Paul di Resta, Force India, Circuit of the Americas, 2013

Is a budget cap realistic for Formula One?

Debates and PollsPosted on | Author Keith Collantine

Paul di Resta, Force India, Circuit of the Americas, 2013The FIA is making a fresh attempt to impose a budget cap – or “cost cap”, to use its latest preferred terminology – on Formula One.

The sport’s governing body intends to have regulations completed by June this year ready for enforcement from January next year.

Budget caps have been talked about in F1 for years but none has ever been successfully implemented. Is it a realistic idea, or a piece of pie-in-the-sky optimism?

For

The FIA is yet to give details of how its proposed cost cap will work. The basic idea is that a maximum limit for annual spending is set and new regulations written to ensure teams do not exceed it.

As is the case with the new engine rules this year, the specification of which will be gradually frozen between now and 2020, the budget cap could be set fairly high at first and gradually reduced over a number of years. This would allow the largest teams to scale down their operations gradually and avoid the shock of widespread staff lay-offs.

Enforcing the cap would require the enlisting of a third-party accounting firm to evaluate the expenditure of each team.

Against

The first obstacle to a budget cap is finding common ground between the teams on how high to set the limit when the difference in their spending varies so greatly. F1’s richest competitors are believed to spend at least five times that of their smallest rivals.

Different team structures presents a further challenge: for example, consider the question of engines. Some teams buy theirs from third-party suppliers (e.g. Caterham from Renault), some buy theirs from other teams (e.g. Sauber from Ferrari) and some develop their own engines which they also sell to other teams (e.g. Mercedes). Given that, and the fact different engine manufacturers supply different numbers of teams, how can a fair limit be set? This is one reason previous attempts to agree a limit have foundered.

But the greatest barrier to a budget cap how one could be enforced. Teams are secretive about their budgets, and there is potential for expenditure in areas such as research to be hidden. Some teams are the minor arms of global car producers, within which F1-related development work could be conducted beyond the eyes of the FIA’s investigators.

I say

There should be no doubt over the necessity of reducing costs in Formula One – the number of competitors remains stubbornly low, there is no sign of any potential new entrants arriving and last year showed even the midfield teams are feeling the strain as talented drivers are jettisoned to make way for those with more money.

Some of the visions for what F1 might be like under a budget cap verge on the utopic. But while a return to the days of 26-car (or larger) grids would be a boon for the sport it doesn’t make the difficulties of capping budgets any less real.

Not only do these challenges appear insurmountable, but even if they were, could each team be persuaded their rivals genuinely were sticking to the spending limit? Or would we face a return to the days of the Resource Restriction Agreement and the persistent innuendo that some teams were spending more than they had agreed to?

I believe F1’s financial crisis needs to be tackled from both angles: not only controlling costs, but changing how teams are rewarded.

F1 has enjoyed some success in controlling costs by imposing limits in the rules: the 2003 parc ferme restrictions which ended the use of qualifying cars, limiting numbers of engines and gearboxes per race, and capping staff levels at race weekends. As well as extending those regulations into other areas, F1 should revise its revenue sharing, which tips the balance too far in favour of the wealthiest teams.

Like a budget cap both these proposals require political will to achieve. But unlike a budget cap at least appear to be realistic.

You say

Do you agree introducing a budget cap is a realistic solution to Formula One’s financial worries? Cast your vote below and have your say in the comments.

Do you agree introducing a budget cap is realistic for Formula One?

  • Strongly agree (18%)
  • Slightly agree (34%)
  • Neither agree nor disagree (5%)
  • Slightly disagree (18%)
  • Strongly disagree (22%)
  • No opinion (2%)

Total Voters: 241

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83 comments on “Is a budget cap realistic for Formula One?”

    1. And noone went for it proofing Keith’s point :)

    2. yes, they were invited to put in their entries. But HAVE any realistic outfits actually stated that they would indeed like to enter @full-thorttle-f1?

      Surely such an entry would not keep silent about its intentions, but we have not heard of a single outfit who did.

      1. sorry for the typo in your account there @full-throttle-f1!

      2. @bascb

        I don’t recall HRT, Lotus/Caterham and Virgin/Marussia stating there intentions before actually invited to sign up.

        RUSSIAN TIME have made clear there intentions to race in 2015, so maybe it could be them.

        I am sorry about being a person who lives in hope, but if there are no new entries and can seriously see F1 dying out in a couple of years.

        1. HRT didn’t (as they did not exist yet) but Adrian Campos certainly did announce it @full-throttle-f1. As did USF1.
          Manor (who got the spot before being named Virgin and then Marussia) did not announce it either, they were a bit obscure anyway – I even read rumours that a familiar relation between Mosley and Booth (or was it with Wirth?) was the reason they were chosen over more likely bids (I think ART was one of them at the time, as was Epsilon Euskadi if I am not mistaken).
          Lotus did not mention it because the “1Malaysia” outfit, or what their official name was then, only got the chance to enter late, when Toyota dropped out of F1.

          Do you have any links to Russian Time mentioning that intent, I hadn’t heard of that one before?

          1. ART’s bid in mid 2010 to move up from GP2 to F1 for 2011 was only semi-serious though – they soon conceded that they could not raise the necessary funding and withdrew their entry almost immediately.
            Epsilon Euskadi did try bidding but were rejected on the ground that they had no funding – and I believe they were declared bankrupt later that year – so their bid was also fairly flimsy.

            To be honest, most of the bids that were submitted in 2010 and 2011 were rather speculative and mostly came from outfits that only really existed on paper and hoped to cash in on famous names – such as the bids that tried to revive the Brabham marque – or attempts by washed up drivers to buy their way back into the sport, such as Jacques Villeneuve’s bid or Wurz’s Team Superfund.

