$200 million budget cap agreed?

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Moxie
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Joined: 06 Oct 2013, 20:58

Re: $200 million budget cap agreed?

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I'm won't say that enforcing such regulations is impossible. I will say that it will take a financial regulatory organization larger than that of some nations. Is FOM really interested in enforcing these rules? Will we see the emergence of rule, deferments or special waivers for preferred teams, notably Ferrari? Enforcement of these rules will be entirely behind the scenes, and under the table. Frankly, the whole thing smells fishy.

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FoxHound
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Joined: 23 Aug 2012, 16:50

Re: $200 million budget cap agreed?

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@ richard

Third parties are a huge problem. Suppliers can sell to the team at below cost price.
What would happen if for example, IP was passed on to the third party via a "free source" which then only incurred production costs?

Someone mentioned smart supplying mercedes gp. This will never work as the 2 are diametrically opposed in terms of manufacture and capabilities for their target raison d'etre.

However in house ops such as red bull technologies primarily exist to feed the team.
Mercedes AMG arm in affalterbach could potentially have the resource to help the gp team, but at great expense and also open to prying eyes. Ferrari in this bracket too.

Mclaren will next year be able to tap into Honda's resources.

Basically the problem boils down to interpretation once again.
200million apears a fair cap, but if these suppliers are under pressure to find and fire silver bullets, I defy anyone to find the smoking gun.
"Reasonable value" for items purchased or developed is a primitive means of policing this.
Even slicing 10/20% off the headline values will see the actual value at closer to 240 million.
Still "reasonable" but not "right".
JET set

Richard
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Joined: 15 Apr 2009, 14:41
Location: UK

$200 million budget cap agreed?

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Looking for the "right" number will be impossible. Starbucks and Amazon demonstrate the smoke and mirrors that'll come into play.

That's why it's only realistic to focus on the physical things rather than ephemeral accounts.

I really couldn't care if Merc spend squillions on a wind tunnel via a network of secret subsidiaries in the Virgin Islands because they'd only be allowed to use it for a set number of hours, more importantly they'd be obliged to give access to other teams at the agreed book value.

Put it another way, the goal should be to support mid level teams so they can be competitive with a budget of $200m.

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FoxHound
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Joined: 23 Aug 2012, 16:50

Re: $200 million budget cap agreed?

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How can you focus on the physical?

The physical is but a memory stick away from the virtual.
I'm not trying to be obtuse here, but it stands to reason.
If red bull are saving 50 million a year due to the cap, but lose their edge, what is stopping them from setting up "red bull aerospace" which is primarily for "aerospace" but coincidentally can help its team crunch numbers and cut development time?

Nothing can stop the flow of that information and ideas.
It can easily be replicated in the confines of a teams established factory.
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WhiteBlue
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Re: $200 million budget cap agreed?

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The bulk of the research cost is aerodynamic. You can prop the budget cap up by homologation. If you are limited by your number of aero parts you gain not much benefit from cheating with outsourced research.
Formula One's fundamental ethos is about success coming to those with the most ingenious engineering and best .............................. organization, not to those with the biggest budget. (Dave Richards)

Richard
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Re: $200 million budget cap agreed?

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Indeed, it's a lot easier to count 6 different front wing configurations in one season than it is to police a financial cap.

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turbof1
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Re: $200 million budget cap agreed?

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I was thinking along the same lines, but homologation to that extent is undesirable: in order to get the budget cap to work properly, you'd need to homologate almost everything about the car, else if something is left open teams will just spend the whole budget cap on that and after that fund it through non-transparent ways.

But if you homologate everything, then either everybody races with the same cars, so a spec series, or everybody develops a car for the coming season and ends the season with the exact same car. I think neither option is desirable and would instantly kill the sport.

I still keep with my own opinion: the rules are way too tight. Smaller teams can't compete because the rule book kills innovation which would allow the smaller teams to combat the big budgets with ingenious ideas. Open up the aero rules, find other ways to slow down the cars and let them have it.
#AeroFrodo

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FoxHound
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Joined: 23 Aug 2012, 16:50

Re: $200 million budget cap agreed?

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Homologate F1?

That would be the death knell of the sport. And if you are limited in the amount of front wing variations you can race, how will this benefit the midfield and backmarkers?

All that will happen is the aero development will be Comcentrated into various type of tracks. And guess who wins that war convincingly? Top teams.
The rest will then be lumbered under the rules with no lee way for further development.
In most seasons the midfield actually close the gap to the front even if only by a small amount in some cases.

