How to cut costs without a cost cap?

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bhall II
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Joined: 19 Jun 2014, 20:15

Re: How to cut costs without a cost cap?

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The 107% time for the Abu Dhabi Grand Prix was 1:48.291. Caterham's cars clocked in at 1:44.540 and 1:45.095, each over three seconds faster than necessary to qualify. Without a realistic chance to genuinely compete, the money spent on those three-plus seconds was money wasted. (I know that sounds harsh, but it's the economic reality of the situation.)

I think that means we can't really put a figure on the cost of entry, or suggest ways to lower it, because we've not yet really seen the cost floor since teams enter F1 to compete, not to just be there. Otherwise, I don't think Caterham would have been so fast, as counterintuitive as that may seem, and I certainly don't think Marussia would've have racked up $204 million worth of debt throughout its short existence.

So, can anyone think of a way to regulate motivation? (Ban the grid girls?)

Also, for those who've suggested non-PU-related technical restrictions as a way to bridge the gap between the top teams and the minnows, realize that non-PU-related development is the only avenue available to non-works teams that's independent of manufacturer support. To restrict what those teams can do on their own is tantamount to a regressive tax.

In the end, such restrictions are likely to increase the performance potential of the works teams relative to the backmarkers, because those teams have PU-related ways to increase performance that the backmarkers can never access on their own. But, you can be sure that all customer teams will nonetheless face higher costs in the form of higher PU bills as the manufacturers flex their financial muscles in order to master those new rules.

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Hail22
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Joined: 08 Feb 2012, 07:22

Re: cutting costs

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acosmichippo wrote:
bhall II wrote:Absent complete standardization of the entire car, I don't think anything can keep overall costs down, because top teams will spend whatever it takes, wherever it's possible, in order to find a competitive edge.

Case in point: F1 cars and practices are more restricted now than they've ever been in the sport's history, yet top teams still spend $300-500 million a year.

Like it or not, that's simply the nature of the beast.
I agree. You're never going to be able to stop a team from spending however much they want to spend. BUT lowering the minimum cost would at least make it easier on new teams to enter the sport and keep struggling teams in. Competing with the big dogs is a completely different story.

One would like to hope that Formula 1 makes changes that will make the sport sustainable into the future.
If someone said to me that you can have three wishes, my first would have been to get into racing, my second to be in Formula 1, my third to drive for Ferrari.

Gilles Villeneuve

ESPImperium
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Joined: 06 Apr 2008, 00:08
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Re: How to cut costs without a cost cap?

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To send one person to every GP and test, its will cost the team £22,500 each season, most teams are sending 60 people to each event, that transport bill is about £1.5m a year as teams often have about 85 to 90 guys who are in rotation with each other, and also send a few reserves at the hotel incase someone takes unwell. Transport bills for teams are about £15m a year once you take in fuel, insurance and the leasing costs of the vans and trailers. I am also including the freight costs for the equipment.

A small team of 200 staff will often have a staffing bill of about £10m a year once you take into consideration all the positions in the team and all the consultancy work. Im not including bonuses, which can run to 60% more for regular staff, for a world title winning team of 1100, staffing will run to about £40m with £25m in bonuses. And that figure dons include driver salaries and bonus, a figure that can run to a eye watering figure of £51m for a WDC & WCC winning team. Small teams, with drivers salaries and bonuses will be more like £15m.

For a small team, you are already at £30m, as much as a third of the budget. For a mid pack team its a quarter of the budget gone. Chassis R&D for the next year is about £8m for those smaller teams, larger teams will often spend double that easily. Then the costly updates come in, some smaller teams will run with a R&D budget of £8m, larger teams will run with a R&D development plan of £150m as they have more tools to develop wings/floors that 'flex' and more tighter bodywork... The list goes on for that extra tenth of a second every race, the teams who run their own gearbox can also factor in a £12m plus R&D budget for those. Then you, for a engine supplier/manufacturer will have a budget of £150m for R&D for power trains. Engine supply for small teams will run from £16m to £21m a season depending on the maker and support that the team wants/needs. Gearbox supply will be about £6m to £8m easily, support dependant as well.

Teams will often run from a budget of £75m for a Marussia sized team and a top end team will often spend £500m if they are a Mercedes sized team. The gulf isn't just massive there its another planet. However the gulf in terms of time isn't that bad on track, its about 4.5 seconds, but in F1 terms its an eternity.

