Budget cap: tricks and cheats

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Will FIA really be able to police the budget cap?

Yes
6
18%
No
27
82%
 
Total votes: 33

Xwang
Xwang
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Joined: Sun Dec 02, 2012 10:12 am

Budget cap: tricks and cheats

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Teams are already thinking about how to trick or cheat the incoming budget cap and FIA is starting to try to catch up with a new note:
https://www.motorsport.com/f1/news/fia- ... ext&nrt=54

Will FIA really be able to police the budget cap?
I'm still learning English so please excuse me if my English is not good enough and feel free to correct me via PM if you want.

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El Scorchio
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Re: Budget cap: tricks and cheats

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Xwang wrote:
Sat Sep 12, 2020 1:45 pm
Teams are already thinking about how to trick or cheat the incoming budget cap and FIA is starting to try to catch up with a new note:
https://www.motorsport.com/f1/news/fia- ... ext&nrt=54

Will FIA really be able to police the budget cap?
Not sure ‘cheat’ or ‘trick’ are the right words as it implies bad intentions. Maybe more ‘exploit any loopholes or grey areas’ is more accurate!

They will all look at it of course with varying degrees of success I am sure. It just becomes another strategic element.

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RZS10
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Re: Budget cap: tricks and cheats

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This is about stockpiling parts for next year, isn't it?

I guess they'll come up with something that says that the production cost of any part used during season x must be counted towards the budget of season x ...

Jolle
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Re: Budget cap: tricks and cheats

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Xwang wrote:
Sat Sep 12, 2020 1:45 pm
Teams are already thinking about how to trick or cheat the incoming budget cap and FIA is starting to try to catch up with a new note:
https://www.motorsport.com/f1/news/fia- ... ext&nrt=54

Will FIA really be able to police the budget cap?
Why not? Of course there will be a whole new library of rules, exemptions and deals. But a good investigative accounting firm backed up with a technical and sporting team will be able to get a good insight what is actual happening at the teams.

Fraud is just the new cheating.

Expect weekly clarification requests and lots of addendums on the fly.

Zynerji
Zynerji
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Re: Budget cap: tricks and cheats

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This should be done in a self-balancing manner. Unfortunately, no one actually seems to want real budget parity in F1.

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nzjrs
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Re: Budget cap: tricks and cheats

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Jolle wrote:
Sat Sep 12, 2020 2:02 pm
Xwang wrote:
Sat Sep 12, 2020 1:45 pm
Teams are already thinking about how to trick or cheat the incoming budget cap and FIA is starting to try to catch up with a new note:
https://www.motorsport.com/f1/news/fia- ... ext&nrt=54

Will FIA really be able to police the budget cap?
Why not? Of course there will be a whole new library of rules, exemptions and deals. But a good investigative accounting firm backed up with a technical and sporting team will be able to get a good insight what is actual happening at the teams.

Fraud is just the new cheating.

Expect weekly clarification requests and lots of addendums on the fly.
I seem to recall that the statute of limitations on financial regulation breaches is quite a long period of time, so one can audit back into the past to detect fraud. That is in my opinion quite a deterrent.

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subcritical71
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Re: Budget cap: tricks and cheats

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Xwang wrote:
Sat Sep 12, 2020 1:45 pm
Teams are already thinking about how to trick or cheat the incoming budget cap and FIA is starting to try to catch up with a new note:
https://www.motorsport.com/f1/news/fia- ... ext&nrt=54

Will FIA really be able to police the budget cap?
Can they, yes. Do they have the will to enforce the rules and make an example of a top team.... sadly, no. They don’t have the will to enforce the existing regulations properly.

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Big Tea
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Re: Budget cap: tricks and cheats

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How could this be enforced guys- A team, lets call them Xtra, design and build the model. Well actually 2 models but one is faulty, say wrong colour, so they sell it to company 'More'.

Xtra are limited in wind tunnel and CFD time, so they use a weeks worth of it, getting things established and trim the model.

More also modify their model, its theirs that can do what they want with it. BTW, they have a tunnel, or access to a tunnel, and as they are not a F1 team they can do what they want with it.

Xtra employ consultants from 'More' for a few days and get advice on the model. They also help out in the tunnel. (They are not in F1 so who knows what they do with their model)

jump forwards a while, some more 'consultants' taken on short term from 'More', and the car is looking good and Xtra well inside the spend cap.
We are standing on the shoulders of Giants. So don't kick.

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subcritical71
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Re: Budget cap: tricks and cheats

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Big Tea wrote:
Sat Sep 12, 2020 3:28 pm
How could this be enforced guys- A team, lets call them Xtra, design and build the model. Well actually 2 models but one is faulty, say wrong colour, so they sell it to company 'More'.

