FORUMula1.com - F1 Forum

[scotty]

The latest on this:

Formula 1 supremo Bernie Ecclestone is making a fresh push to introduce a budget cap in the sport as a means of ensuring costs are kept under control.

As discussions continue to try and frame a deal for the FIA to police the current Resource Restriction Agreement, high level sources have revealed that Ecclestone has told teams he is serious about a move to impose a complete cost control in time for the 2014 season.

During Monday's meeting in Paris between team principals, the FIA and Ecclestone, and in a subsequent meeting in the Indian Grand Prix paddock, Ecclestone put forward his plans for the budget cap.

While a budget cap move has not received support from teams in the past - because it would result in a drastic cut in their spending power – Ecclestone is planning to set the starting limit as high as £155 million ($250 million USD).

This would be around the figure that the current top teams are spending – with Red Bull's recent accounts lodged at companies house showing a £176 million turnover for all its activities.

Red Bull team principal Christian Horner believes that a budget cap would be a more suitable solution to cost control than the current RRA.

"Ultimately an overall cap that captured all activities of an entrant would be a better way of looking at controlling costs than what is currently proposed," he told AUTOSPORT. "I think the problem with what is proposed is different entities are treated in different ways, which is our major concern."

The biggest hurdle in imposing such a cap on costs on teams though is how to ensure that engine spending by manufacturers is incorporated in a fair way.

"This is the fundamental problem," said Horner. "It is very difficult. Basically you are looking at a supply price, but this is where budget controls fall down in terms of how do you police and regulate them?

"This is where stability of regulations will always have a much bigger and more transparent impact."

Sauber team principal Monisha Kaltenborn told AUTOSPORT recently that she was in favour of a budget cap approach being adopted in F1 – but had to be at the right level.

"We for a while have been proposing a budget cap, which we are still convinced about because it will allow everyone to make use of their strengths," she said.

"It would be a level playing field and everyone could go the way they wanted to, which I think would make the sport very exciting.

"But we should not start at a level that is even beyond what people are doing right now. Fans want to see competition between teams, and what strategic decision you take on the development side as well as on track."

Another team principal, who did not wish to be identified, was much more sceptical about the idea of a budget cap being introduced at £155 million – because the level was so high.

"There is no plan yet to bring that limit down, so it will not really affect anyone – or help any of the teams that are facing cost issues," he said.

Horner reckoned that ultimately the best way to help all the teams on the grid would be to impose tighter technical and sporting regulations that limited the benefits of spending too much money.

"The problem is that we contradict ourselves, because 2014 for sure will be a very expensive car," he said.

"Whenever you change regulations there is inevitably an increase in expense involved, as you cannot carry over any components and you have to start your R&D process again from scratch.

"The most important thing is stability and I think what we would like to see is that 2014 is fixed, but thereafter there needs to be stability and I think stable regulations do enable costs to decrease."

I started a whole new thread dedicated to this topic cause i think it's quite an interesting area to discuss.

What do you think of potential budget caps? And why?

[Jabberwocky]

I think it is good, and starting high is also good.
If the budget is lowered say 20 millions a year, it means the bigger teams reduce in size slowly, which is more achievable

Can you imagine saying to Redbull, right drop your budget from 170 Million to 50 Million in one go?

As for the engine funding that is more difficult. I was reading something a while ago (I think it was to do with ice racing but not 100% on that) anyway the long and short of it was that to keep prices down anyone could buy any competitors car for 3,000 pounds. Maybe an engine manufacturer has to sell it's engine to any team for 5 Millons a year, so the engine guys will only have a finite income to limit expenditure.

[What's Burning?]

pretty budget.

[LewEngBridewell]

It will encourage newer teams to come and join, and make it easier for them to compete with the best. I'm all up for that. The big teams won't like it though.

[Denthúl]

It will encourage newer teams to come and join, and make it easier for them to compete with the best. I'm all up for that. The big teams won't like it though.

Maybe eventually. The problem is, the current proposal for the starting cap is higher than most teams spend, so it will take several years for this to make an impact. Even if it's brought down to around £100m, this is still more than Caterham, Marussia and HRT spend, and even Williams, Sauber and Force India. That being said, I do like the idea of a budget cap, but in conjunction with more open technical regulations. Capping the ultimate spending of a team, in my opinion, removes some of the need for banning things like engine-blown diffusers, F-ducts, double-DRS etc. because teams can't just spend, spend, spend developing something like that; they have to make it fit in to the annual budget.

[andrew]

I'm against budget caps. To me it's another step to F1 becoming a spec. series.

[Jabberwocky]

A down side I can think of is that if a team goes down the wrong development route, they will not be able to spend there way out of it. Which might not sound like a bad idea.

Can you imagine 2009 if no one could afford to develop the double diffuser? Or if a team could not develop the blown diffuser!

[Ferrari man 009]

Not sure I agree with it. I might be wrong but no other sports have budget caps, although some have a rule where you can only spend a percentage of turnover made. If budget caps were introduced, it would be like saying Manchester United and Wigan Athletic could only spend the same money on players, which isn't really fair on the top teams.