There are ways to cut costs, yes. One way is to reduce the amount of aero developments taken to a race, but that restricts performance and teams don't want that. One other way is restrict staff movements, and thats against EU law as well. Another way is financial, but for 3 teams at least that is difficult due to their 'parent company' status in the markets.

I am not sure there is a solution, but there could be 3 ways to help ease the pain for the smaller teams. FIA Success taxes from drivers super licences and team entry fees, that i think can bring in €100m a year for the FIA for their 'campaigns' and such is the first. Second is technical rules loosened off enough, but the amount of updates they can do per season limited to 4 wing specs per season and 3 specs of every other part that touches the wind externally on the car. But with that, id also exclude certain tools the teams use, all tools must be readily available commercially, no team specific flex rigs. CFD, Wind Tunnels, 7 post Shaker Rigs and all Non Destructive Testing are all allowed for 'safety' purposes. But wings should be tested using static rigs only and built strong enough to last the rigours straight away.

The final one would to be to limit the workforce hours per week to a maximum of 50 hours per week per employee with a clocking in/out procedure managed, controlled and monitored by the FIA. If a employee exceeds his hours, that employee looses those hours the next week. It aint a restriction of trade to my definition of the European Employment Law. Id also use this workforce allowance at race events, limiting the stupid curfew, allowing light shifts again, but limit trackside hours to 1,800 per event from Thursday to Sunday. Id allow teams to breach this marker 4 times a year. Id exclude travel time from this as theres at least 10 events that would put a employee over the limit there, travel time for Force India would be 10 minutes walking to about 32 hours the quickest way to Melbourne via air.

Other than that, theres zero i can think of to reduce costs, id rather achieve a level, or rather leveller playing field. I did hear a figure of 2.4% of what costs can be saved from evert team straight off with cost reductions. Thats just £12m for Mercedes, or £2m for a Marussia sized team. If i was to reduce costs now, id make it one two day test after one race then a single day at 4 other races and then a final 3 day test at Abu Dhabi. Id like to see 21 days testing a year, 12 pre season with the Reserve Driver getting 2 of those. 6 days in season conducted by a driver that has not taken part in a race that year and a final 3 day test where a minimum of two young drivers take two days and a final day for a new driver to the team to take the seat as all contracts would be by regulation finish at 12 midnight GMT after the last race that year releasing drivers to a new team early. Drivers contracts and announcements would be known to all by the Thursday of the last event of the year for main race drivers by regulation. But thats just my view on getting young drivers into the sport.

Wayne DR
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Joined: 24 Feb 2014, 01:07

Re: How to cut costs without a cost cap?

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I truly believe, that we can have better racing at a much cheaper cost.

However, as in all walks of life there are the "Haves" and the "Have Nots". The big teams will ALWAYS spend as much money as they have available to win the championship, and this is good for technological development and the spectacle itself.
- Many decades on EVERYONE who has even a passing knowledge of F!, knows what the "Fan Car" is.
- My favourite quote is, "As a Team Principal, what do you do if your Technical Director comes to you and says' "I can't possibly spend my whole R&D budget"? Fine a new Technical Director!!).

The big teams will never agree to a budget cap, and the smaller teams will never have the budget to compete! As discussed above, for a better spectacle, we want closer lap times and more overtaking, for this we need to close the gap between the "Haves" and the "Have Nots", but no one has the $500 million to give to Marrusia or Caterham, and where will they fine the extra 400-500 R&D engineers...

My proposed solution is simple:

1) Bring back "Customer Cars"
By eliminating design houses [i.e. reducing BOTH bums on seats AND infrastructure (bricks and mortar)], we can significantly reduce the Minnow team costs. How much does it cost to build, run and maintain a wind tunnel?

For example: Redbull design and manufacture their cars and the Torro Rosso cars.
Yes, a Customer Team will always be one spec behind, but the gap will not be a huge as it is now!

2) Allow previous years cars to run as a "B Spec" for privateers
In the 90's there were up to 30 cars vying for the 26 spots on the grid. Allowing the young up and comers (with cash) to run their own cars (with some team support obviously) would possibly even keep pay drivers out of larger teams...

There is enormous amounts of engineering effort and cash spent on car development over a season, to be simply put in a shed at the end of each season. What a HUGE waste!

3) Reduce downforce at the extremities of the car, and bring it back to the centre
This will reduce the car sensitivity, and increase overtaking.

