“Nonsense” to say cost cap can’t work – Lowden

2014 Malaysian Grand Prix

Graeme Lowden, Marussia, Albert Park, 2014The FIA’s pan to introduce a cost cap in Formula One next year is realistic and can be made to work, says Marussia’s sporting director Graeme Lowden.

Earlier this month McLaren Group CEO Ron Dennis said the FIA’s plan for a “global cost cap” to come into force next year was “pie in the sky”.

However Lowden said the fact other sports have similar rules shows such a plan could work in F1.

“I think one of the key things that we can learn from other sports is that it is entirely possible to do this,” he said. “I think that’s something that’s really important.”

“You still hear people say that it might be difficult or it might even be impossible to do it. Personally I think that’s nonsense.

“Formula One has introduced the biggest technical change that we’ve seen certainly in my generation and it’s been done successfully. And most other global sports have introduced, for the better of the sport, financial mechanisms which do work to greater or lesser extent.

“And therefore I think one of the things that I’d been really keen to see emphasised is that these mechanisms do work, they can be done, and it’s certainly not impossible.”

Lowden said “progress is being made” on the regulations, which the FIA wants to complete by June. “I think it’s difficult to say where it’s on target, behind or ahead because there’s no real blueprint for this at all.”

“What there has to be is just a will amongst the teams for it to happen for the good of the sport and I think it would be for the good of the sport so I remain optimistic that something will happen within the timeframe and it will improve Formula One.”

Sauber team principal Monisha Kaltenborn agreed there has been progress on the plan.

“We are working on papers and I think it’s more than just an intention of the FIA to do this,” she said. “The teams got together with the other stakeholders and there was an a agreement amongst everyone that we have to do something here.”

“We looked at different ways to do it so I think that’s already a big step in itself and we are making progress so I’m confident that sticking to that agreement amongst everyone we will have some cost control next year.”

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20 comments on “Nonsense” to say cost cap can’t work – Lowden

  1. Mike Dee (@mike-dee) said on 28th March 2014, 10:35

    I still think it is very difficult in Formula One. The teams are very heterogeneous, with some building more parts than the others, some of which get sold on to other teams (and I am not only talking about engines). It will already be tricky to define the cost cap in a meaningful way, and it will be even more difficult to police it.

  2. Mouse_Nightshirt (@mouse_nightshirt) said on 28th March 2014, 10:40

    I’m in agreement with the little teams here.

    The top players, for all intents and purposes have an effectively infinite pile of money to throw at issues, which is a massive advanyage when you can outspend a rival by a factor of ten.

    If we’re trying to be road relevant, then reign in the costs. You wouldn’t see Ford or Peugeot or Volkswagen throwing limitless amounts of cash at trying to design a new exhaust pipe or wing mirror in a road car. Yes I know it’s very different in terms of end results, but I can’t see how a budget cap will dull racing other than to tighten the field significantly.

    • Steph (@stephanief1990) said on 28th March 2014, 10:41

      +1

    • Psychotext (@textuality) said on 28th March 2014, 11:26

      What you say is true, but I think the problem most have with the budget cap is how easy it will be for the bigger teams to get around it. Nothing to stop Ferrari having a bunch of their work done by their road car division who then invoice at under cost (or don’t invoice at all, just hide the total sum of the work in the murky waters of R&D).

      It’s a noble aim, but massively impractical.

      • Michel S. (@hircus) said on 29th March 2014, 1:59

        Unless components are standardized and teams (and their suppliers) are then forced to supply other teams under non-discriminatory terms … it could work with an IRL-like format in which the chassis is homologated but teams are free to innovate on body kits and engines (though that hasn’t happened yet, that side of the pond)

    • Mads (@mads) said on 28th March 2014, 11:45

      @mouse_nightshirt
      I think a lot of people would like a budget cap, as it would mean closer competition. Me included.
      The problem is just that, no matter how good the idea is, it won’t stop the big spenders from just hiding most of their expenses.
      And so, what difference would it make?
      The only result I see is a lot of pointing fingers and a lot of bickering.
      Until someone comes up with a bullet proof solution which ensures that a team cannot hide their costs, then it isn’t going to do F1 any good.

      • Mouse_Nightshirt (@mouse_nightshirt) said on 28th March 2014, 11:52

        @textuality and @mads – I agree with you both that it would be difficult and that there would be, at least at the start, a lot of things slipping through. But I don’t think that’s a reason not to try and that the problems are insurmountable.

