How to cut costs without a cost cap?

[diffuser]

That and those in control don't want to change things.

They like the inequality

[GitanesBlondes]

Mind that I said "the operation-side". Transport is just an example from it; you'll obviously need a lot more measures. The cost bigger then transport to, let's say, China is actually operating that far from your base. For instance you need more staff, more equipment, higher control costs, staff overhead, accomodation,... .

Going to a race weekend involves much more then just transportation. Perhaps I enlarged it too much with my example. However, the point was that just running, running and not developing anything, a F1 team in the current format costs around 40 million. For a team like Marussia mind you; teams like Ferrari and Mercedes will pay that multiple times. Since the minimum of operating is already too much for bottom teams, I'd say you need to tackle operating costs first and/or increase income so that they can run the operational side without deficits. Just running down aero development will not help since marussia and caterham only invested very limited in that.

I'd say make first of sure teams can operate viable in F1 before trying to make them more competitive. Starting from such a business plan will already go a long way.

IndyCar is starting to expand outside of North America for 2015. They have a long-term plan to start seeking out venues in other areas of the world, but a lot of it also depends on circuit promoters and the like. So costs will increase when they begin to expand further...or rather if they do expand further.

Where IndyCar costs are going up is with the introduction of the Chevrolet and Honda aero packages in 2015.

Engines are still far less costly compared to F1. The 2014 engine budgets were the real significant change we had, and resulted in two teams folding.

[turbof1]

Well, engine rules and new aero rules. But yes, mostly engine rules. It should be noted that these teams already were very much strugling, and this was the extra drop they couldn't handle.

I don't think you can just simply compare Indycar engines to Formula 1 engines. They are different markets too, with Indycar being more aimed towards America and F1 more aimed towards Europe and Asia. The ones currently inside F1 think the cost is worth the exposure to the segment of the market they are aiming for.

But I'm getting too much into details, and bottomline is that I agree these engines should be cheaper. Unfortunaly the only ones who could force cheaper contracts have forfeited 2/3 of their rights on changing the rules.

[Moose]

I think it's become fairly clear over the course of this thread that getting the costs for competing with the top teams down is not going to happen, so here's an interesting alternative idea.

Don't give out prize money. Instead, split the TV money equally between the teams. That gives the teams a minimum guaranteed income, and stops skewing <em>some</em> of the income heavily in favour of the teams that already have lots of money to spend.

This wouldn't have a major impact on the top teams' budgets (e.g. Merc would go from $141m income from prize money to $107.9m), but it would have a huge impact on the small teams. $100m a year is easily enough to sustain a mid field team (it's not dissimilar to FI or Williams' budgets), and would allow everyone to actually compete.

[Fulcrum]

Most of the means of limiting spend have been concerned with physical resource restriction. Perhaps a more feasible approach would involve human capital restriction instead? Someone proposed limiting the size of the pit crew, specifically for pit-stops. Why not apply that principle throughout the team structure? A team cannot employ more than X people; no more than Y aerodynamicists; Z data analysts and so on.

Human capital spend is already a significant component of total costs, and would not necessarily be lowered by limiting the number of employees (the better ones would be paid more), though logistical costs would decrease. However, it would force the existing talent pool to be spread more evenly, preventing complete monopolization of talent by the top few teams. This would hopefully improve competitiveness, improve the show, attract advertisers, etc...

[piast9]

In my opinion this discussion is pointless. Yoy may restrict the areas where the money may be spent. But big teams already have the money and they will spend it wherever they want, introducing wheel guns out of unobtainium or feeding the whole crew with truffles, if only it will give the edge over other teams. I'd prefer to see these money spent on the actual car. The only way is the budget cap which on the other hand has the disadvantage that it is very difficult to police.

[emaren]

Most of the means of limiting spend have been concerned with physical resource restriction. Perhaps a more feasible approach would involve human capital restriction instead? Someone proposed limiting the size of the pit crew, specifically for pit-stops. Why not apply that principle throughout the team structure? A team cannot employ more than X people; no more than Y aerodynamicists; Z data analysts and so on.