Xtra are limited in wind tunnel and CFD time, so they use a weeks worth of it, getting things established and trim the model.

More also modify their model, its theirs that can do what they want with it. BTW, they have a tunnel, or access to a tunnel, and as they are not a F1 team they can do what they want with it.

Xtra employ consultants from 'More' for a few days and get advice on the model. They also help out in the tunnel. (They are not in F1 so who knows what they do with their model)

jump forwards a while, some more 'consultants' taken on short term from 'More', and the car is looking good and Xtra well inside the spend cap.
It's a valid concern, but there are already and has been specific rules about how the 3rd party work must be allocated in Appendix 6 of the sporting regulations. It may be that these need to be tightened up to prevent your exact scenario, but more or less its already in the rules.

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subcritical71
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Re: Budget cap: tricks and cheats

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subcritical71 wrote:
Sat Sep 12, 2020 3:51 pm

It's a valid concern, but there are already and has been specific rules about how the 3rd party work must be allocated in Appendix 6 of the sporting regulations. It may be that these need to be tightened up to prevent your exact scenario, but more or less its already in the rules.
APPENDIX 6
1. A competitor shall, in respect of the Listed Parts to be used in its cars in Formula One, only use Listed Parts which are designed by it.
2. The obligation to design and use Listed Parts shall not prevent a competitor from Outsourcing the design and/or manufacture of any Listed Parts to a third party (including an Associate of such competitor) provided that :
a) It retains the exclusive right to use the Listed Parts in Formula One so long as it competes in Formula One.
b) In the case of the Outsourcing of manufacture such third party shall not be a competitor.
c) In the case of the Outsourcing of design, such third party shall not be a competitor or a party that directly or indirectly designs Listed Parts for any competitor.
d) If part of an Outsourcing arrangement involves aerodynamic testing by a third party, this must be carried out and reported in accordance with Appendix 8 to these Sporting Regulations. For the avoidance of doubt, any related Restricted Wind Tunnel Testing and Restricted CFD Simulations must take place in the wind tunnel nominated by the relevant competitor in accordance with Paragraph 1.5 of Appendix 8 or using the CFD hardware nominated by the relevant competitor in accordance with Paragraphs 2.6 and 2.7 of Appendix 8. Any such Testing or Simulations will be taken into account when assessing the relevant competitor’s compliance with the usage limits defined in Section 3 of Appendix 8.
3. a) A competitor may use non-Listed Parts designed by another competitor, if this is the case any aerodynamic testing related to the design of such Parts must be carried out and reported only by the competitor designing them in accordance with Appendix 8 to these Sporting Regulations.b) In the case of a competitor Outsourcing the design of non-Listed Parts to a third party that is not a competitor, and such arrangement involves aerodynamic testing, this must be carried out and reported in accordance with Appendix 8 to these Sporting Regulations. For the avoidance of doubt, any related Restricted Wind Tunnel Testing and/or Restricted CFD Simulations must take place in the wind tunnel nominated by the relevant competitor in accordance with Paragraph 1.5 of Appendix 8 or using the CFD hardware nominated by the relevant competitor in accordance with Paragraphs 2.6 and 2.7 of Appendix 8. Any such Testing or Simulations will be taken into account when assessing the relevant competitor’s compliance with the usage limits defined in Section 3 of Appendix 8.
4. No competitor shall be entitled :
a) To pass on or receive any information on Listed Parts (including but not limited to data, designs or drawings) directly to or from another competitor or via an external entity or third party.
b) To receive or supply consultancy or any other kind of services from or to another competitor directly or via an external entity or third party in relation to Listed Parts.
5. Any information on non-Listed Parts passed on or received by a competitor or any consultancy or any other kind of services involving a competitor in relation to non-Listed Parts shall be strictly limited to the designs or drawings necessary for the integration of the non-Listed Parts into the design of the car and/or the data necessary for the correct operation of the non-Listed Parts on the car.
6. No competitor may use movement of personnel (whether employee, consultant, contractor, secondee or any other type of permanent or temporary personnel) with another competitor, either directly or via an external entity, for the purpose of circumventing the requirements of this Appendix.
7. Any reference to any competitor shall include any Associate of such competitor and any external entity working on behalf of a competitor or for its own purposes and subsequently providing the results of its work to a competitor.
8. An “Associate” means :
a) Any person (including any corporate or unincorporated body) in which such party directly or indirectly :
(i) Owns share capital or business assets; or
(ii) Has the power to exercise voting rights; or
(iii) Has the power to appoint members of the supervisory board, board of directors or bodies legally representing such a firm or body corporate or unincorporated; or
(iv) Has the right to manage the business of such firm or body corporate or unincorporated body; or
b) Its controller (where controller means any person who directly or indirectly has in or over any party the rights or powers listed in sub-clause (a) of the definition of Associate); or
c) Any person (including any corporate or unincorporated body) in which its controller directly or indirectly has the right or powers listed in sub-clause (a) above; or
d) Any agent, contractor (or sub-contractor) or any other person (including any corporate or unincorporated body) which is set up or used by a competitor to circumvent the requirements of this Appendix.
9. “Outsourcing” means to procure goods or services under contract with an outside supplier.

