“Pie in the sky” cost cap plan won’t work, says Dennis

2014 F1 season

Ron Dennis, McLaren, 2014Ron Dennis is sceptical the FIA’s plan to introduce a cap on team budgets from 2015 can be made to work.

Speaking at McLaren’s headquarters on Thursday Dennis described the cost cap plan as “pie in the sky”.

“The issue is not the concept of a cost cap,” he said, “the issue is the regulatory process of monitoring a cost cap. It’s almost impossible.”

“It’s a simple thing, Formula One – people spend what they have,” he explained. “If you can’t afford to be in Formula One, don’t be in Formula One. There’s lots of other categories you can go motor racing in.

“It’s as simple as that. In the end, it’s been that was for very many years. For years Ferrari dominated Formula One because it had more money.”

Dennis also questioned the timing of the plan, pointing out that last year F1 “had bulletproof engines, the price of which was cascading down” which were now being replaced with “the most expensive engine in the history of motorsport”.

He voiced doubts about the “practicality of the concept” of a cost cap and said engineers will always find ways to get around technical constraints on performance:

“If you brought in a cost cap that said that a wheel upright had to weigh a certain amount, the concept was to avoid using exotic materials, the designer would say ‘well, I want to have to lowest possible centre of gravity’, they would make it from the most exotic materials and they would put tungsten at the bottom to lower the centre of gravity.”

Following the disbanding of the Formula One Teams’ Association last week, which McLaren helped to form in 2009, Dennis said McLaren’s first priority would now be to itself rather than the collective action with other teams in the sport.

“I think I’ve done my bit over the years,” he said.

“I won’t be moved away from the principles by which this company runs and we will always be supportive of what we believe to be right. But certainly this year we are going to be totally focused on returning ourselves to competitiveness.

“We have sacrificed enough for the benefit of the whole.”

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46 comments on “Pie in the sky” cost cap plan won’t work, says Dennis

  1. bull mello (@bullmello) said on 6th March 2014, 23:59

    Ron Dennis has it right here.

    “It’s a simple thing, Formula One – people spend what they have,” he explained. “If you can’t afford to be in Formula One, don’t be in Formula One.

    The cost cap policing and the whole cost cap idea is totally counterproductive to the competition that is supposed to be taking place on the track. Sadly, the era of Garagistas is over and high tech rules the day. That takes people, good management and and investment to be successful. Besides, Toyota and other teams have proven that spending money in and of itself does not equal success. Think Lotus in 2013. Not the highest budget, but excellent results.

    Any comments by Bernie and the FIA are just to placate the smaller teams. There will not be any real, workable budget cap.

    • Zain Siddiqui (@powerslidepowerslide) said on 7th March 2014, 0:18

      You don’t even have to look as far back as Toyota to see an example of a team that spends boatloads of money and still doesn’t succeed. Think of a certain team in Maranello.

      • Kingshark (@kingshark) said on 7th March 2014, 0:37

        @powerslidepowerslid
        That “certain team in Maranello” has won a total of 15 WDC’s, 16 WCC’s, and 221 races. Just because they currently aren’t winning doesn’t mean that they never do.

        • Spencer Ward (@sward28) said on 7th March 2014, 1:29

          Just to play devils advocate, because I am a Ferrari fan and always have, but those championships and wins have taken place over 64 years.

          I would say Zain has a point on Ferrari “pulling a Toyota”, particularly if look at the era between ’80and ’98. Where nothing was won.

          • Kingshark (@kingshark) said on 7th March 2014, 2:54

            @sward28
            Apart from the 1982 and 1983, where they won the WCC. Not to mention the many race wins during this period of time.

            Just because Ferrari has not won every championship in its existence doesn’t mean that it’s suddenly a Toyota-quality team.

            Milton Keynes also never won anything from 1996 to 2009, despite the buckets of money thrown at them by Jaguar (’00-’04) and Red Bull (05-09). Were they in “Toyota mode” for 14 years?

          • Tim M (@tim-m) said on 7th March 2014, 6:22

            1990 was damn close for Ferrari as well. Certainly not ‘pulling a Toyota’ there!

