[Rules] Future Rule Changes

[Mike Harte]

Tony, I am sorry but you are mistaken if you believe that just because a company is public and is traded on a public stock exchange that they would some how become transparent; financial history, both recent and from the past, would indicate that it would be far from the truth.

The most recent in the UK happened within the last couple of months at the UK's largest supermarket chain, Tesco plc, where is transpired that for years they have been manipulating their accounts, and yet their auditors never realised. Maybe the reason for that might be because they weren't looking terribly hard at the accounts because they 2, 3 or 4 times as much from the client in providing other services, such as how to avoid as much tax as possible. And they take advantage of that advice, which is why all their property is now owned by various companies with their office situated in a broom-cupboard of an accountant in Luxembourg.

In the past we had the likes of Enron who also manipulated their accounts for years, and their fall also took the life out of their audit accountants. And going back a little further in time, we have the case of Parmalat, a name well known in Formula 1. Again, a publicly quoted company where they had been cooking the books for years. Currently, we have Vodafone, an internationally recognised company that also hides a large part of it's accounts behind the doors of offices in countries where you do not have to disclose a company's affairs.

The reality is that it would not make the slightest difference, because the sad reality is that many of these business suits don't really care whether they break corporate law because they think that they will never be found out. And the even sadder truth is that they may well be right because the major investigator of these matters in the past was the media. However, that is now a thorny issue, certainly here in the UK, as virtually every one of the main media outlets here use some form of tax manipulation which means that although they are publicly quoted companies, their accounts are not wholly transparent. And so they tend not to focus on other companies being a little naughty with their accounts.

As for the drivers, it matters not how much nor how little if at all they get paid, because it is their contract that dictates whether they have to accept team orders or whether they are allowed to speak their minds.

[Richard C]

There is a general vibe in this thread that if any solution is not perfect and has definable negatives that it can't work. I firmly believe this is an incorrect conclusion. The world operates daily using less than optimal solutions. You can't sit on your hands until not just a better solution appears, but the BEST solution appears. If you wait for perfect... prepare to wait forever.

I am not an expert on public and private companies and their level of financial transparency, but I have worked for both and have worked for private that are working to become public. There is a difference between them and how they operate financially! And yes funny accounting exists (and will continue to exist) but it also is found out (examples listed above) and there are repercussions. And yes there are those who are not caught, but the same applies everywhere. I am sure some F1 team(s) are currently cheating somehow today and getting away with it. My point is every system will have benders and breakers and some who get away with it. The real question is if the new is better than the old?

As I have stated above and will say again... IMHO, workable solutions for a cost cap system can be found. The problem is a lack of will by the players.

Richard

[Richard C]

Potential cost cap and revenue sharing idea...

Current revenue sharing gives preference to older and well established teams with the minnows getting much less. Let's flip it upside down.

You submit to a lower cost cap and intrusive forensic accounting, but you get a large share of the shared revenue, meaning you have to raise less money via sponsors. You don't like the small cap or intrusive forensic accounting, then you get a larger (or no) cap, but also minimal (or no) sharing of revenues. Maybe 100% of your budget is via sponsors.

It also doesn't have to be one or the other, it could've be a sliding scale. It would potentially allow small teams to get their feet under themselves and then grow sponsors and wean themselves off of (or reduce dependence upon) the shared revenues.

Richard

[miatanut]

Originally Posted by Mike Harte

Tony, I am sorry but you are mistaken if you believe that just because a company is public and is traded on a public stock exchange that they would some how become transparent; financial history, both recent and from the past, would indicate that it would be far from the truth....

I don't know how it works in the UK, but in the US, the companies hire their auditors, there are generally accepted accounting practices, but in the end, there is a lot that comes down to judgement calls, and there is incentive for an accounting firm to look at it the way their client wants them to see it. That, or lose the client.

If the auditors worked for the FIA, that would be a significantly different deal. Then the auditors would find a whole lot more potential problems and there would be endless fights about whether something did or did not comply with the rules.

I WAS a big cost cap fan. I've changed my mind.

I've realized the reason F1 has gotten into the fix it's in now is BECAUSE of rules that narrow the places to spend money, resulting in massive investments needed to find tenths of a second and the answer isn't to try to close more "loopholes" to the point the cars are all virtually identical, because then the biggest teams will spend untold millions on developing the ultimate tire and damper simulation models, because dampers and suspension settings will be the only place left to play.

I've realized that instead, the answer is to reverse course and open the technical rules up substantially. Then you get situations like WEC where there are four different combinations IC and KERS technologies at work because four different teams thought four different directions were the way to go.