Simply because the teams that have high budgets will buy the absolute best of the best. If (say) the pit crew was reduced to six people, then the top teams would embark on diet, exercise and training regimes for those six people and get them to practise for 8 hours a day, every day. Compared to (say) Lotus that use six random people, the pitstops woutd be several seconds faster. Hence the money would be used to gain an advantage.

If they can only employ X people, you can be totally sure that the teams with the budget will employ the absolute cream of the crop of each function. They already do this, but it would be even worse if there was a restriction

Human capital spend is already a significant component of total costs, and would not necessarily be lowered by limiting the number of employees (the better ones would be paid more), though logistical costs would decrease. However, it would force the existing talent pool to be spread more evenly, preventing complete monopolization of talent by the top few teams. This would hopefully improve competitiveness, improve the show, attract advertisers, etc...

Well in any pool of human resources there is generally a bell-curve that relates to talent

The top teams are going to grab the absolute top resources, the bottom teams would be lucky to get average / below average.

The only way to cut costs is to remove the money, the only way to do that, it to make it less desirable or less possible for those writing the cheques. So you need F1 to tarnish its reputation or you need a global recession...

[Fulcrum]

Most of the means of limiting spend have been concerned with physical resource restriction. Perhaps a more feasible approach would involve human capital restriction instead? Someone proposed limiting the size of the pit crew, specifically for pit-stops. Why not apply that principle throughout the team structure? A team cannot employ more than X people; no more than Y aerodynamicists; Z data analysts and so on.

Simply because the teams that have high budgets will buy the absolute best of the best. If (say) the pit crew was reduced to six people, then the top teams would embark on diet, exercise and training regimes for those six people and get them to practise for 8 hours a day, every day. Compared to (say) Lotus that use six random people, the pitstops woutd be several seconds faster. Hence the money would be used to gain an advantage.

If they can only employ X people, you can be totally sure that the teams with the budget will employ the absolute cream of the crop of each function. They already do this, but it would be even worse if there was a restriction

Human capital spend is already a significant component of total costs, and would not necessarily be lowered by limiting the number of employees (the better ones would be paid more), though logistical costs would decrease. However, it would force the existing talent pool to be spread more evenly, preventing complete monopolization of talent by the top few teams. This would hopefully improve competitiveness, improve the show, attract advertisers, etc...

Well in any pool of human resources there is generally a bell-curve that relates to talent

The top teams are going to grab the absolute top resources, the bottom teams would be lucky to get average / below average.

The only way to cut costs is to remove the money, the only way to do that, it to make it less desirable or less possible for those writing the cheques. So you need F1 to tarnish its reputation or you need a global recession...

Your argument is basically a statement of what we have now. The top teams currently are able to grab the top talent, but you conveniently forget that they can grab as much as they like too.

By limiting the number of people that can be claimed by a team you don't prevent money from buying the best, but you absolutely prevent money from buying everything.

There is a very easy way to remove the money from F1. Ban manufacturers.

[emaren]

There is a very easy way to remove the money from F1. Ban manufacturers.

Right, so we get rid of Ferrari, McLaren and Mercedes I guess ?

That means that Red Bull will simply dominate the sport until they are bored, and/or people realise just how disgusting the drink is.

At the moment, Red Bull are spending more than several of the smaller teams combined, so in order to remove the serious money, we need to remove them too. In which case Williams dominate, but they are not a manufacturer, so we cannot throw them out too.

So, I guess we would all be happy watching Sauber and Force India slug it out with Lotus picking up the points when they can ?

It simply does not matter what areas of development you freeze, the teams will find the money to improve the rest of it.

Unless F1 becomes a true spec series, then there is no way that the money that is floating around in the sport will not be spent.

Remember when they froze the engines ? The development race was on for carbon-fibre gearboxes and seamless gear changes, and blow diffusers, then winglet with winglets attached and wheel covers and steering wheels with eleventy buttons.

Unless the money is removed from the outside, through declining advertising revenue, then the costs will always be equal to, or slightly more then the income

[bhall II]

[...]