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Big Tea
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Re: Budget cap: tricks and cheats

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subcritical71 wrote:
Sat Sep 12, 2020 3:51 pm
Big Tea wrote:
Sat Sep 12, 2020 3:28 pm
How could this be enforced guys- A team, lets call them Xtra, design and build the model. Well actually 2 models but one is faulty, say wrong colour, so they sell it to company 'More'.

Xtra are limited in wind tunnel and CFD time, so they use a weeks worth of it, getting things established and trim the model.

More also modify their model, its theirs that can do what they want with it. BTW, they have a tunnel, or access to a tunnel, and as they are not a F1 team they can do what they want with it.

Xtra employ consultants from 'More' for a few days and get advice on the model. They also help out in the tunnel. (They are not in F1 so who knows what they do with their model)

jump forwards a while, some more 'consultants' taken on short term from 'More', and the car is looking good and Xtra well inside the spend cap.
It's a valid concern, but there are already and has been specific rules about how the 3rd party work must be allocated in Appendix 6 of the sporting regulations. It may be that these need to be tightened up to prevent your exact scenario, but more or less its already in the rules.
That is going to be hard to police though isn't it?
If all teams are honest about it, no problem. But, on past record....


6. No competitor may use movement of personnel (whether employee, consultant, contractor, secondee or any other type of permanent or temporary personnel) with another competitor, either directly or via an external entity, for the purpose of circumventing the requirements of this Appendix.
We are standing on the shoulders of Giants. So don't kick.

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subcritical71
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Re: Budget cap: tricks and cheats

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Big Tea wrote:
Sat Sep 12, 2020 4:58 pm

That is going to be hard to police though isn't it?
If all teams are honest about it, no problem. But, on past record....
I agree 1000%. The FIA have too often shown they don’t have interest in enforcing their own rules. It will be like with children. The teams will push them until they find the boundaries. It will depend on how strict they (FIA) want to be.

Unless they take a proactive approach to policing, and stop relying on formal protests, they cannot get on top of it.

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nzjrs
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Re: Budget cap: tricks and cheats

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I think it's reasonable to assume that how ever devious we think we are here coming up with cunning exploits of the budget cap, we will appear as simpleton next to a good forensic accountant who could come up with more creative evasions. Given this, such accountants would have been involved in the drafting of the rules and in their enforcement.

gshevlin
gshevlin
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Re: Budget cap: tricks and cheats

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All of these creative ideas could be shut down very quickly if the FIA and Liberty were to introduce and enforce an intent clause in the regulations, stating that if in the opinion of the FIA or LibertyF1, an action has the intent of circumventing or ignoring the cost cap regulations, with no other possible explanation for it, that the action will be disallowed, and the team can and will be punished.
The Inland Revenue in the UK did something similar in the late 1970s to try and clamp down on wholesale tax avoidance schemes in the UK that were in the legal grey area between avoidance (which is legal) and evasion (which is illegal). They introduced a regulation stating that if, in the opinion of the Inland Revenue, there was no valid business purpose to a transaction, then it would be assumed that the only purpose of the transaction was to evade the payment of tax, and the Inland Revenue would act accordingly. The regulation stopped most of the grey area tax avoidance schemes almost immediately.

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Big Tea
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Re: Budget cap: tricks and cheats

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nzjrs wrote:
Sat Sep 12, 2020 5:55 pm
I think it's reasonable to assume that how ever devious we think we are here coming up with cunning exploits of the budget cap, we will appear as simpleton next to a good forensic accountant who could come up with more creative evasions. Given this, such accountants would have been involved in the drafting of the rules and in their enforcement.
But in the case of a team like (for no particular reason I chose) Renault, the accountant will not have access to the parent company's books. An engineer paid to be on a study course just before getting a placement at Alpine is just coincidence. If the study course includes exactly what is needed to be able to bring new knowledge to a project, it is a coincidence.

I know you are saying most would probably not consider the return worth the risk, but some may do
We are standing on the shoulders of Giants. So don't kick.