Budget caps - who does it benefit?

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wesley123
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Re: Budget caps - who does it benefit?

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V12-POWER wrote:
Thu May 28, 2020 10:15 pm
I wonder when someone will come up with a ”legacy” grand prix series with proper sounding engines, no halo, grid girls and all that tobacco sponsorships.
Never, because the whole world has moved on from that.
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Morteza
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Re: Budget caps - who does it benefit?

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"A fool thinks himself to be wise, but a wise man knows himself to be a fool."~William Shakespeare

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raymondu999
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Re: Budget caps - who does it benefit?

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Can we get back to the thread topic pls lol.

Who do we reckon are winners in this? I would reckon Aston and McLaren would be big winners. And maybe Haas. And Ferrari probably a big loser
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mclaren111
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Re: Budget caps - who does it benefit?

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raymondu999 wrote:
Mon Jun 08, 2020 8:44 am
Can we get back to the thread topic pls lol.

Who do we reckon are winners in this? I would reckon Aston and McLaren would be big winners. And maybe Haas. And Ferrari probably a big loser
Top three are Big losers... They spend +- $400 Million currently...

Agree that Mclaren & Racing Point will be big winners...

Just_a_fan
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Re: Budget caps - who does it benefit?

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One question that comes to mind is this: If there is a stringent budget cap of $145m (excluding driver salaries and the top bosses' salaries), what happens to the prize money and the other payments made to teams?

What's the point of, for example, giving Ferrari their "special guys" payment? Originally it was obviously done to help them to be competitive against the other big guns (an advantage they don't seem to make the most of but that's a different issue), but at $70m+, it's about half of their allowed budget. Surely these payments (others get "special guys" payments too, of course) should be removed and the teams just run on what they win and what sponsorship they can find. In effect, these special payments allow the teams that receive them to spend more on the car because they can max out their driver salaries without harming their bank accounts and then use the full $145m on the car. Teams that don't have these payments have to find extra money for drivers on top of the $145m they need to find for the car. As many teams don't get close to $145m now, I'm not sure the budget cap is going to do anything useful for the guys at the back.
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Re: Budget caps - who does it benefit?

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Mercedes probably has a budget of c.$400 million for this year. (It's a number quoted in quite a few places but the source is quite difficult to pin down so take it with a pinch of salt).

To share some of Ex-Lotus boss Matthew Carter's view on the situation:-

Starting at the $145 million cap.

Lotus spent 17% on logistics (just travelling around the world). Let's make it 20% because Mercedes are a bigger team - $80 million
Driver wages: Lewis ($40m), Bottas ($10m) - $50 million
Marketing: Lotus used to spend $10-12m on marketing. Mercedes is much bigger so let's double that to, well, let's call it $25m.


Continuing on the same vein as Mr. Carter, my own research (intrinsic pinch of salt) suggests:-

Top three execs wages: Wolff was on c.$9m, Lauda pretty much the same. I suspect the next most valuable Exec was also on about the same. Let's call it $25m between them.

So that's $325m already.

The Formula 1 website says that teams were allowed to incur a total of $45m on capital costs over a four year period. So c.$10m a year but there's an increase for this four year period so it's really $15m a year for now.

Fees to enter the championship (for Mercedes, that will be $5.5m this year) and purchase super-licences (difficult to tell but Button said he paid c. $1.3m back in 2009 and inflation isn't your friend here). Let's call it c.$10m for entry plus Hamilton and Bottas' licences (we'll ignore the other drivers they might be on the hook for).

That bring us to $350m.

Employee bonus costs are all excluded. For a team like Mercedes, those bonus costs are going to be pretty high (Reuters put the 2014 title as being worth $16k minimum for every employee - c.500 employees for Mercedes? ). Let's call that $10m as I'm guessing at least a couple of people will get more than that bare minimum level of bonus and there's inflation over time so I think this is a very conservative number.

Their corporate Income tax and property costs are also excluded. I'm not even going to take a guess at these, but I strongly suspect that it's more than a couple of dollars, especially given how much income Mercedes had last year (I understand that they basically nearly broke even).

Engine purchases are excluded. I wonder if Mercedes can argue that they still need to buy an engine? If so, c.$20m

We're now at a conservative $380 million (excluding Income tax and property costs) and we've not looked at maternity/paternity leave, sick leave and contract intrinsic medical benefits.

Looking at the numbers, this doesn't feel like much of a cap. If only Mercedes had to abide by this cap, they'd be in the same position they are in now, spending more than every team other than Ferrari.