            That said, there were a couple of bids that were a bit more professional. Lola Cars submitted a bid and went as far as producing a wind tunnel model only to be rejected on funding grounds, which was perhaps a prelude to their more recent financial problems.

            The other more serious bid was Prodrive – Richards first tried to buy Renault’s team when Renault withdrew from the sport, then decided to go it alone when that bid failed. Richards claims that his bid was rejected because he refused to sign a contract with Cosworth – he wanted to sign a deal with Mercedes – although some suggest that the real reason might have been poor relations with the FIA after his entry for the 2008 season collapsed when customer cars were banned after Williams took legal action.

  1. Spot on article as always Keith!

    It makes me wonder who fans like on F1Fanatic can identify problems, whilst the FIA seem oblivious?

  2. Why do they have reintroduced in season testing, that’s just a stupid decision!

    1. I think pirelli has a few reasons.

    2. Not a stupid decision. It is needed and even the small teams need it.

      Best thing they could do is add the amount of testing days and windtunnel days and CFD time into a formula so teams can choose to not build the windtunnel but instead do everything on track. Or in CFD or in windtunnel.

      And yes, pirelli needs the possibility to test their tyres. Idiocy like last years screwups on silverstone are not what they or the sport needs.
      Personally i think that the FIA should “draw” a team that provides a car of last year for Pirelli testing. Then let Pirelli run the car so no info goes to that team, and make sure the driver in the car is not linked to a team either. Simple but elegant.

    3. New inseason testing is done at the same track where GP was held, right after the GP. I think this is the wisest move over a long period of time. I’ve wondered for years why they haven’t done it. Inseason testing levels the field in my opinion. Lets thake Lotus’ passive-F-duct. They struggeled with it for couple of years because they had no time to test it properly. I hope inseason testing brings out more such innovations and bould ideas! Also richer teams have better simulators, midpack and backend teams have none! When you have real testing the odds are even, all teams have the same track and amount of tracktime.

      Gone are the days of Mika vs Schumi when testing was at its peack – just crazy amount of testing! Just bring back more testing, get TV and fans involved in it and I think everyone wins. F1 cars should drive on tarmac.

      1. i am no expert, so people might correct me, but i am strongly opposed to inseason testing! i believe it doesnt level the field, but makes it less leveled. you say lotus stragled with one thing for years and with testing they wouldve have it done more quickly. thats true: that one thing theyd have fixed! in the same amount of time ferrari wouldve tested hundreds of other factors in the same amount of time!!! with the money they have, they can produce many more parts as lotus. you would say without the testing its the same case, but no: the restriction levels the field, because the restrictions will always punish more the teams with more potencial (money!) than the smaller ones, what makes the advantage smaller!

        1. “you say lotus struggeled” is what i meant…

    4. The idea is that the mid season tests replace the eight days of straight line tests that could be used for aero correlation procedures and the “media sessions” which some teams were accused of using as de facto test sessions.
      In a way, it is more a case of switching one type of mid season test for another (hence why we have four sets of two day test sessions) rather than a fully reintroducing mid season testing, and because it is tacked onto an existing race session it is probably more cost effective than the individual straight line test sessions were.

  3. I love the idea in principle but enforcing it will just be far too hard. It is so easy to hide money with creative accounting that it will just become a farce.

    1. Yep, introducing a budget cap as such is nearly impossible as F1 teams are kings to find loophole and there will be all sort of accusation … The only way to reach that is for exemple limiting the number of new parts a team can bring as evolution of their car, but this is against the development interest of F1.

      As Mercedes doesn’t have to pay its engine and gets money for selling, that’s something like 150 mil in their favor ? I really can’t see how they could impose a budget cap, what should be counted in or not …

      1. @jeanrien:

        As Mercedes doesn’t have to pay its engine and gets money for selling

        Don’t they also have to spend some money to develop the new engine?

      2. I agree that a budget cap is very unlikely to achieve and I’m not sure if it is at all desirable. I already see a few methods how a team that belongs to a bigger company can get around it easily and a few more or less legal ways independent teams can do that too (granted I have some business degrees at hand but so do the teams .. and if they don’t I will be happy to assist them). One could prevent all accounting shenanigans known to man, but that would involve a 4000 page contract and none of the teams would sign that (some larger corporations probably couldn’t for some other legal obligations).
        And while there are some good ideas from people as to limit the things the teams do rather than how much they spend, but I don’t think that would bring down cost at all as the money they save on something like crews would simply be put into more aerodynamics work. One could limit the number of times a year they are allowed to bring updates to their cars, but then again we do want to see the pinnacle of motorsport I guess. I guess one could impose a maximum of employees including subcontractors and personnel working for suppliers who are actively working with the team, but then again a team like Ferrari would have to let a lot of people go who love to work for them and who they could pay if they were allowed to. Maybe, just maybe there will always be teams spending more and teams spending less so here is what I think would help:
        In the self proclaimed most free and only properly capitalist country in the world, the socialist free zone, the USA they have a sport, their favourite sport in fact, the most american sport there is, American Football. Why do I bring this up? Because no matter how big the team is, they split the TV revenue equally amongst them, no discrimination (and they even let the worst teams potentially pick the best prospects and there is a salary cap). On top of that they can have their own sponsors so the popular teams will still get more money. And of course there are ways around it like letting your sponsor pay a players salary and pretend all of it is for the advertising he does.
        Do I think that giving teams more money than they get now will make the biggest spend less? Probably it won’t. If a team can spend a billion a day, they will. But the way most things go, there are diminishing returns to everything. Gaining your fist half second a lap via brute force costs X, the next half second 2X, the next maybe already 5X and so on. You can outspend (made up numbers) a small midfield team 3-fold, a small team spending maybe $90million. Today, part of the money is shared equally, part depending on success. So part of the budget difference comes from the small team getting $35million and the big one getting $100million. Overall about $750million are distributed, were it equal every team could get about $65million. A small team will still be able to pull in the same (small amount) of sponsoring. For the small team thats a boost of $30million, a third of their budget. Outspending them 3-fold would now mean spending almost $400million while receiving less, simply keeping the same absolute distance to them would still mean spending $300million (30 more) while receiving less (35). Will the big teams simply try to squeeze more out of sponsors to do that? Possibly yes. Will this incentivize clever ideas over brute force making millions of designs and letting them run through billions of simulations for hundreds of hours? Maybe, hopefully. It could also possibly make smaller teams more competitive which could earn them more sponsorship. Of course the idea isn’t perfect. Eventually nothing would improve, big spenders would exist the same way, car manufacturers will pull out because it will be so much more costly to force success (as if that ever worked) and my personal favorite, maybe there won’t be an incentive left to be successful. Looking at American Football, I feel like it still exists, lots of people watch it, lots of teams have outside chances, lots of big companies sponsor teams and surprisingly they all still try to win the Super Bowl.