My suggestion is different, and will cut costs. Introduce a rule where teams can only develop a car in 2 designated windows a season. For example: Once a team brings their car to the 1st race they are stuck with it until the next "development" window.

Using 2012 as an example, once all teams arrived with their cars in Australia, they can only bring upgrades to 2 races. With the calendar, the obvious ones would be Spain (after the Mugello test) and Belgium (after the summer break). This would cut costs but also allow teams to not be budget limited over the winter.

[Jabberwocky]

Not sure I agree with it. I might be wrong but no other sports have budget caps, although some have a rule where you can only spend a percentage of turnover made. If budget caps were introduced, it would be like saying Manchester United and Wigan Athletic could only spend the same money on players, which isn't really fair on the top teams.

My suggestion is different, and will cut costs. Introduce a rule where teams can only develop a car in 2 designated windows a season. For example: Once a team brings their car to the 1st race they are stuck with it until the next "development" window.

Using 2012 as an example, once all teams arrived with their cars in Australia, they can only bring upgrades to 2 races. With the calendar, the obvious ones would be Spain (after the Mugello test) and Belgium (after the summer break). This would cut costs but also allow teams to not be budget limited over the winter.

If a team makes an error in development that means they would be in trouble for half the season. which is unfair, and a poor show especially if a team turns up that is light years ahead of everyone else.
If you look at this year, Mclaren would of won the 1st half of the year and then Redbull the second, would be a boring show look how the last 4 races have turned out!

[darwin dali]

Not sure I agree with it. I might be wrong but no other sports have budget caps, although some have a rule where you can only spend a percentage of turnover made.

You are indeed wrong: American Football, e.g., has budget caps.

[What's Burning?]

So does the NBA.

[andrew]

MotoGP has cost restrictions - I think.

[Ferrari man 009]

Not sure I agree with it. I might be wrong but no other sports have budget caps, although some have a rule where you can only spend a percentage of turnover made. If budget caps were introduced, it would be like saying Manchester United and Wigan Athletic could only spend the same money on players, which isn't really fair on the top teams.

My suggestion is different, and will cut costs. Introduce a rule where teams can only develop a car in 2 designated windows a season. For example: Once a team brings their car to the 1st race they are stuck with it until the next "development" window.

Using 2012 as an example, once all teams arrived with their cars in Australia, they can only bring upgrades to 2 races. With the calendar, the obvious ones would be Spain (after the Mugello test) and Belgium (after the summer break). This would cut costs but also allow teams to not be budget limited over the winter.

If a team makes an error in development that means they would be in trouble for half the season. which is unfair, and a poor show especially if a team turns up that is light years ahead of everyone else.
If you look at this year, Mclaren would of won the 1st half of the year and then Redbull the second, would be a boring show look how the last 4 races have turned out!

Taking this year as an example, McLaren would/should have dominated the 1st 4 races although Mercedes were quick too. Then Red Bull and Ferrari would catch up after Mugello and all 4 teams would be pretty close on pace (which is what happened). This close fight would be held until Spa when Ferrari and Red Bull would improve and have a close title fight, which it was until Singapore/Japan when RB started to dominate.

The only way i'd be happy with a budget cap is if the technical/aero regulations were relaxed, allowing teams more freedom to design the car but with less money so some teams would develop in different areas of the car to others.

A budget cap AND tight technical regulations and you might aswell just have 1 car with different liveries like they had in A1GP which was so successful a few years ago

[Jabberwocky]

I have said for years that the only engine regs needed is "100kg of unleaded fuel for the race" unrestricted KERS, but it starts off the race with no charge.

[scotty]

I guess i should add my opinion, seeing as i started the thread.

I think this absolutely must happen, but in the right way. A few years ago some teams were spending a rumoured $400m, to send two cars racing at 18 or so tracks in a year. That is utterly ridiculous. Then you had Ferrari apparently spending $200m a year on engine R&D, which was equally ridiculous. In my view there is literally no feasible argument as to why spending that much on two cars to race for a year is warranted or reasonable.

So my idea is to have specific areas very capped, with others much more free. Aero, for example, is far too emphasised still, and provides no ultimate benefits to anyone. This can easily be restricted way down and the racing wouldn't suffer - very arguably the opposite, it would actually improve things massively if aero influence became limited. The EBD, which teams are still trying to exploit and probably spending vast amounts on, is the perfect example of what is wrong with current F1 spending. At the other end of the spectrum you have energy recovery systems, which are very, very important as new vehicle technology goes. So much more freedom could be given in this area. When you consider who is developing these systems, they are the teams with the biggest budgets anyway and would be more willing to spend in this area if the conditions were right.

But any budgeting idea won't work if the technical regulations aren't right, and as it stands, they are not appropriate for true cost reduction. Materials, for example, are unnecessarily exotic in some areas. The most important technologies such as ERS and engines are far too restrained, even under the 2014 rules.

That idea isn't perfect but there are so many factors to try and consider, it is hard to grasp every aspect without hours of research (and i don't have the time to do that!!). And i could easily go into masses more detail on my idea above, but no one wants to read a monster essay on an internet forum post. But i believe that would help reduce the spending chasm in the right areas to bring the grids a little closer together in some areas, such as aero.