Teams react badly to Mosley's £30m cost cap

I nearly choked on my Rich Tea biscuit when the news came through about the £30 million budget cap voted through today by the FIA world motor sport council.

The teams did likewise. They did not expect this after presenting such a unanimous front the other week in Geneva. Their confidence that their unified voice would be taken into account by the FIA, when deciding rules and policy, was misplaced. Instead Max Mosley has gone much further than the teams wanted to in stripping costs out of the sport. FOTA has just put a statement out which makes clear how annoyed they are with this move,

“With regard to the decisions taken today by the FIA World Council, FOTA would like to express its disappointment and concern at the fact that these have been taken in a unilateral manner, “ said FOTA president Luca di Montezemolo. “The framework of the regulations as defined by the FIA, to be applicable as from 2010, runs the risk of turning on its head the very essence of Formula 1 and the principles that make it one of the most popular and appealing sports.

“Given the timeframe and the way in which these modifications were decided upon, we feel it is necessary to study closely the new situation and to do everything, especially in these difficult times, to maintain a stable framework for the regulations without continuous upheaval, that can be perplexing and confusing for car manufacturers, teams, the public and sponsors.”

This has the potential to open up a dangerous rift between the Formula 1 teams and the FIA just as the new season starts. It is likely that Mosley has done this to get teams to accept the general idea that there will be a budget cap system in F1, much as he did with standard Electronic Control Units, engine freezes and so on.

He has to lead them kicking and screaming to things which then get accepted. A £30 million budget cap will never be accepted, but once the teams have gone over the hurdle of the cap, Mosley probably reckons they will meet somewhere in the middle on the numbers, so around £50-60 million, which let's face it, should be enough to run an F1 team on. But the road ahead will be rocky and this is a real test of the mettle of FOTA as an organisation.

In Geneva I asked Montezemolo whether he thought Max would feel the FOTA proposals went far enough and he said that they would put them to him and have a dialogue. It's fairly clear that there hasn't been that much dialogue this time around, not like in December when the FOTA engine package was agreed by the FIA in the days following Honda's shock withdrawal.

What's behind this? Max wants to keep the smaller independent teams in the sport and encourage new ones to come in. He hates the idea that there are two empty franchises. But the budget cap puts manufacturer-backed teams like Ferrari, McLaren Mercedes and BMW in a difficult position. They are to be given the option of spending as much as they like, but the budget capped teams will get more technical freedom, more engine power and better aerodynamics, to make them competitive. The boards of the big car firms will never accept this and you'd have a two class F1, which never worked in the turbo/non-turbo days.

The eye catching Mosley quote is the one where he dismisses suggestions that the budget cap would be impossible to police,

“We went into all this very carefully some time ago,” he said. “We involved forensic accountants from Deloitte and Touche as well as financial experts from the current teams. The vast majority of payments are traceable and any benefits in kind can be valued. There were a number of meetings. It became clear we could do it. The problem was getting the current teams to agree a figure. Also, the majority wanted a lot of exclusions such as land and buildings, the team principal's salary and the drivers. We would also need the right to carry out very intrusive audits and impose severe penalties for overspend. However these difficulties no longer arise because each team will now be able to choose whether or not to run under the cost cap.”

The other little gem is this one,

"We will make sure these advantages do no more than balance the disadvantages the cost-capped teams will have because of their very restricted budgets. As said, we will balance the median performances by adjusting the cost-capped cars should this prove necessary. The other cars will have stable technical regulations in return for which we understand FOTA intend to provide guarantees of continuing participation until 2012, underwritten by the major car manufacturers."

Mosley has leapt on the guarantee given in Geneva by the manufacturers to stay in until 2012 and thereby cut their wriggle room on this. On top of that he's saying that the FIA may adjust the equivalence between capped and non-capped teams' performance, possibly even from race to race, which he knows is not F1, but it's a strong position from which they will eventually have to agree something.

What makes this a particularly big play is the fact that these things have been voted through, so they aren't proposals, they are now rules which will need to be 'unmade' once the negotiation has taken place.