        Sometimes it is better to remain silent and seem like an fool than to speak and erase all doubt, so now you see my foolish and unrealistic ideas that would probably destroy F1 and mankind as we know it and maybe kill Bernie instantly if he read it.

      3. I am 100% serious with this:

        Either heavily limit in season wind tunnel use or ban it all together after the season starts.

        Done. Mid-range and small teams no longer need to worry about the RIDICULOUS time/money spent by RB and Ferrari in these things.

    2. I do think a cap of some sorts can be done and kept in check. But it will likely be hard to make it watertight and even then, its hard to find a suitable penalty for a team that does overspend.

      To me it would make lots of sense to cut down on how many people operate a pitstop, maybe put a fix on the amount of iterations a team can bring to the car during the season and maybe looking at more parts that can be sourced from a single supplier by the FIA.

      1. @bascb agree on that and I think the only way they can achieve it is by limiting things they can actually see, observe and control. Not numbers on some sheet of paper …
        Crew (pit crew but also at the factory) is a good point as there are great difference in numbers. But yet difficult to have something relevant, should you count the people working on the engine for Merc, or instead they could declare people working on the engine but rather working on its integration into the car (which is team work). What about employee or consultant, should they be counted the same way ? That quickly becomes very difficult.

        Pit crew number is definitly something they can control, would be fun to have some kind of endurance pit, 4 guys at the same time on the car.

        Get rid of wet tyres and bring more inter. It is interrupted anyway when it’s time for wet tyres, or they run it for 5 laps to dry the track and back to inter … This is nonsense and cost quite a lot for nothing.

        Limit the number of parts they can bring or avoid them to ship between close races (this could be polemical) but it has actually a lot of sense if you have let’s say Malaysia then Singapore. Avoid teams to ship extra parts between the two races.

        Engines and gearboxes limitation is good as it stands right now.

        Not much else you can do really without entering the critical part where you lose control and everyone begin to point out at everyone for “ignoring” or arranging the rules

        1. Pit crew number is definitly something they can control, would be fun to have some kind of endurance pit, 4 guys at the same time on the car.

          I am certainly on for this one too @jeanrien. If they want to make a pitstop more interesting, this is the way to go for me. And its safer with less speed and less people around too.

          1. But probably less safe having the crew needing to run from one wheel to the next, around the car, when pit lanes are often a bit narrow anyway. I know that sometimes happens anyway, when they’re late with a tyre or have the wrong set, but having them running about all the time while other cars pull out from behind them and pull in in front seems risky.

        2. @jeanrien:

          Pit crew number is definitly something they can control

          Yes, but unless those guys are paid shedloads of money, reducing their numbers really isn’t going to make that much difference ;-)

  4. I don’t think the resource cap will work for the reasons you gave in the poll text.

    And i agree that the sollution would be even distribution of the revenue in F1. Make all teams receive the same amount and suddenly the big 4 will need more money from outside or curb their spending.

    As a last point, the best teams have the most money, that is a fact. Reason for that is that success is easier to sell to sponsors. In that persepctive the imbalance is natural and should not be an issue.
    But with revenue also being in their favor, the balance is so lopsided that it kills the mid and small teams. Fix the revenue and you have a “reward system” that works.

    In the time of many cars the revenue was small and thus it had relatively little influence, now it’s huge and the imbalance makes it impossible for smaller teams to bridge the gap.

  5. I don’t think its difficult to do. They were able to do it with engines very easily by just freezing development on them. While creative accounting will always occur, you also have ways of accounting for this. It has to be a transition, and it has to not require one team’s approval to do it.

  6. It’s a tough question how to improve the sport’s financial situation. There are a couple of underlying reasons why there is so much concern over team budgets: the biggest one is the greed at the top levels. F1 is still booming business, but the teams can’t benefit from that since they get a very low portion of the revenues made. And it’s not just the teams that are struggling with this: circuits (the Nuerburgring being the prime example) and broadcasters (BBC) as well. I would start with fixing that.

    Another problem is the ever improving technology. The design has been optimised by CFD and other simulation programs up to the point that there is pretty much no gain to be made at all. Another side-effect of this is that the top teams hardly make mistakes – last year’s McLaren was considered a failure, even though it was only 0.5-0.8 seconds off the pace. How is a team that doesn’t have those resources supposed to keep up with that?