And before anybody goes "But BOP!!!", I say take a look at the rules. There is a "Fuel Technology Factor" which is an attempt to make a transparent way of equating petrol and diesel approaches, which is a problem F1 doesn't face. There is a definite favoritism to go big with the hybrid, pushing the technology. Beyond that, there is no favoritism to big engines over small (or vice versa), or any particular cylinder configuration. So, you get a diesel, a big V8, a little V4, and a medium, low-revving V6 that is petrol, but almost diesel-like. Supercapacitors, batteries, electric-driven flywheel, and mechanical-driven flywheel.

Last year's dominant team is struggling right now, but there has been some great on-track action from two others taking different technological approaches from each other.

There's one team that arrogantly thinks it can beat the others on a fraction of the budget using a completely crazy approach of front engine, front wheel drive. We'll see how that works out. In any case, it has produced a lot of interest.

F1 should pay attention and plan how it could open things up a bit and get some exciting duels out of it.

[chillibowl]

Originally Posted by Richard Casto

There is a general vibe in this thread that if any solution is not perfect and has definable negatives that it can't work. I firmly believe this is an incorrect conclusion. ...

i'll go one step further and say that there seems to be some with the inherent belief that these teams are run by people who are not only willing to cheat but willing to cheat at lex luthor like proportions.

of course some managers and teams owners might cheat, some have cheated,some are going to cheat but surely its not endemic.

anyways, what is their incentive to cheat? is cheating on this scale worth the risk? surely their incentive to cheat is not the same as it is of some faceless corporation...these teams have very well known faces.

Agree with you Rich, no solution will initially be ideal and the rules will evolve with time and experience much like the technical rules do.

[Paradise City]

I think conspicuous cheating very rarely happens.

But what does happen and what is ubiquitous in such a hyper competitive cauldron is that rules are bent all the time. This will melt the effectiveness of any cost cap over a period of time.

I think a lot of this conversation is moot and will remain theoretical. The teams won't be divested of their newly found powers and they won't abandon the inherent paranoid outlook that one team or one faction is rippin' off the other. Any truce that may happen would be short lived. A state of paranoia is a permanent feature of hyper competitive environments.

So if F1 isn't on a slow burning terminal decline - it's maimed itself for life. Thanks, Bernie.

[bjohnsonsmith]

Originally Posted by Casper

Who would subscribe in the first place given the returns would be very poor?

That's the first thing I thought of. F1 teams are constantly looking for more and more money, through sponsors and/or pay-drivers, so the team can go racing. If you're a team who has floated on the stock market, the return has to be worth the while of current investors as well as an attractive proposition for future investors. It begs the question, how does the team guarantee that return if the team is finishing mid-field or lower?

[Richard C]

Originally Posted by miatanut

If the auditors worked for the FIA, that would be a significantly different deal. Then the auditors would find a whole lot more potential problems and there would be endless fights about whether something did or did not comply with the rules.

Good point about who the auditors work for. I reminds me a software audit situation. I "think" some very large software companies farm out license compliance auditing to external auditors who get paid based upon the problems they find. So they actively seek cheating as they have a financial incentive to do so.

Originally Posted by miatanut

I've realized that instead, the answer is to reverse course and open the technical rules up substantially. Then you get situations like WEC where there are four different combinations IC and KERS technologies at work because four different teams thought four different directions were the way to go.

Originally Posted by miatanut

F1 should pay attention and plan how it could open things up a bit and get some exciting duels out of it.

I agree that WEC right now is an example of less restrictive rules working well.

Originally Posted by miatanut

I WAS a big cost cap fan. I've changed my mind.

I've realized the reason F1 has gotten into the fix it's in now is BECAUSE of rules that narrow the places to spend money, resulting in massive investments needed to find tenths of a second and the answer isn't to try to close more "loopholes" to the point the cars are all virtually identical, because then the biggest teams will spend untold millions on developing the ultimate tire and damper simulation models, because dampers and suspension settings will be the only place left to play.

I think that excessive costs and rule freedom is related. But... I think we would disagree about the impact of one upon the other. I for example firmly believe that regardless of the freedom of the rules (unless you impose extreme draconian spec rules that allow for ZERO development) that the cost will be as large as the teams allow them to get. If a team has naturally deep pockets, or the world economic climate has sponsors throwing money at you, the budgets will find a natural level "regardless of the technical specification". The larger factor is the perceived benefit of being a player. There are plenty of other series that might have more open rules, but nobody really cares to play as they don't have the real or perceived value that F1 as from a PR perspective. In fact... I think one reason why WEC is going good right now is that while it has large budgets, they are much smaller than F1 and that is because they have found a natural limit. The perceived value of those involves is that they don't find value in spending F1 dollars in WEC. Maybe if current WEC is a new "golden age" then that perceived value will grow and so might the budgets!