If you open the rules, teams will be less likely to be chasing expensive white elephants that get binned year end.
Mechanical grip needs to be improved to a rate that makes aero less decisive imo.
No one shoulders the cost for faster tyres other than Pirelli.

The rest should then fall into place as the tyres will be high performance in relation to engine and aero. The grid will get closer overnight.
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Richard
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Joined: 15 Apr 2009, 14:41
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$200 million budget cap agreed?

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The motive for budget cap proposals is that small teams say it's not fair that RB develop and test umpteen front wings while midfield teams can only afford to produce 6 variants during one season.

One route to address that is to create financial rules that would mean a team could only afford to develop 6 variants. As we all agree that would be impossible to enforce. The alternative is to say teams can only use 6 variants during a season. Both options give the same outcome, but one of them only requires counting to 6.

The outcome is that teams would agree the outputs and activities that would typically cost $200m and that would form the definition of allowable team scale and scope.

Yes rich teams would throw more cash into developing those 6 wings, but the performance differential would be closer than the current scenario when they develop 20 wings in a season.


Please note this is not homolgation, the teams could do whatever they wanted within the definition of scale and scope. Yes I agree that rules should be loosened.

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FoxHound
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Joined: 23 Aug 2012, 16:50

Re: $200 million budget cap agreed?

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If a team can only produce 6 wings, and another 20 what difference will it make?
Apart from a couple of seasons out of the last 20 the midfield have lessened the gap to front runners by the season end.

The scenario I see is that the lesser teams will be locked into their performance, flat lining throughout. Bigger teams will be able to move faster and more effectively and the gap, instead of shrinking as has historically happened, widens.

My view here is if there is a need to have 20 iterations of a front wing in a season, then its obvious the front wing plays too big a role in the overall F1 picture.
Limit its ability to create DF by making them even smaller and having a maximum surface area.

There will be little need for 20 versions of a wing in this instance and instead of limiting versions of a wing, you allow development on a smaller scale.

Seems a decent way forward to me.
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Pup
Pup
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Joined: 08 May 2008, 17:45

Re: $200 million budget cap agreed?

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I doubt if the development process would change. You'd just index the process at 6 points instead of 12, or however many. Many small updates would become fewer larger ones, but the work behind them would remain the same.

In fact, getting each iteration right would become more important, since the teams would be stuck with each piece for three or more races. Depending on the relative importance of those pieces, you may well see even more resources diverted that direction.

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raymondu999
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Joined: 04 Feb 2010, 07:31

Re: $200 million budget cap agreed?

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FoxHound wrote:Homologate F1?
...
The rest should then fall into place as the tyres will be high performance in relation to engine and aero. The grid will get closer overnight.
I find your post somewhat self-contradicting. Are the tyres not practically a homologated component?
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FoxHound
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Joined: 23 Aug 2012, 16:50

Re: $200 million budget cap agreed?

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Can you please point to me the self contradiction?
I'm confused as to how you think tyres are within the developmental budgetry remit of teams.
To build and develop a race tyre costs Pirelli.
How a team uses it's tyre is neither here no there in budgetry terms as it's a problem that will always be present.

The FIA dealt with this already by mandating a single supplier. Lets not be over scrupulous.
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Pingguest
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Joined: 28 Dec 2008, 16:31

Re: $200 million budget cap agreed?

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When Max Mosley proposed a budget cap, he said such a regulation could be enforced according to (forensic) accountant. However, so far I have not seen any accountant stepping forward to state that a budget cap is indeed enforceable. I found that rather alarming.

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turbof1
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Re: $200 million budget cap agreed?

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Accountancy has since then also massively developed. At present, we speak of Financial Technology; entreprises, especially big ones, construct their operations in such a way they often have to pay a tiny fraction of taxes they normally need to pay. And they ever get better and better at it. Every single university on this planet runs a wide accountancy education program dedicated to this.

Most companies behind F1 are very much capable of using these constructs to hide away budgets. The smallest teams will probably not have access to this. So they will be infact more disadvantaged in the long run.

Bringing in a budget cap will just result into another arms race, but this time off the track, hidden from everybody.

The only way, and really the only way, to level out the teams financially is to kill off the sport. And the only other option to level out the teams competitively is to allow innovation, which has been killed off long a long time ago.
#AeroFrodo