    Back to budget caps: I don’t think I’m qualified to determine whether budget caps are realistic or not (hence I voted ‘neither agree nor disagree’). I don’t know what it will take for teams to ignore their own interest and decide purely for the benefit of the sport.

    1. I think that even without changing the slice that ends up in the teams hands (although I certainly do think it should be bigger, but also that the tracks should get something back instead of it ending up at CVC), a great deal can be done for a more even split of money.

      Why do the top teams have to get so much more money – that makes it an uphil battle for a team getting less, because they will automatically have to invest more of their own money to get “into the club”.

      1. “The poor stay poor, the rich get rich, that’s how it goes”, as one wise man put it, @bascb ;)

        I would really welcome a change in revenue sharing, but I will remain a stubborn pessimist in this area. I do believe that a wisely managed, partly “socialist” system of splitting large revenues will work best in most cases (e.g. NFL in sports, and Norway as a whole country).

        But I feel a gloomy global tendency in all areas of our lives to be just the opposite. Greed will prevail.

        1. Yes, NFL does seem to work (I am not sure about Norway, as the only reason it works is their huge gas revenues, but still they have some teething problems that remain hidden under the general solid living conditons) @phildick.

          But whatever, I fully agree that its going to take a real big threat from outside to ever get the teams to agree on something like that (in hindsight it shows how “scared” they were of Mosleys proposals when they put together FOTA), and its not likely to happen anytime soon

  7. I do and don’t like the idea of a budget cap.
    One part of me says that F1 should be spending all the money they can to develop faster and see those results on the track because, well, F1 is meant to be the fastest and best right?
    However, reality steps in for me. When one team spends $400mil (for example) and employs 1000 men and women to make the best car in the world and that is racing against a team who can put together $40mil which hires a handlefull of budding engineers wanting to make the most of their lives and a couple drivers whose talent maybe good but the reason they are driving is their dad’s pocket, doesn’t seem like a level playing field and not fair to me.

  8. Whatever the outcome, I’ll take a hard-to-police cost cap over customer cars any day.

    1. Exactly bro, couldn’t have said it any better @bookoi

  9. There is absolutely no question a budget cap can and should be introduced. To think otherwise is counter productive and short sighted. Some of the challenges mentioned in the article are just that, challenges, that will have to be overcome but are by no means insurmountable. For instance if a team do not build their own engine, they will have to spend buying one. Those teams who do spend building theirs will recoup their spending by selling engines to other teams. I fail to see how this might be a problem at all, unless I am missing something here. Also if a team is part of a bigger company say mercedes or Ferrari, there is very little research the car manufacturing arm can do benefit their f1 operation. Aerodynamics and even mechanical parts for f1 don’t translate at all to road cars so if the FIA finds a way to monitor development parts maybe by homologating them before they can be put on the car you would be able to quickly start to see patterns if any teams are misbehaving. And that’s just off the top of my head. I am sure there are some very bright people at the FIA/consultancy company who can put their heads together and find solutions for efficiently policing the budget cap. Meanwhile a complete change of the commercial structure is also required so teams get more money from the commercial side of the sport.

    1. I think ‘all’ you are missing is the concept of getting the teams to agree to what dollar amounts things should be capped at, and getting teams to trust each other that they’re not funnelling moneys through bogus channels. I think most people within and without F1 would agree that capping costs are becoming more and more necessary, but it is about agreement and trust and policing.

      Personally I think that the teams can’t be trusted when the likes of LdM even admits that cost cutting is needed but that even they could potentially funnel R&D money through Fiat or Chrysler.

      I am pessimistic about this topic because there is, to me, too much difference between what the have teams have and what the have not teams have. I think F1 should either make itself a rich teams’ sport and forget about worrying about lesser teams that can barely afford to be in it without watering down the product with pay drivers, or get serious about the financial issues and sort this out.

      Largely though, I think what has to happen is that viewership has to fall off drastically before F1 will seriously look itself in the mirror and make the necessary changes. They, I think, will have to be forced into change, and the only thing that will make them agree to the terms of said change will be when the entity’s very survival is on the line and they can no longer afford to repel people with gimmicks and instead need to attract people back from the brink.

  10. Give more money to smaller teams from prize money.

    Here, problem solved.

  11. No, it won’t work. And in the end, I don’t care. If it means the demise of Formula 1, so be it. There’s no doubt in my mind a new series will emerge to take it’s place and a new beginning will probably mean the new sport will learn quite a few things from how F1 destroyed itself. There’s just too much fundamentally wrong with F1 to fix things as of now. Shame, but everyone’s selfish and thinking of money and putting up a good show.

    In fact, I’ll be relieved to witness the birth of a sport taking the place of the current show.

    1. -1

      Of course the issues can be fixed. Wishing for the death of the sport is not the way forward.

      1. I’m not wishing for the death of F1 (the sport did already die unfortunately) but we can all see it coming. The only entities that really matter in the end, the teams and the circuits, are in financial trouble. The entire system is backwards and teams will start to go bankrupt one by one with no new teams entering the sport.

    2. @roald
      I started disagreeing with you, but you got a point. F1 itself has died with all the decisions they’ve made in the last couple of years, so maybe it’s not about saving F1 but rather making whatever this is direct somewhere where it can recover part of its charm while securing its future.

      I’m not sure a budget cap would work because teams are just utterly egocentric. Policing it might be really really hard. But I cannot understand how those top overspenders suppose things will develop. I mean having 3 teams racing because the rest folded can’t be good.

      So a solution is required, and fast. But who cares, really? who cares about new teams and sponsors when the sport’s cerdibility has gone so way down?