What we see as a cost problem is that the "cost to succeed" has been driven higher and higher by the big teams. Money is no guarantee for success, but it sure helps, or rather it may set the statistical bar so high that only those with money will every really have a chance to succeed.

To get to my point...

In short, I don't think opening rules will result in lower costs in F1. It will change how and where the money is spent, but the money will be spent regardless. For the large teams it will allow them to try more odd ball ideas to see what works and what doesn't. It would probably increase the quality of the sport, but will not solve the problem of a revolving door of small teams an the sport being dominated by a small number with deep pockets. That is why I believe that cost caps might be a good solution if a way to implement them can be found. This is one the primary assumption that cost caps is designed to increase the number of players and aid in the year to year team stability!

Originally Posted by miatanut

There's one team that arrogantly thinks it can beat the others on a fraction of the budget using a completely crazy approach of front engine, front wheel drive. We'll see how that works out. In any case, it has produced a lot of interest.

The Nissan experiment is interesting. I think many of us love the idea of the old school Garagista who show up with a bright new idea and rock the boat on little money. It is interesting that Nissan has cast themselves in this light. They clearly are not some guys running this out of a garage, but rather a large corporation who like the idea of playing the role of outsider and revolutionary who are funding what might be considered "Professional Garagista". I truely believe that the sport has matured technically enough that someone coming out of left field "on their own" and winning is never going to happen. It could only happen in something like the Nissan scenario in which some ideas (that really are not new but not part of the status quo) are funded by someone with deep enough pockets to make it a reality. And even then... who knows if the Nissan is going to live up to its potential let alone the promise.

With that being said... I think the entire Nissan saga is excellent and still an example of what is good with WEC. I can't wait to see them race. I don't want to get into a WEC vs. F1 battle, but I do think lessons are to be learned. I don't think any solution that F1 might use has to be a huge experiment, but rather I think there are likely plenty of other sports that have similar issues that F1 can learn from. Be it motorsports or something else.

As I say over and over again, it is a lack of will to make this work. What I haven't said is what my opinion is as to why the lack of will exists (or maybe it is obvious). It is fear of the unknown. It might actually succeed and those who are winners today might not be guaranteed to be winners tomorrow. The fact that is might actually rock the boat is what they don't want to happen. That is why if anything, I see them maybe agreeing to cost caps, but not open specs. Because narrow specs equals relatively predictable results and maybe at a lower cost if caps are put in place (not that I agree it should be done that way, as I would like to see more open specs).

Originally Posted by chillibowl

i'll go one step further and say that there seems to be some with the inherent belief that these teams are run by people who are not only willing to cheat but willing to cheat at lex luthor like proportions.

LOL! Absolutely! So true and I needed a good laugh!

Originally Posted by Paradise City

But what does happen and what is ubiquitous in such a hyper competitive cauldron is that rules are bent all the time. This will melt the effectiveness of any cost cap over a period of time.

I am not sure if you are speaking to technical design cheating or accounting cheating in the fragment of your post above. The cost caps IMHO will not really talk much to technical issues (it might, but only at a high level). The technical regulations will handle "cheating" at the design level. But if the competitive nature and potential for cheating is at the financial level, I will say that F1 is dwarfed by that on the global business level. Much larger dollars and stakes have been at play for decades (or centuries?). I doubt the F1 teams are going to be coming up with new financial accounting cheats that haven't already been tried before. My point is that I don't think the competitive nature of F1 will degrade the practice of financial accounting over time. Yes... teams will get better at bending the rules as they learn how to play the new game, but I believe the accounting game is likely a tighter set of rules to play with the room for maneuvering being much smaller.

Richard

[Paradise City]

I am not sure if you are speaking to technical design cheating or accounting cheating in the fragment of your post above. The cost caps IMHO will not really talk much to technical issues (it might, but only at a high level). The technical regulations will handle "cheating" at the design level. But if the competitive nature and potential for cheating is at the financial level, I will say that F1 is dwarfed by that on the global business level. Much larger dollars and stakes have been at play for decades (or centuries?). I doubt the F1 teams are going to be coming up with new financial accounting cheats that haven't already been tried before. My point is that I don't think the competitive nature of F1 will degrade the practice of financial accounting over time. Yes... teams will get better at bending the rules as they learn how to play the new game, but I believe the accounting game is likely a tighter set of rules to play with the room for maneuvering being much smaller.

