on 5th May 2009, 14:37

    Hmmm, Four-wheel-drive!

    Audi F1 anyone!!!!!! :)

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