      I say: think about a solution while fixing F1. If the sport only grabs headlines when we have things like double points or tyres exploding, then why bother?

  12. please please please, lets not introduce these caps, F1 has survived the test of time and will always be considered a “lab” for revolutionary development.
    else we’ll be talking about a “spendinggate” in the future…

  13. I can’t see a budget cap working.. For one example, Red Bull (and Toro Rosso) could easily circumnavigate the cap by being “gifted” offerings from Red Bull Technology, which presumably wouldn’t fall under the budget cap?

  14. Chris (@tophercheese21)
    10th January 2014, 13:54

    Slightly Agree.

    Formula One is too expensive at the moment, and it definitely needs to become less expensive so that more teams can enter the sport, and have some level of success. At the moment we have 2 teams (Marussia & Caterham) that are 4 years old and have served no other purpose other than to exist. They got into the game at the wrong time, financially speaking.

    I definitely think that there needs to be a cap on spending. This will enable teams to be more competitive, and more closely bunched, not so much because the giants can throw a ‘squillion’ dollars at a project whilst the smaller teams cannot. Instead it will force teams to be more ingenious with their ideas around regulations.

    It will show who has the best design team, rather than who has the most money. Look at Toyota for example. They ran two full scale wind tunnels 24/7, with an overall budget upwards of $690 million, (The largest budget in the history of Formula One), and they were un-impressive.

    Lotus on the other hand operate on around half the budget of Red Bull, Ferrari, Mercedes and Mclaren. Yet they produced a highly competitive and race winning car last season. Because they have brighter brains, than thick wallets.

    It all sounds well and good, but how on earth do you police the spending? I for one, have no clue.

    1. But the question was, is it realistic. And for that, I say completely not realistic. But the cap is needed.

  15. I think the problem is the emphasis on aero development. The sport is simply too dependent on aerodynamic grip, and has been for some time. But the teams know that aerodynamic grip gives them an advantage, and so they will not give it up. Not without a fight. The only feasible thing to do is clamp down on aerodynamic design freedom, and open up the engine regulations as a quid pro quo. That’s the way it should have been in the first place.

  16. I think it’s fundamentally the wrong approach, and impossible to effectively enforce. What really needs to happen is that firstly the revenue distribution needs to be seriously looked at, with significantly less money being creamed off by third parties for personal profit, and a fairer distribution of TV revenue from the fastest to the slowest teams. Things like Ferrari’s special bonus should be scrapped, along with any other multiplier bonuses which award teams more for continual or repeated success. A championship or race win should be of equal value to every single competitor.

    Then the business of operating and creating F1 cars should be made significantly cheaper. Firstly by restricting development, which is currently unrestricted. My suggestion is either to require teams to produce, say, three aero packages for the car which they must use through the whole season, which should be homologated and unchanged. Or to allocate a number of ‘development points’ for each team. Say a new wing costs 2 points, a bargeboard 1 point, a new floor 3 points, etc etc, and then restrict the number of points available to each team. Basically reduce the benefit of relentless testing and development. And finally by having genuine rules stability for a significant period of time. Having teams design completely new cars each year is ridiculous and introduces massive unnecessary costs, while also creating a bigger gap between teams. Stability in the aero rules allows the teams to build up a good understanding of the aero concepts, and reduces the need for lots of experimental development.

    1. I like your Idea, every race we see small or large updates to a car but those are that have been deemed worth taking to the track, there are many new components that never leave the factory, that are probably just discarded when not needed any more and it is a big waste of money.

      1. My favourite idea is simply to have the teams create a limited number of aero configurations before the start of the season, and then they have to use them for the whole year. You might see teams create three really interesting and individual aero concepts, and stops teams spending huge amounts on diminishing returns from tiny incremental changes.

    2. Basically what I wanted to post. F1’s revenue model is a big problem, as are the figures the teams spend on development.

      Setting a limit to the amount of money to be spent is going to get teams looking at what they can save on, but the limit might still be more than Caterham’s budget. Teams will still get an uneven slice of revenue. It is however very consistent in the ‘treat the symptoms, not the disease’ formula the FIA and teams have been using since the 90s.

  17. Could engine manufacturers override the freezing of engines rules by setting up new companies? Merc could take over Ilmor and start to develop a new engine based on its own engine. Then just start using Ilmor engine branded as Mercedes AMG… Ferrari starts using FIAT engines and Renault quits engine business, sells it to Infinity :)

    1. Mercedes bought Ilmor long ago.

  18. The sport has to have a budget cap or certain restrictions on spending. One of the biggest is everyone has to agree on it, and why would Ferrari for example agree when they can spend so much on their F1 programme. And how would you police it, F1 really is heading into a watershed period for the sport, we could have a financially stable sport in with more teams or half the grid could fold and the series could be dead. What about an you can only spend how much money you generate or limit spending on certain parts of f1 e.g. 30% of a teams yearly budget can be spent on aero development. But the way prize money is handed out has to be the first port of call. Its so lopsided and unfair to the smaller teams.

  19. Something needs to be done about the cost that’s for sure. The teams will never agree among themselves so it as to be done through the regulations.

    Getting back to basics would be a good start. The cars only need a powertrain, tyres and chassis, anything else is just extra expense. Engines don’t need expensive KERS, Turbos etc, don’t need to rev to 18000rpm. Gearboxes don’t need 8 ratios. A standard powertrain could be used. Afterall they’re all much of a muchness after a couple of years development. They could open up tyre supply to other suppliers, and they only need one dry tyre compound, and they could be homologated at the start of the season. Homologating say four wings at the start of the season, together with the chassis would still leave plenty of scope for deveopment in other areas.