F1 teams aren't typical businesses. They are relatively small, tightly focused, cash intensive and frentic teams enclosed in a small fish bowl of other piranha like companies. They are of a rare and peculiar breed and will elude the collar of a budget cap in short order.

Not that I'm even arguing against caps or targeted cost caps. Some controls may very well be better than nothing even if such controls ultimately succumb to the centrifugal forces of hypercompetition.

Teams are too powerful. There's no way of prying that power away from them, ergo, there will never be any cost cap of any significance.

[Oldtony]

Originally Posted by Paradise City

Teams are too powerful. There's no way of prying that power away from them, ergo, there will never be any cost cap of any significance.

That is simply not true.
F1 teams are in fact weak, transient and inward looking organisations driven by motives that have very little to do with longevity or corporate success. They are focused on winning races and thus on beating the other teams.
That is their great weakness.
The area that has the power is FOM. In the past FIA had some power but that was sold to FIA for a mess of pottage by first Max and later Todt.
In the end teams will come and go, as they have in great number since the beginning of F1. With the exception of Ferrari there are really no very long term survivors. And most of the other, now senior teams, teams have a chequered past having been reborn from the ashes of other failures.
The advantage of a cost cap is that it may keep some teams who would not otherwise survive, or make it a feasible exercise for others to enter.
Certainly there would be efforts to subvert the rules, but if the team was a publicly listed entity the use of PLCs, trusts, and holding companies would all be external sources of funds whose transfers to or from the team would be reportable.
Not perfect, but certainly a lot better than we have now.
It may also convince the teams to work co-operatively in talking with FOM where it was of mutual benefit.

[Paradise City]

Originally Posted by Oldtony

That is simply not true.
F1 teams are in fact weak, transient and inward looking organisations driven by motives that have very little to do with longevity or corporate success. They are focused on winning races and thus on beating the other teams.
That is their great weakness.
The area that has the power is FOM. In the past FIA had some power but that was sold to FIA for a mess of pottage by first Max and later Todt.
In the end teams will come and go, as they have in great number since the beginning of F1. With the exception of Ferrari there are really no very long term survivors. And most of the other, now senior teams, teams have a chequered past having been reborn from the ashes of other failures.
The advantage of a cost cap is that it may keep some teams who would not otherwise survive, or make it a feasible exercise for others to enter.
Certainly there would be efforts to subvert the rules, but if the team was a publicly listed entity the use of PLCs, trusts, and holding companies would all be external sources of funds whose transfers to or from the team would be reportable.
Not perfect, but certainly a lot better than we have now.
It may also convince the teams to work co-operatively in talking with FOM where it was of mutual benefit.

The teams are powerful, of course, they are. They quit tomorrow. No F1. That's power. That ain't nuthin' else but power. Eccelstone is more powerful of course as he manipulates the teams paranoia with ease. But teams - as in the big manufacturers - can injure the sport in very serious ways.

It's naive to say that the hermit kingdom of F1 will submit to public scrutiny in an authentic way. That won't happen. The highly strung paranoia of the teams prevents this above all and the business models the teams occupy span the spectrum; realistically that won't be policeable in the long term.

[Richard C]

Originally Posted by Paradise City

It's naive to say that the hermit kingdom of F1 will submit to public scrutiny in an authentic way. That won't happen.

They already do... It is called the Technical Regulations and the associated pre-event inspections. They play by more rules than many businesses in that they already follow many health, safety and financial regulations (even as private companies) plus those imposed by the sport. That is a lot of scrutiny and sometimes quit public (have we so quickly forgotten McLaren's hefty fine and public drama at Renault and thier exit?) So in one sense, what is a bit more?

But I do agree they are not just going to roll over and say "Yes". It would be a real uphill battle.

Richard

[wnut]

If the teams subject themselves to open book inspections then the sponsors could see the money being spent on the team principle's new castle or the team's new technical centre, or how little has been spent on the actual racing and what has been diverted to the future fund kitty.

So nobody in F1 has any interest in opening their books, they will just keep crying poor and fleecing their sponsors. I

Open books are just plain not going to happen.

[Paradise City]

Originally Posted by Richard Casto

They already do... It is called the Technical Regulations and the associated pre-event inspections. They play by more rules than many businesses in that they already follow many health, safety and financial regulations (even as private companies) plus those imposed by the sport. That is a lot of scrutiny and sometimes quit public (have we so quickly forgotten McLaren's hefty fine and public drama at Renault and thier exit?) So in one sense, what is a bit more?