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Re: Budget caps - who does it benefit?

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ENGINE TUNER wrote:
Wed May 27, 2020 10:06 pm
914hald wrote:
Wed May 27, 2020 9:59 pm
Token system :lol:
How did that go last time with engine token system? Mercedes got an even bigger advantage.

Im afraid it will cripple Mclarens progress with integrating Merc power unit properly, and fixing gremlins.

And what about freezing dev. From 20/21, if a team makes a dog of a car for 2020, and is not able to rectify anything for 2021 (ex Haas tyre problem). Will it not force teams out of F1?
Wrong, the token system did not help Mercedes, it held them back the most. Ferrari had the biggest jump in engine performance from 2014 to 2015 nd that was under the token system. What the token system did was favor large changes and discourage a large amount of small changes, that is exactly the conditions necessary to encourage those behind to catch up more quickly.

If anything increased Mercedes lead, it was in the ever intensifying reliability requirements. From 5 PUs, to 4 then to 3 per season, that affected Renault and Honda the most.
the great power development of the Ferrari engine, it was said in Italy, was due to having well understood how best to use the injection systems in accordance with the flow sensor.
the other manufacturers, it was said, had better integrated the systems and therefore could use more peak fuel. then that system was developed up to the disputes of 2019.

dans79
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Re: Budget caps - who does it benefit?

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Honestly, I think the top teams will come out of this even further ahead than they would have been without it.

Their are a lot of ways you can have a big budget that is completely legal, for example.
  • Teams that are also engine manufactures will just shift money to the engine development side, as that isn't bound by the budget cap.
  • Teams that produce road cars or road car related tech will start having substantially higher "internal" transfers. An employee will develop something on the road car side and be paid by the road car side. When the tech is flushed out, the employee will "transfer" to the race team and bring all the knowledge with them free of charge.
Extreme regulation will never work in my opinion, It will probabbly just end up killing of f1 completly.
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Big Tea
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Re: Budget caps - who does it benefit?

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Is there any way of nailing a hard and fast definition of 'spending?' For instance, a research postgrad between years would do a very good job but 'spending' on them would be far less than a top design engineer. There are also back door 'part time' employees paid low wages, who could be working for other companies in the group getting high earnings for their half month.

Not saying it IS going to happen, just could.
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Re: Budget caps - who does it benefit?

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the bigger the company the more knowledge there is available, so a budget cap would hurt independent teams more then the ones part of lets say, Daimler.

So, I think Williams is going te hurt most, followed by RedBull/AT (but less then Williams because they can share IP), McLaren (bigger then Williams, but still no FCO or Daimler), Alfa Romeo, HAAS and Racing Point all have help from bigger companies and Ferrari, Renault and Mercedes will have lots of knowledge available for them in their respected parent companies.

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Big Tea
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Re: Budget caps - who does it benefit?

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Jolle wrote:
Mon Jun 08, 2020 5:22 pm
the bigger the company the more knowledge there is available, so a budget cap would hurt independent teams more then the ones part of lets say, Daimler.

So, I think Williams is going te hurt most, followed by RedBull/AT (but less then Williams because they can share IP), McLaren (bigger then Williams, but still no FCO or Daimler), Alfa Romeo, HAAS and Racing Point all have help from bigger companies and Ferrari, Renault and Mercedes will have lots of knowledge available for them in their respected parent companies.
Especially if they can 'rotate' staff as above. Bring in which specialist is needed then swap them. 1 employee slot, 4 people
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dans79
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Re: Budget caps - who does it benefit?

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This is also a good way for the big teams to work around the budget cap.


https://www.crash.net/f1/news/938397/1/ ... her-series
F1’s cost cap could make Mercedes race in other series

Staff migrating between teams, or even working on both teams at the same time would be impossible to police. Mainly because policing knowledge is impossible.
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Jolle
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Re: Budget caps - who does it benefit?

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dans79 wrote:
Tue Jun 09, 2020 3:32 pm
This is also a good way for the big teams to work around the budget cap.


https://www.crash.net/f1/news/938397/1/ ... her-series
F1’s cost cap could make Mercedes race in other series

Staff migrating between teams, or even working on both teams at the same time would be impossible to police. Mainly because policing knowledge is impossible.
They just quit the only other real constructeur championship (DTM). All other racing series are more or less spec series so totally not attractive for a factory.

Look at how big Arrow Peterson is, who runs the three McLaren branded cars: 60 people including administration, marketing and management.

All the talk about other championships are empty threats.