    • JCost (@jcost) said on 7th March 2014, 6:25

      If you can’t afford to be in Formula One, don’t be in Formula One. There’s lots of other categories you can go motor racing in

      Ron is right. Actually id doesn’t take a wise man with an outstanding record and experience in F1 world to see that it won’t work.

  2. skipgamer (@skipgamer) said on 7th March 2014, 2:13

    “If you can’t afford to be in Formula One, don’t be in Formula One. There’s lots of other categories you can go motor racing in.

    That’s a dangerous thing to say, there’s a very real possibility that potential investors will just pass up on Formula 1 and go racing in a bunch of other cheaper, fairer alternatives, that also offer more exposure as we move through the internet age, which Formula 1 simply hasn’t kept up with (in terms of coverage, accessibility, etc.)

    It’s easy for the established successful teams to have this point of view, but they must remember, without the loss-making newcomers, it’d be quite a sad sight watching a grid of less than 10 going around a track.

    • J.Danek said on 7th March 2014, 7:28

      +1.

      Very convenient for Dennis to manifest this attitude when he’s at the helm of a well-funded team.

      Exactly the wrong attitude for building a sustainable, compelling sporting spectacle in F1. Ron and Bernie are two old corrupt dinosaurs.

      • accidental mick (@accidental-mick) said on 7th March 2014, 13:04

        To state that Ron Dennis is corrupt is a complete lie and, by the way, libellous.

        • J.Danek said on 8th March 2014, 5:00

          I reject your baseless claim of libel, and remind you that:

          On 13 September 2007, the FIA hearing imposed a penalty for illicitly collecting and holding information from Ferrari to confer a dishonest and fraudulent sporting advantage upon McLaren. The penalty consisted of exclusion from and withdrawal of all points awarded to McLaren in all rounds of the 2007 Constructors’ Championship, a record fine of $100 million…

          On 14 September, Ron Dennis [fancifully] announced that he was the one who alerted the FIA that further evidence existed.

          On 15 September, Max Mosley contested Ron Dennis’ claim that he alerted the FIA to the existence of further evidence, claiming that Dennis actually alerted him that Alonso had decided to send the emails in himself, and that Mosley had been erroneously assured by Dennis that the emails contained nothing incriminating.

          Corrupt is as corrupt does. And it’s not surprising that Dennis presided over a team so corrupt and unethical that he was forced to resign from the role of team principal to save McLaren from further punishment after another lying-scandal erupted in Australia 2009.

          The only reason that McLaren did not ‘thrive’ under Whitmarsh as it ‘thrived’ under Dennis was b/c of Whitmarsh’s integrity and unwillingness to tolerate unethical, unsporting practices.

          • accidental mick (@accidental-mick) said on 8th March 2014, 21:20

            Ron Denis was not forced to resign. I would remind you that when Ecclestone owned Brabham, Mosely was Ecclestone’s lawer and Dennis was Chief Engineer (which in those days amounted to being designer). Ecclestone is on record as saying that Dennis is a much more ethical and a better man than he, Ecclestone, would ever be. I would also remind you that Mosely spent a great deal of effort trying to get Dennis out of F1 and that the swingeing fine was just another installment of that (I suppose) revenge.

    • dragoll (@dragoll) said on 7th March 2014, 8:32

      @skipgamer I think your sentiment is right on the money. Ron has gone out and effectively stated “Come sponsor McLaren, we’ll spend every penny”… I think Ron could have chosen a better argument than “don’t cost cap us, because we are incapable of saving money.”….

  3. Mike (@mike) said on 7th March 2014, 2:20

    Great. At the helm of one of the more influential teams is a man who would see F1 die before admit he was wrong.

    • HoHum (@hohum) said on 7th March 2014, 14:54

      @mike, I think you have it back to front, turning F1 into a cut-price circus is what will kill F1, maintaining the ideals of highest technology creating winners is what will ensure the long term survival of F1.

  4. Guy (@sudd) said on 7th March 2014, 2:32

    McLaren revival has begun! F1 is about money and he is right that McL has been playing the role of appeaser for too long. Not just money to compete, but money to keep developing one year in advance even though you’re spending billions on the current year. Cost cutting in F1 is a joke. You can’t police it when teams have so much at stake to improve their cars by half a second. Never mind new regs and technologies every other year- which means more spending.