    It’s not for the purists, and I’m one of them, but the rate things are going F1 won’t be around much longer without some radical changes. In my opinion it’s only the rule makers that can make those changes, and if some of the teams object they can always go and race elsewhere. There’s no other race like a grand prix or no other race series like F1, and when push comes to shove no team walks away from it if they can afford it.

  20. A huge ‘strongly disagree’ – I think there’s no legal regulation which could be made loophole-free and thus the smart legal experts at the teams would be quick to circumvene them somehow.

    See FFP in football and how it really affected spending on the player market this summer…

  21. There’s no question, something should be done. But a budget cap will not work, loopholes will ultimatly be found by the teams.

    The current problem is that all bar the top teams are in financial trouble. So logically the first thing to do should be to even-out the price money. Let’s just split the ~63% the teams get evenly over all teams. Bin the rule which connects championship position to money. Teams and drivers should just race for the sake of winning (and getting a commercial advantage), not prizemoney from FOM. This would solve part of the problem. There will always be teams having more money than others, but at least not 5 times as much. A quick fix is simply not possible. Small steps are.

  22. Won’t work, waste of time and resources better spent elsewhere. Natural selection works better. Teams should use Lotus as an example for two reasons. They spent less with better results than McLaren, for example, who spent more. This proves overspending does not always work. Making best use of available resources works better. If a team (Toyota comes to mind) wants to spend itself into oblivion for mediocre results, let them. Let the prize money structure be fixed to reward teams like Lotus more fairly for their excellent results so they do not have to resort to pay drivers and then miss test deadlines the next season. Lotus, the fans and the sport as a whole deserves equitable compensation to teams that get results and benefit the state of the sport. Create a positive cycle to replace the vicious cycle!

    Another thing, penalties. How will penalties be meted out in such a budget cap system. Everybody talks about the cap, nobody discusses the penalties. Would they be financial? That would just be a cost of doing business for the rich teams. Would they be performance based penalties? Likely the accounting analysis will not be complete before racing, so would penalties result in post race declassification a certain number of places by degree of financial infraction? Or, complete disqualification for a race, races or season? Explain to me, how could that be good for the sport? OR, would teams get penalized in future races? Next race, several races or next season? How would that work? And again, good for the sport?

    I’m not too worried about solutions to any of the above budget cap problems because the teams simply do not have the political will or desire to enact or enforce a workable agreement in this area of the sport. They may say otherwise, but that is just more politics. Fixing the problem lies in the more equitable distribution of prize money for all teams. There is enough money there to do the job. The various entities that comprise the sport of F1 just need the foresight to save themselves from themselves and fix it. That would actually be easier and more logical than an budget cap system that will never happen.

  23. In the beginning F1 developed as the fastest, top end of motor sport (now the “pinnacle”) and attracted designers, manufacturers, drivers and fans (then called “spectators” and “magazine readers”.) Over the last maybe twenty or so years it has seen an insidious input of “spectacle” and “rules” — not all good, not all bad — but all requiring more money and as any economist will tell you, there is a snowball effect in that you have to spend more and more in order to obtain more and more.
    I don’t know how much the teams spend on “rule compliance” or how much the FIA puts into “rule writing” and “rule enforcement” covering design, testing, racing, tracks, etc. But if F1 wants to remain the “pinnacle” then innovation within very broad guidelines is an absolute necessity. Nit-picking minor details is counter-productive, very expensive and curtails innovative development.
    As to the spectacle, the finances are outrageous. If Mr Ecclestone’s personal fortune and family trust were properly re-invested in F1, there would be no more talk of budget caps or pay drivers for years to come.
    So, what do we want? The ultimate expression of the fastest man and machine combination? Or the flamboyancy of the World Wrestling Federation with its tabloid driven squabbling? It all comes down to the freedom of achievement compared to the dreary, messy, over-regulated current state of affairs that is still called Formula 1.

  24. Short answer: no. There are no means of policing such budget cap that can’t be circumvented.

  25. Maybe only development money should have a limit imposed on it. It’s sounds like a very tricky rule to implement and then police. The only way I could see it working if all the teams’ money was pooled in an FIA account and all transactions went through it, and that seems very implausible

  26. Occasionally with these polls we get a situation where the sentiment expressed is the comments is quite different to what’s in the poll. I’ve just read a lot of comments about how a budget cap wouldn’t work, yet at the time of writing with only 148 votes cast those who think it’s realistic outnumber those who don’t.

    So it would be interesting to hear more from those who think it is realistic and how they think it could be made to work.

    1. I would especially like to hear how the potential penalty structure would work. Would penalties be financial, post race position changes or future race grid penalties? Or some other method?

      1. Financial penalties for overspending would be such an hilarious idea, the FIA probably has a concept of it laying around already.

        1. Scary, isn’t it.

    2. Maybe those who think it is realistic haven’t really thought about it but just wish it could work, much like Bernie does everytime he has a new idea.

      1. I didn’t vote but I commented because to me all ‘evidence’ seems to suggest that a budget cap wouldn’t work not because they couldn’t figure out the actual method, what to physically enact on paper, but because the teams can’t be trusted and nobody seems to know how it would be policed given said distrust.

        On the other hand I think a cap would work, but I think it would have to be with a gun to the teams’ heads, and that would only come if viewership was so down that the health of the sport would be in serious jeopardy, a point at which they aren’t quite at or else something would have already been enacted. I think they’ll all have to be threatened with their jobs and therefore do an about face and willingly accept caps, policing, and not abuse it by pulling the wool over the fans eyes who will have shown them that they are the number one concern, for without them they don’t get to do what they are supposed to be there doing for the love of it, not just the millions.