4) Bring back in season testing
ALL teams currently spend enormous amounts of money trying to simulate track testing, so it would probably be cheaper to JUST DO IT!. (Not open slather, but at least 4-5 extra days a year)


For this to happen, the FIA need to "grow a pair", stand up to the Teams and Bernie and make it a reality.

marcush.
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Joined: 09 Mar 2004, 16:55

Re: How to cut costs without a cost cap?

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I don´t think testing will be of any use to cut cost..How would this be possible? it´s not like teams are doing claculations because they are not allowed to run trial and error experiments anymore.

As for the customer cars ,and previous years cars -i agree .It´s a nonsense to force everyone to build his own kit if he does not want to.I would even go further and allow to attend a selected count of races .It´s a huge task to start up and gear up for a global campaign from the word go.this must be one of the main reasons for new teams struggling to make an impact-you just don´t have any time to regroup and make steps forwards with the worldwide scheduling the whole year.

Manufacturers have to supply PUs free of cost to at least 2 teams and this goes completely with cooling package and complete software package +calibration.I think it was more than obvious this year -there were at least two if not three Merc powerunit specifications on track and i would stop that.

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Hail22
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Joined: 08 Feb 2012, 07:22

Re: How to cut costs without a cost cap?

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Could something similar to what the V8 Supercars are proposing / imposing for 2017 work for Formula 1 in order to maintain / increase its fan base? But in the same token manage / cap the minimum cost for smaller teams that cannot afford Hybrid v6 turbo units...perhaps they could opt for a penalised (power and rev limit reduced) V10 unit like we had in 2006/07 with STR and the like?

Source: http://www.v8supercars.com.au/news/cham ... nd-beyond/
The 2017 blueprint means the current V8 Supercars could be joined by turbo-charged six or four cylinder engines from 2017.
I see no reason why F1 cannot have Aero cost parity by only allowing a maximum of four different FW and RW designs / configurations to suit circuits like Monza, Monaco, Spa etc?
If someone said to me that you can have three wishes, my first would have been to get into racing, my second to be in Formula 1, my third to drive for Ferrari.

Gilles Villeneuve

lebesset
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Joined: 06 Aug 2008, 14:00

Re: How to cut costs without a cost cap?

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isn't the biggest handicap the smaller teams have is that that they lack the resouces to develop the cars in season ?
what mercedes spent during this season on aerodynamics would probably have half funded a back marker team for the year !

so how about only one change per season ?
teams develop the aero for the first half of the season , then have 6 months to develop for the second half , then have 6 months to develop for the first half of the next season , and so on , and so forth

think of the implications... a small team comes up with a demon tweak and can't be copied for 6 months
look what happened to brawn ....made the DD work and won 85% of the first 7 races ; big teams caught up and they won 20% of the last 10 ...I accept that button played the intelligent game , ignored the ...win the WDC in style brigade ... and racked up the points to be champion without trying for another win in a car which wasn't any more the front runner

but the principle pertains , a small aero team can do a good job in 6 months , they certainly can't keep up with an aero improvement every race like RBR
in any case , as far as I personally am concerned it is all about keeping the small teams in business , narrowing the gap to compress the field , and improving the racing
isn't that what all the real fans want ? or is it just me !
to the optimist a glass is half full ; to the pessimist a glass is half empty ; to the F1 engineer the glass is twice as big as it needs to be

CBeck113
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Joined: 17 Feb 2013, 19:43

Re: How to cut costs without a cost cap?

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No, they want close racing, and this would make things even worst than the engine freeze this year & next year too.
“Strange women lying in ponds distributing swords is no basis for a system of government. Supreme executive power derives from a mandate from the masses, not from some farcical aquatic ceremony!” Monty Python and the Holy Grail

Wayne DR
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Joined: 24 Feb 2014, 01:07

Re: How to cut costs without a cost cap?

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marcush. wrote:I don´t think testing will be of any use to cut cost..How would this be possible? it´s not like teams are doing claculations because they are not allowed to run trial and error experiments anymore.

As for the customer cars ,and previous years cars -i agree .It´s a nonsense to force everyone to build his own kit if he does not want to.I would even go further and allow to attend a selected count of races .It´s a huge task to start up and gear up for a global campaign from the word go.this must be one of the main reasons for new teams struggling to make an impact-you just don´t have any time to regroup and make steps forwards with the worldwide scheduling the whole year.