    Look at Lotus last year, great car out of the box. But once the development war began, they felt behind because they don’t have the deep pockets to keep investing in R&D. So yes, money won’t buy you success in F1, but a lack of it is the difference between being “OK” and “Glory”.

    • bosyber (@bosyber) said on 7th March 2014, 5:37

      But @sudd, in the last few races, didn’t Grosjean do more to keep Vettel honest than either the Mercedes cars, or Ferrari?

      • Guy (@sudd) said on 7th March 2014, 6:09

        @bosyber, yes they had some good races but they still finished fourth in the constructors. IMO that car was capable of second if they had the funds to keep developing and bringing updates through the season. Imagine if it was Lotus that was having rear tire wear problems instead of Mercedes. I have a feeling Mercedes spent buckets to curb tire wear. But their pockets were so deep, they could do that and still have funds for aero updates and general R&D to improve performance. Williams made a great move by switching to Mercedes based on what we’ve seen so far. That’s hopefully one less thing draining their revenue. Red Bull does not have money problems so they are going to spend like Mercedes to find solutions.

    • Albrecht said on 7th March 2014, 8:23

      @sudd

      Look at Lotus last year, great car out of the box. But once the development war began, they felt behind because they don’t have the deep pockets to keep investing in R&D.

      If we compare early season vs late season performance of each team, Lotus was, after Red Bull, the most successful at improving the car over the season. Both Ferrari and Mercedes fell behind, comparatively.

      Not that I disagree with your point about of the importance of budget, it’s the absolute truth. But Lotus has been somewhat the little exception of that rule, constantly punching above their weight, especially last year. You made a good point, but chose a very bad example.

    • HoHum (@hohum) said on 7th March 2014, 15:00

      One obvious example of lack of finance hurting them was loseing Kimi, that definitely cost them points, assuming they had the money to keep 2 cars was up-to-date.

  5. Adam Blocker (@blockwall2) said on 7th March 2014, 3:25

    Ron, you are spot on. I am glad you are back in charge, maybe McLaren will actually win something now.

  6. evered7 (@evered7) said on 7th March 2014, 4:26

    A lot of Ron Speak on F1F today. He has been out for sometime now and these are strong words. I just hope he realizes that Ferrari isn’t their only competitor now. RBR will come strong, Mercs are already looking good along with Williams and Force India are definitely on the up.

    So unless he has got a BrawnGP kind of car for this year, I think he should go easy on the tough talk.

    • Albrecht said on 7th March 2014, 7:55

      @evered7 You’re mixing things. It was hardly “tough talk”, and the mention of Ferrary was simply an example. The cost cap benefits midfield teams and poor teams the most. All the top teams, the ones McLaren tends to compete against, bar Lotus have relatively healthy finances, so these statement is not directed at them.

    • Keith Collantine (@keithcollantine) said on 7th March 2014, 9:08

      @evered7 Was at a one hour media briefing with him at the MTC yesterday. That’s a lot of transcribing!

      I just hope he realises that Ferrari isn’t their only competitor now.

      He mentioned Ferrari as an example, I wouldn’t get hung up on that.

  7. Girts (@girts) said on 7th March 2014, 10:10

    For years Ferrari dominated Formula One because it had more money.

    Well, that didn’t exactly help McLaren, did it? It has also been reported that McLaren’s actual budget isn’t a match for what Ferrari, Red Bull and Mercedes possess. Dennis must be planning to improve the team’s financial situation but at least today McLaren would only gain if a budget cap of around $200 million was introduced.

    Moreover, people-spend-what-they-have approach might have worked in the past but things have changed, F1 is much more expensive today. Frankly speaking, I don’t care if Sauber and Williams vanish (I know that a lot of fans would be hugely disappointed though) but I’m worried about the risk of a shrinking field. If the struggling teams could easily be replaced by new ones, then fine, it’s a dog-eat-dog world and may the fittest survive. But it’s not the case, it’s the sustainability of the sport as a whole that we’re talking about.