        So sadly, I think the teams will need a big slap in the face and a wake up call and then I think much can realistically be done.

  27. How can anyone who calls himself a F1 fan strongly disagree with a budget cap given the current financial state of most of the teams in the grid today? It’s a disgrace in my view. Of course there has to be a budget cap and quickly before it’s too late. I think instead of discussing whether it should or shouldn’t it be implemented a much more productive discussion would be to propose ideas to make it work. The current financial situation is unsustainable.

    1. @pmccarthy_is_a_legend – There are plenty of ideas on how to make F1 sustainable without the addition of another layer of negative, non-productive rules and penalties structured to punish teams caught cheating. How can this problem be fixed without another authoritarian layer of crime and punishment where the only options for violators seem to be altering race results after the fact or grid penalties in future races? Or, even worse, complete disqualifications for a race, races or season? Financial penalties alone won’t work. Rich teams would consider that just a cost of doing business. How can adding more possible penalties that change points scored or future grid positions possibly be a good thing for F1 and all of its fans?

      I will not insult you by asking how anyone could call themselves an F1 fan if they disagree with me, that would be silly. It’s OK to agree to disagree while still having the best interest of F1 at heart. Discussion to reach better ideas on how to fix problems is a good thing and not worthy of negative insults.

      I would rather see F1 implement positive changes to improve the sport through better technical regulations and profit sharing instead of negative policing and penalties. The money to fix the problems of the financially strapped teams is already there. More equitable sharing of revenues through profit sharing and prize money could avoid the need for pay drivers and missing valuable pre-season tests. Technical regulations designed to improve racing and decrease costs are extremely possible. Hire Ross Brawn as a consultant or director and let him do it. I bet he knows how to improve the racing and cost structure at the same time. These two ideas alone could make F1 a better show for everyone without turning it into a spy vs, spy police state. Get rid of the vicious cycle by implementing a positive cycle, not introducing another vicious cycle!

      I respect your views even if you completely disagree. As a fan of F1 since the 1960s I’m not going away anytime soon. I know F1 can fix these issues for the better and there is likely more than one way to make it happen.

    2. I see there are a lot of problems with the finance of F1 in pretty much all of it’s parts. Running a team, running a race, being a driver and even then leaving so many stones unturned that could make them more profit or bring them more goodwill or investors.

      F1’s costs and profits are spiraling out of control. One of the ways that manifests is teams running out of money. If anything has a structural problem (finance in F1) treating symptoms one by one is going to take forever and not actually doing that much to treat the root of the problem.

      Firing off solutions before you figure out what the root of the main problem is, is a cardinal sin in consultancy. The teams, the FIA and now the strategy group seem to not even be able to read a textbook on solving organizational problems when it comes to changing how the strong stay strong.

  28. A quick response, some ideas that could reduce the burden on teams , some of which have already been mentioned:
    Limit pit crew in pitlane to 4, combined with tyres that will last a full race and no mandatory pit stops.
    Save tyres and wages, travel and accomadation costs, back to sprint racing.

    Only 2 dry and 2 wet compounds available.
    save tyre cost and transportation.

    allow more testing at local tracks with less onerous manning requirements.
    small teams can’t afford the massive capital costs of wind tunnels and simulators, drivers don’t need to drive flat out to evaluate new parts.

    Limit aerodynamic benefit by reducing the size and complexity of the front wing, consider an FIA supplied wing.

    Reduce the number adjustments the driver is allowed to make during the race, if the differential needs adjustment make it a mechanics job.
    All these adjustable mechanisms add huge cost, how much is that steering wheel costing, as long as it is the same for all it doesn’t need to adjusted every corner.

    Make the rule more stable but allow some engine development within the fuel and rpm limits.
    allow engines to be rebuilt between race weekends.

    Remember that everything is in reality paid for by the teams, FOM only give the teams back a share of the revenue after all costs have been deducted,finally the teams nead a bigger share of revenue and more opportunity to publicise their sponsors, like billboards on their motorhomes and trucks.

    1. @hohum – Good points and suggestions. Improving racing and decreasing costs are not mutually exclusive. I totally agree that better technical regs concerning aero are a huge possibility for cost saving and better racing.

  29. I’m in favour of cost reduction purely because the teams themselves have pushed their own budgets to the limits and generally beyond. I chose slightly agree to a budget cap because of this reason. I didn’t choose strongly agree, because I’m not sure that a rule change by the FIA will be able to sufficiently keep it in check. Many codes of sport around the world have budget caps, and there are always loop holes in the rules. In Australia there have been multiple breaches of budget caps in both the Rugby League competition and the Australian Rules competitions, where teams either keep 2 sets of financial books, where 1 set was kept to fudge the player payments, or they don’t declare certain payments to players within the books and write it off as something else. The other thing that the teams in the Australia Rules competition are rumoured to be doing, is getting the sponsors to directly pay players to do PR or Event Functions work which really is part of the players pay.

  30. It’s a difficult question. On the part one this is a good idea, the little team’s chance will be improve. Otherwise, nobody can check that which team keep the cost-cap.

  31. The way I see it is like this:

    Right now it’s not what you spend, but how you spend it.

    It’s all well and good telling people how much/little they can spend, that’s relatively simple, but the likes of Caterham and Marussia don’t have the infrastructure that the likes of Red Bull and McLaren already have. For example, Marussia could spend money to develop their own wind tunnel and simulator whilst Red Bull already have both and don’t need to spend money building them. Basically, the top teams already have options the smaller teams don’t have.

    A good example is Lotus: What was once a top team with a vast budget is now strugling for money, yet despite this they’re still a top team because they still have the infrastructure from the Renault days.