Manufacturers have to supply PUs free of cost to at least 2 teams and this goes completely with cooling package and complete software package +calibration.I think it was more than obvious this year -there were at least two if not three Merc powerunit specifications on track and i would stop that.
The teams already have a "film day", and my thoughts were to allow the teams to have individual unrestricted test days at their local tracks. The Red Bulls first test in 2014 (well all Renault engine teams if I am honest) and the McLaren Honda first test at Abu Dhabi were absolute debacles. The cost in engineering to rectify these issues without being able to turn a wheel are enormous, and can cause over conservatism, and therefore a slower car.

Fulcrum
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Joined: 25 Aug 2014, 18:05

Re: How to cut costs without a cost cap?

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I expect the initial outlays might render this idea dead in the water, but surely some degree of cost saving could be generated by allowing 100% scale models in the wind tunnels?

This could/would save on calibration and correlation errors, which I would call loss due to inefficiency.

I'm not sure of the differences between a wind tunnel model and the actual car, but if one allowed 100% scale, then you could simply use the car itself? You don't have to double manufacture all the time (100% and 50% etc..), so this would remove some overheads?

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Tim.Wright
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Joined: 13 Feb 2009, 06:29

Re: How to cut costs without a cost cap?

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With the scale models the chassis is not connected to the wheels because its hung from the roof from the structure that measures the aero loads. You can't really do that on a real car.
Not the engineer at Force India

JRalph
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Joined: 15 Feb 2014, 21:40

Re: How to cut costs without a cost cap?

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Most of the proposals to reduce cost attempt to do so by regulating what is perceived as the most expensive components of the sport. The problem with that is, as others have stated on these forums, as areas become more tightly regulated teams will divert their resources to other areas, which not only doesn't reduces cost but makes those expenses more ineffective. A perfect example of this is the rise of the state of the art simulators in lieu of in season testing.

The only way to reduce costs is by providing incentives for teams to spend less. As I've suggested in different forum I think the best way to do this would be to create a soft cap on the number of hours that a team can test on the track, run in the wind tunnel, spend on their simulators or any other area of objective measure (i.e. number of different front wings in a season). Teams would then be allowed to test on track, in the tunnel or virtually to their heart's content but for every hour above the cap that they test they would have to pay a set price into a pool. At the end of the year that pool of money would then be divided among all the teams depending on their final standings.

So for example lets say there is a cap of 400 hours and any hour above that cost $50,000/hr. Then if a team like Red Bull had spent 600 hours testing during the year, they would have to pay $10,000,000 into this pool.

This would help in two ways: 1) it provides an incentive for a team to stay under the cap thus reducing costs and 2) if a team deems it necessary to go above the cap the teams that can't afford to run such a testing regiment will still benefit monetarily and will hopefully create more parity in the sport.

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FW17
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Joined: 06 Jan 2010, 10:56

Re: How to cut costs without a cost cap?

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WilliamsF1 wrote:In 2003 Minardi tested a car with Avon f3000 tyres. The car was by itself a second slower than the competition but still finished the test 2.5 seconds slower than others.


If current F1 were to use Avon tyres which are available to everyone they would still be faster than what Pirelli supplies at $2 million a season.
Get rid of Pirelli's and let teams buy Avon

Pirelli costs teams 2 million; Avon would cost just 500K for off the shelf product which would be better than the current Pirellis

Moose
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Joined: 03 Oct 2014, 19:41

Re: How to cut costs without a cost cap?

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WilliamsF1 wrote:
WilliamsF1 wrote:In 2003 Minardi tested a car with Avon f3000 tyres. The car was by itself a second slower than the competition but still finished the test 2.5 seconds slower than others.


If current F1 were to use Avon tyres which are available to everyone they would still be faster than what Pirelli supplies at $2 million a season.
Get rid of Pirelli's and let teams buy Avon

Pirelli costs teams 2 million; Avon would cost just 500K for off the shelf product which would be better than the current Pirellis
Had it occurred to you that the goal with Pirelli was not the fastest possible tire, but one that degrades in the right way to provide some fighting?

Edax
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Joined: 08 Apr 2014, 22:47

Re: How to cut costs without a cost cap?

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Just a wild idea.

What if a rule was enstated that at some point at the end of the season all teams were forced to disclose their IP to each other? That would be in a form of a technical drawings package, windtunnel data, CFD data, performance data etc.

This would not remove the incentive for the top tier teams to innovate, since it still would give a whole season advantage. For the lower ranked teams it would cut down on development costs and increase their competitiveness. At worst they could copy last year's winning car.

Even for the top teams it would not be all bad, since they can use the data of their competitors to speed up their own development.

What do you think?

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