  8. craig-o (@craig-o) said on 7th March 2014, 10:33

    The only problem with telling other teams and businesses to go to other series is that only 6 or 7 teams can actually afford to comfortably be in F1… And unless we adopt 3 car teams that would leave the field very short of cars.

    • HoHum (@hohum) said on 7th March 2014, 15:07

      @craigo, 6 or 7 teams not enough? honestly how much time is invested in watching the cars from positions 12 or 14 down. We all love a plucky underdog but if we are going to watch him he better be a lot closer to the front than 13th.

  9. Paul Pemby said on 7th March 2014, 10:36

    There is no way a cost cap could be managed. R&D work would be “subbed out” to another company to hide the true cost. If Mclaren F1 had a cost cap imposed on it I’m sure we’d see the R&D costs in McLaren Automotive increased substantially.
    Always a way round anything these days.

  10. Steph (@stephanief1990) said on 7th March 2014, 10:37

    Great. We’re on the verge of possibly getting rid of Bernie and welcome the return of another capitalist hero. Dennis doesn’t even see the simple flaw in what he’s saying: if the teams don’t have money they won’t race but if no one can afford it then no one will race. At best the rich teams will just keep dominating: Red Bull, Mercedes, Ferrari and McLaren and the poor ones (it’s quite absurd to even call them “poor” when they still have millions) will either stay at the back and be pushed out of the sport altogether. That’s hardly racing on equal or competitive terms.

    • Albrecht said on 7th March 2014, 11:49

      @stephanief1990

      That’s hardly racing on equal or competitive terms.

      There again, F1 has never been about racing on equal or competitive terms.

    • HoHum (@hohum) said on 7th March 2014, 15:12

      But Steph, that’s Rons’ point, F1 has never been about equality, it has always been more “David and Goliath”.

    • Mads (@mads) said on 7th March 2014, 18:17

      @stephanief1990

      That’s hardly racing on equal or competitive terms.

      That is exactly what it is.
      If you impose a budget cap you are unfairly limiting the wealthier teams, who to be fair, are wealthier due to their own work and fortune.
      Not that I don’t think that a budget cap would be a good thing for the sport. It’s just not really possible.

  11. Sam (@) said on 7th March 2014, 10:37

    “I’ll be so happy when only Red Bull, Ferrari, McLaren and Mercedes are racing. 8 cars.”

    Yipee. Maybe then Ferrari can finally close their deal on three cars a team.

  12. caci_99 said on 7th March 2014, 11:12

    While I agree with Dennis that the cost cap is impossible to be controlled, I don’t agree with his view about spending nature of F1. If he really believes that in F1 should be the teams that can afford it, I am afraid we could lose some teams that have been in F1 for some long years (Sauber, team Enstone, Williams maybe) and no new entrants. F1 is spending much much more than it used to some 10 years ago. This frenetic spending is not healthy to F1. We will end up with only three to four teams affording it and racing there where it can afforded. This does not look good to me.

  13. GT Racer (@gt-racer) said on 7th March 2014, 11:33

    “If you can’t afford to be in Formula One, don’t be in Formula One. There’s lots of other categories you can go motor racing in.

    Ron is highlighting the problem with the ‘established front runners’ in F1 & the attitude they have, They only look at things from there perspective & in Ron’s case they look at F1 as it was & not as it is.

    Realistically there are only 4 teams who can afford to remain in F1 purely on there own budget, Those been McLaren, Ferrari, Red Bull & Mercedes. All the other teams are struggling to stay afloat.

    Also this isn’t the F1 of 20+yrs ago where you had 26+ cars turning up each race with Pre-qualifying with plenty of interest from teams outside who wanted to come & join the circus. Back then when a team folded you barely noticed, Back then you had over half the grid who were financially secure so there was never any real danger of grid count dropping to low levels. Now there are so few teams you notice when one falls out, Most of the grid are not financially secure & in Ron’s ‘no cost cap’ world we are in danger of grid count dropping to very low levels.

    OK so the argument is usually to let the teams who can afford it to run 3 (Maybe more) cars. But that just makes the problem worse as they are then spending more & been pushing further back puts the mid-field teams in bigger financial problems as there getting less exposure, Less points etc…
    Plus what happens when 1 team builds a dominant car, Instead of them getting 1-2 finishes, There likely locking out the podium, Wrapping up the championship much sooner.