    It’s a nice idea but for it to be 100% successful it surely would’ve had to have been introduced when F1 started.

    This is just the way I see it from the outside looking in really, I can’t say I’m right or wrong.

  32. A Budget cap cannot be enforced as the big teams have spread and obfuscated their financial structure. Also some teams work for others. Red Bull Technology for instance provides the KERS for Caterham and provides simulator time for Toro Rosso. How are you going to factor that in?

    I think the way to go is not policing/enforcing a hard resource limit, but rather
    encouraging to spend less.

  33. Is it Realistic, not really, you would never get agreements from the teams nor be able to effectively police it
    Is a way to make the sport financially sustainable Required, Yes.

    I agree that the division of money from the sport needs to be improved so that all teams benefit equally from the commercial rights ofthe sport, and that this should provide the basis for the operating budgets for teams, this would then be supplemented by the prize money based on finishing position, and then further by the sponsorship a team / driver can attract. Will some teams have more than others, Yes, but there should be sufficient money for a team to operate the full race schedule and to meet their financial obligations to staff and suppliers, given the millions of £’s in the sport, it is frankly embarrassing to see bills not being paid.

    Where I think the focus needs to be is to work out where within the budgets control and cost saving can be made. The main areas in which an F1 team spend their budget on which i can think of

    Facilities / Plant / Equipment (inc expansion & upgrading)
    Staff
    Engine / Powertrain (inc Gearbox, ERS etc)
    Materials (carbon fibre etc)
    Drivers

    I dont know the % split among them to be honest, but areas like Staff Salaries and Plant & Facilities would not be areas in which I would expect the FIA to influence, limiting staff at track is fine at race weekends, but they should not be able to mandate how many people each company can employ nor which equipment they choose to purchase to make their car.

    Limiting Wind Tunnel & CFD time probably needs to be expanded into the Simulators as well (if not already done so) which provides some control over the runtime and cost that can be put into this development and levels the playing field in terms of time to develop as well and adding limited testing post race weekends again makes sense while at the race tracks with the facilities and equipment already in place.

    So the only areas in which i think the FIA and teams can look to manage their costs are the the costs of providing the Engines / Powertrains & the other materials and items which go into building the car’s,

    I believe that fixing developments on the Engines limits further costs, (some equalisation will probably be needed initially) and that any and all developments done on the engines by any team should be shared with all the teams using that engine, which may put off some expensive development which would not be as big an incentive if they have to share it as well as trying to stop all the teams spending time and money developing specific engine maps etc which other teams also in isolation are spending money on developing as well. I would like to go further and really reduce the amount of control over engines / diffs etc that the driver has while racing which I think leads to far too much control in races being given to the engineers and pit walls who are monitoring the car etc, vs the driver to manage his race

    This leads us to the other parts and materials required to make the F1 car, i was impressed with the recent move in safety where the teams collaborated to provide the solution to the side impact tests and would like to see more collaboration and standardisation of non performance parts within cars. we already have standard electronics control units, the fuel cells are I think all made for by the same company (ATL?), would be interesting to know if they all cost the same..

    I think wheels, nuts and wheel guns could be an opportunity like tyres to be a supplied item, i think we are reaching the limit now of how fast a tyre can be changed and at some point all the teams will be changing them in about the same time.

    Brake discs and pads again are provided by only a couple of companies and again while an area of personal driver preference, could a collective agreement among teams be had,

    Carbon Fibre and Rapid prototyping materials would be another area where I think we could look to agree to a fixed definition and specification, would eliminate some of the areas of controversy in flexible parts on vehicles, I know that this in the past has been an area of competitive advantage in producing thinner, stiffer, stronger or more flexible but really is a benefit mostly to the teams that can afford to spend in this area, we do it in Engines which define what metals etc can be used in pistons and blocks for example, if done collectivley then again total requirements for all teams can be combined and a potentially lower cost can be sourced for all competitors… doubt teams would agree to this…

    I deliberately left Drivers till last, people object to pay drivers and its a symptom of not being able to control their costs and needing to balance budgets, which would reduce if teams were not so constrained. i wouldnt look to limit this area at all.

    Sorry it turned into an essay

  34. Re-introduce in season testing but limit it in some way?

    Teams that have won a dry GP within the past two seasons may only test with limited mileage and cannot use their race drivers. They may have unlimited mileage if they use a driver or drivers who have not started a Grand Prix within the past 4 seasons.
    Teams that have scored points in the past two seasons may either use race drivers and have limited mileage or use their third driver/drivers and have unlimited mileage.
    Teams without any points may have unlimited testing mileage with their race drivers.

    Gives the lower teams that desperately need the mileage, also gives the bigger teams a chance to blood some younger drivers and gets them the experience they’re missing out on since in season testing was stopped.

    You could test after Bahrain (2 week gap to China and a lot of gear will be shipped there direct rather than back to the factory), after Austria (two week gap again, British GP is next so cars will be going back to the UK anyway, does it matter if it’s a day later?) and then after Italy if allowed at Monza. I’m not sure if there are noise regs there or not. if that’s a problem test after Belgium two weeks earlier. Job Jobbed!

  35. I wonder how many people have mis-answered this as a question about wanting a budget cap.

  36. I strongly disagree a budget cap is realistic for F1.
    You can put it in the rule book but I think following the money in F1 is as unrealistic as trying to police team orders during a team order ban.

  37. Budget cap has killed f1 i work for FedEx most people at the depo watched f1 since the cap and sky tv it now just me.i would get up at stupid o’clock to watch races .now if i don’t want to get up i don’t care i just read about it .started watching middle of the 90’s but ever since 2001 it got worse ever year shame it was so great

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