Formula 1
Formula 1
29 Aug
-
01 Sep
Event finished
05 Sep
-
08 Sep
Event finished
19 Sep
-
22 Sep
Event finished
26 Sep
-
29 Sep
Event finished
10 Oct
-
13 Oct
Event finished
Motorsport Blog
Topic

Motorsport Blog

Why a Formula 1 cost cap might work this time around

shares
comments
Why a Formula 1 cost cap might work this time around
Feb 9, 2014, 2:21 PM

The priority for Formula 1 this year is to get costs under control and there are signs that the first steps towards achieving that may be within re...

The priority for Formula 1 this year is to get costs under control and there are signs that the first steps towards achieving that may be within reach.

It was announced by the FIA at Christmas time that a budget cap would be brought in for 2015 and behind the scenes in recent weeks there have been extensive discussions which have proved more fruitful than in the past. The main stakeholders are all engaged: the teams, the FIA and the commercial rights holder.

F1 almost tore itself apart in 2009 when then FIA president Max Mosley tried for force a budget cap of €60 million on the teams and Ferrari led a rebellion which led to the teams announcing in July 2009 that they would leave F1 to start their own series.

This time round things are different; the bar is being set much higher, the object is to find consensus among the teams and there is a stronger desire to control costs. Although the teams share around $700 million a year between them in TV and prize money, it is not evenly distributed with the top teams taking the lions's share and everyone far too dependent on sponsorship, which is elusive. So we have several teams close to the edge financially, unless they have a rich shareholder willing to write cheques to make up the shortfall.

The problem with Mosley's approach to budget capping was that it was too confrontational and that it set the bar too low at the outset for the top teams. There was no way that Ferrari, Red Bull and the well funded teams would accept cutting their budgets by three quarters in one hit. In more recent times, Red Bull has become the team out on a limb, not wanting to give up its superiority which has been built on huge resources, which in turn buys the best people.

The way to achieve a budget cap is to start out by setting the ceiling at an acceptable level to the top teams and then set a gradual glide-path downward over a number of years to a level that works for the sport.

Although this doesn't help the medium sized teams in the short term, what it will do is start the process, embed the principle of budget caps in the FIA Sporting Regulations and then gradually move the cap down to the right level whereby the teams can become self sufficient and can even turn a profit if they are well run.

It will also mean that the medium sized and smaller teams benefit more from assistance and collaborations from the top teams. We are seeing that already with the reduction in wind tunnel time to 30 hours per week. This allows the top teams to rent out tunnel time to the smaller teams. Also, for example, a team like Force India might get an engine, gearbox and whole back end, including suspension from Mercedes, or Sauber might do a similar deal with Ferrari. This would reduce costs for the smaller teams and also alleviate the pressure for customer cars, which some powerful figures would like, but which a strong majority is against.

Bernie Ecclestone has said today that he will offer €1 million to any whistleblower who informs the governing body if a team is cheating the budget cap. This is an inspired idea, as it's a significant enough amount of money for someone employed at a team in the finance department or in the factory to consider risking their job for.

"The plan under consideration is to give €1 million to any whistleblower whose knowledge is proved to be accurate,” he told the Express. “We will then say to the team that the following year you will lose three of the maximum points you have scored. Then let's see if they want to cheat.

“We have approved the budget cap. It is going to happen. Everyone agreed to $200 million. What hasn't been agreed is what is in the $200 million.

“Unless we include everything, I am sure people will find ways around it. It's going to be difficult.”

There are suggestions that the starting figure might be £200 million rather than dollars, but if they can get this across the line - and it seems from talking to the teams as though there may be a chance of consensus this time - then it will be a major breakthrough and the start of an important process.
Next article
Rush will send you to Silverstone

Previous article

Rush will send you to Silverstone

Next article

Quesnel favourite for Lotus boss role - report

Quesnel favourite for Lotus boss role - report
Load comments

About this article

Series Formula 1