        • Mads (@mads) said on 28th March 2014, 12:10

          @mouse_nightshirt
          That is all fine, but HOW would it be solved?
          I just cannot imagine what would stop Ferrari from getting a lot of their employees assigned to the Ferrari road car division, and simply make them write half of the work they do for the F1 team onto the road car development. Same with materials. And what about facilities? Red Bull have a windtunnel for their F1 team exclusively. Ferrari shares their with their road car, and other racing projects. So who pays for updates and the running of it?
          And those things stretches to everything from toilet paper to component development and shipping.
          It would very quickly get impossibly complicated to figure out.

          • Mouse_Nightshirt (@mouse_nightshirt) said on 28th March 2014, 13:18

            @mads
            Sorry, I’m not a financial guru so I’d have no idea how they would get it to work, but I do know there are a lot of very intelligent financial people who would no doubt find ways to get it to work.

          • drmouse (@drmouse) said on 28th March 2014, 14:05

            I think on another, more fundamental, level there are problems with a cost cap.

            Putting aside, for a moment, a team like Ferrari or Mercedes burrying costs in their consumer (or other racing teams) costs, what if something is developed by those divisions which is, accidentally, of relevance to F1?

            Assuming regs are put in place to stop creative accounting to hide costs, there would have to be some apportioning of the R&D of that part/technique to the F1 team. This could lead to them not being able to use it, which would be absurd!

            I do believe that placing limits on certain resources (e.g. wind tunnel & track testing) is of benefit to the sport. However, a budget cap would either be ineffective or would severely stifle innovation, the life blood of F1.

  3. Paul (@frankjaeger) said on 28th March 2014, 12:25

    I think it’s definitely worth a shot and I don’t really appreciate the pessimism that some big team bosses have. F1 has definitely accomplished much larger things than introducing a cost cap. I welcome this motion since it will tighten up the field and hopefully stop F1 being so much of a tiered (Big teams/midfield/back markers) motorsport

  4. mateuss (@mateuss) said on 28th March 2014, 12:56

    I think the biggest obstacle is not that some teams think the budget cap will not work, quite the opposite, some teams are afraid that it will work!
    And I don’t think I have to name the teams.

  5. Marcos (@marcos) said on 28th March 2014, 15:02

    Wouldn’t it be more practical to limit the overall car price in terms of production and material costs?
    I know there will still be a big difference between teams in terms of how much money they spend on R&D. But (1) it will be way easier to control and (2) finding ways to build quality things at a lower cost will definitely be of relevance to the road car industry.

    • Marcos (@marcos) said on 28th March 2014, 15:15

      And talking about things that I find easy to solve (probably because I’m having an over-simplistic view). About the weight limit and how it affects some drivers. instead of raising the limit weight of the car, which will still play on advantage of lighter drivers (they’d have more weight to play around and distribute), why don’t introduce a minimum weight for driver+sit combination? Easy to implement, and it will, at least to some extend, remove the driver’s weight factor.

  6. Who’s Lowden I only know Graeme Lowdon.

  7. pxcmerc (@pcxmerc) said on 28th March 2014, 17:10

    The cost cap works if your the one making the rules, and going after teams that don’t comply. :)

    I heard Brundle complaining about how the fuel rate limiter is supposed to contain costs, and I saw rubbish to that, the only thing containing costs is the will to spend by the teams and the manufacturer. If you put in laws that seriously restrict a team’s ability to compete, they will look for ways around it. Some rules are worth having, like some of the safety bits. Some rules are not worth having, because they only protect the people who are in favor with the current political climate of what ever jurisdiction those rules apply.

    Teams are budget limited, if you wan’t to reduce spending, consider enacting a ‘fair/smart’ weight penalty system, because the teams that spend the most will be punished the most :) cheers. You don’t have the fastest car in F1 because you have the fastest driver, you have the fastest car because you can out spend everyone else. A weight penalty system is so simple to implement and so effective in reigning in costs, and increasing the spectacle. Sure, the drivers can sand bag, but that will only increase the spectacle, so you can’t really lose on that point, and the teams with cheaper budgets will look better to the sponsors, and thus help them get more money. It’s a win-win.

  8. Diego (@ironcito) said on 28th March 2014, 19:12

    They’re basically proposing communism for F1. Very pretty and fair in theory, but totally impractical and unrealistic in practice.

    Besides, a budget cap would likely mean a loss of talent for F1 as a whole. Teams would be pressured to pay less to their employees, so the likes of Newey would end up leaving the sport for something more profitable.

  9. HoHum (@hohum) said on 28th March 2014, 21:17

    It’s really easy to comply with a cost cap, if that cost cap is higher than your total annual spend to begin with, as it is with most of the teams agitating for a cost cap.

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