    Fans bemoan the rise in pay drivers, Drivers like Hulkenberg been constantly overlooked due to lack of budget. If you want to get past that you have to lower costs, You have to look at a cost cap, There’s no other way.

    And before someone brings up that the finances could be better shared out by Bernie, That would help but it would not come close to solving the problem as even a larger payout wouldn’t be enough to give these teams financial security beyond a few months.

    The sad part about the financial situation is that people saw it coming 20+yrs ago yet it was teams like McLaren & Ferrari & Teams who are now struggling like Lotus & Williams were part of the problem back then because it didn’t affect them so they ignored the warnings.
    Then when you had guys like Eddie Jordan, Paul Stoddart & Max Mosley beating the ‘cost saving’ drum 10-15yrs ago they were ridiculed by people saying that F1 should always be about high cost & by comments like what Ron has said now.

    The problem that is often ignored is sponsorship & how thats changed. Back when Tobacco firms were allowed to advertise they threw cash at F1 & plenty of it. Now that tobacco advertisement is banned no other sector has been able to fill the void, It was expected that technology & communication firms would come in given the way that area was growing yet that didn’t happen leaving many teams with big voids in there sponsorship budgets.
    Even when they did come in (Orange with Arrows in 2000-2002) they didn’t bring the level of funding it was thought/hoped they would.

  14. Robbie (@robbie) said on 7th March 2014, 13:03

    RD is right that teams will spend what they have allotted to go racing. A perfect example is LdM pointing out a month or so ago that all restricting testing did was cause teams to spend more on their simulators and wind tunnels. They simply diverted their funds. Can’t spend it here so we’ll spend it there.

    I think that what it comes down to is that they have not reached a point of desperation yet. If and/or when the audience falls enough, or indeed there are only 5 or 6 teams left on the grid and that hurts their bottom line due to reduced interest in the sport, then they will have to act. I think that as long as they are doing things like introducing the most expensive power units in F1′s or even motor racing’s history, at this point in F1′s history, with pay drivers and teams that can’t afford to pay payed drivers, then they must still be nowhere near a breaking point. They aren’t serious about caps because they don’t have to be…yet.

    It should be no surprise that in a series that has brought us Spygate, Liegate, Crashgate, etcgate they can’t be trusted with a cap on spending that might ‘save the sport’, but I think the top teams would have to feel that the sport needs saving before they will make concrete moves. For now I’ll assume there is no urgency yet.

    If F1 is in trouble…if drastic changes are needed…they’ll have to adjust. If the viewing audience no longer buys into what they are selling…they’ll have to adjust. And that to me is the bottom line. Like with all business, they won’t change until they absolutely have to, and that will only be when the bottom line of the top teams is diminished, and that will only be up to the viewers. No viewers equals no sponsors equals no bottomless pit of money.

    So it will be fascinating to see what the new product is, and how the stats will go in terms of global viewership. I think the worst case scenario would have been another year of RBR domination after drastic reg changes, and at least that doesn’t look like it is going to happen. Let’s see what does.

    • HoHum (@hohum) said on 7th March 2014, 15:23

      @robbie, great comment, for me the crux of the argument is in your line “If the viewing audience no longer buys into what they are selling” that is the bigger danger, when F1 becomes just another all-the-same racing series no amount of gimmicks will save it.

  15. Mads (@mads) said on 7th March 2014, 14:11

    I completely agree with him.
    A budget cap simply isn’t possible.
    What I like so much about F1 is that a few weeks after the last race, the results are finalized and set in stone. But with that time frame, even a monkey on LSD could hide the expenses well enough for it to never be discovered.
    Otherwise that would need to change and we would end with a sport like cycling where champions are stripped of titles years after. To what good?
    I support the idea. It would be brilliant if a budget cap could make teams more even, resource wise.
    But it just isn’t a realistic option.

    • HoHum (@hohum) said on 7th March 2014, 15:32

      @mads, exactly right, even if we introduced “garagista” era caps, 200sqm factory, 50 employees, etc. how in the internet era could you police it, and the cycling analogy is spot on, cheating was the level playing field to most participants.

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