By limiting the number of people that can be claimed by a team you don't prevent money from buying the best, but you absolutely prevent money from buying everything.

[...]

I think any moves to limit personnel will likely lead to the appearance of "independent advisers" or other staff "furnished" by parent companies and/or sponsors who work for the teams but are not officially employed by the teams. The most that can realistically be done is to limit the number of personnel at each grand prix, which has already happened and has nevertheless had little effect on staffing costs, because teams now stream telemetry back to their factories in real-time for analysis by those who are no longer allowed to travel.

Again, for any restriction short of complete standardization, there will always be a way around it.

I think we need to disabuse ourselves of the specious notion that restrictions are the answer here. The regulations have never been tighter; the restrictions have never been so numerous; and the costs have never been higher. What should that tell us?

The sport should instead be looking for ways to increase the value of expenditures.

[Xwang]

I think that if they reduce the restrictions it will be easier and less expensive to gain performance because there would be more area where to find performance and even not so detailed analyses should be enough to improve.
A lot of micro aero development have been made because there was not any other possibilities to improve.
Then if this approach (deregularization) creates cars to much fast, then maybe you can imagine to restrict the fuel flow in order to assure a given minimum time lap and/or maybe limit the total amount of downforce which can be generated (mechanically limiting the suspension maximum load or electronically cutting the engine power if the maximum downforce is reached).

[Jolle]

From what I understand, aero is pretty much cost capped, with limited time avalible in the wind tunnel and with cfd. So much that I pressume even a team like Mercedes and red bull have to choose when to develope what car (for Mercedes I guess they started very early with the W05 and Red Bull made a choice to develop the blown defuser further during that time).

The big money is in the last few HP or tenths of lap time. At the moment the engine suppliers have to deliver the same spec engine for every team, if they were allowed to develop the 2014 PU's in two directions, one for max performance (for the works teams) and a budget version for the back markers, that would save a great deal. Teams could even "buy" extra HP if they do well in funding.

Another idea is to get more technical sponsors into F1. For instance battery developers (and undo the weight limits on ES). The works teams could have million dollar 15kg power packs, while back markers could opt for 30kg packs. Also they could have a supplier like Varta, Duracell, Samsung or Exide.

The right way would not to try to cut costs for everybody but how to run two cars within the 107% the most efficiently.

[Richard]

There are two issues:

Ensure the cost to compete for midfield teams allows them to be financially sustainable - This is worth pursuing.

Limiting the car design in order to limit the spending of the top teams - Forget it. The top teams will spend every penny they have even if that is for obscenely diminishing returns.

[mrluke]

Agree with Richard's post above, the aim should be reducing the expenditure required to be competitive.

How about mandating all teams to release full technical details of their car within a week of the final race.

This reduces the chances of one team being dominant for a long period but would be the biggest help for those teams at the bottom of the grid.

In some respects Mercedes worked in this way with the PU development where all of the teams shared the testing schedule and pooled their data afterwards.

The downside would be that the cars would improve at a much higher rate than they do at the moment.

[hollus]

Ensure the cost to compete for midfield teams allows them to be financially sustainable - This is worth pursuing.

This was as good as achieved and within Bernie's fingertips 2 years ago, when travel costs to overseas were paid by FOM.
Me and others have often cited Symmonds 60M$ just to compete figure, but that allowed Marussia and Caterham to compete to the 104% time of the winners. With 10M$ less in travel costs what was to stop them from extending engine life to compete only to the 106% (crank up the engine for Q1 only), change pieces only between years, be 20 kg overweight and use only 10 mechanics in a pit stop?
Then, minus 10M travel costs, I gather one could do 106% with 30M$. Now extend price money to 12th or 13th position, and voila, 10M a year keep you in the grid. Slow, but in the grid, and that is how it used to be in the 70s, 80s, 90s...
It is only Bernie's wish to give no money below P10 (2 years out of 3) forcing the Caterhams and Marussias to fight to go from 104% to 103.5%.