But I do agree they are not just going to roll over and say "Yes". It would be a real uphill battle.

Richard

Ain't never gonna happen. Yes, you can nail down technical regulations with exacting specifications, go some way to punish blatant cheating but the multinational, cross jurisdictional commercial nature of the sport and the deep complexity of supply and manufacturing and hyper competitive and focused mentality required to run a team will defeat any cap, sooner rather than later.

[chillibowl]

i guess for me its a chicken vs the egg kind of thing.

if the big teams can prevent a budget cap they will try to do so because they have deeper pockets (although i think that logic is changing even for them).

if a cap is imposed they will live under it but their efforts will focus on lobbying to increase the size of the cap rather then try to dismantle it. public perception requires and rewards institutions who live within budgets.

F1 is a sport in decline. not trying to be all doom and gloom but numbers are falling and the racing is shifting to places with little interest other than having its leaders attend a really really nice party. sponsorship is in decline and investments are drying up as well. its a very different world then it was 10 even 5 years ago.

the manu will at some point back out due to their own financial concerns and we will be left with a couple of teams whose DNA is racing. teams with no where else to go.

teams like Williams and Mclaren both of whom have argued for a budget cap (just not the ridiculously low one Mosley suggested yesteryear) and if those are the only two teams left then i would consider that a massive victory for F1.

the manu's can leave and i can even deal with the exit of Ferrari, although i believe the logic of Ferrari has changed and it needs to cut costs to make itself look more valuable and the hedge funds who take it over after the IPO would rather see dividends rather than an unlimited F1 budget.

so if we are left with Williams, Mclaren, and maybe Ferrari plus the minnows is that not the ideal framework going forward?

as fans thats like 50% of what we want right there....the implementation of a budget cap should be one of the most unifying concepts among this like minded group imo.

why the 'older' fans among us are so against this concept leaves me bewildered to be honest!

[miatanut]

Originally Posted by Richard Casto

I think that excessive costs and rule freedom is related. But... I think we would disagree about the impact of one upon the other. I for example firmly believe that regardless of the freedom of the rules (unless you impose extreme draconian spec rules that allow for ZERO development) that the cost will be as large as the teams allow them to get. If a team has naturally deep pockets, or the world economic climate has sponsors throwing money at you, the budgets will find a natural level "regardless of the technical specification". The larger factor is the perceived benefit of being a player. There are plenty of other series that might have more open rules, but nobody really cares to play as they don't have the real or perceived value that F1 as from a PR perspective. In fact... I think one reason why WEC is going good right now is that while it has large budgets, they are much smaller than F1 and that is because they have found a natural limit. The perceived value of those involves is that they don't find value in spending F1 dollars in WEC. Maybe if current WEC is a new "golden age" then that perceived value will grow and so might the budgets!

Richard

Actually, we agree on that, but my argument is that if a large team can get blind-sided by a little team with some-off-the-wall idea, the BOD of the company sponsoring them will be very unimpressed. The result of this is budgets for the largest teams drop because the ROI goes down and they become impossible to justify.

Originally Posted by Richard Casto

In short, I don't think opening rules will result in lower costs in F1. It will change how and where the money is spent, but the money will be spent regardless. For the large teams it will allow them to try more odd ball ideas to see what works and what doesn't. It would probably increase the quality of the sport, but will not solve the problem of a revolving door of small teams an the sport being dominated by a small number with deep pockets.

Richard

This is a place I disagree. I think there will always be young star designers with big ideas coming up through small teams. Eventually they get poached by larger teams, but the muse can be unpredictable and may not visit them again at the large team.

Originally Posted by Richard Casto

The Nissan experiment is interesting. I think many of us love the idea of the old school Garagista who show up with a bright new idea and rock the boat on little money. It is interesting that Nissan has cast themselves in this light. They clearly are not some guys running this out of a garage, but rather a large corporation who like the idea of playing the role of outsider and revolutionary who are funding what might be considered "Professional Garagista". I truely believe that the sport has matured technically enough that someone coming out of left field "on their own" and winning is never going to happen. It could only happen in something like the Nissan scenario in which some ideas (that really are not new but not part of the status quo) are funded by someone with deep enough pockets to make it a reality. And even then... who knows if the Nissan is going to live up to its potential let alone the promise.

With that being said... I think the entire Nissan saga is excellent and still an example of what is good with WEC. I can't wait to see them race. I don't want to get into a WEC vs. F1 battle, but I do think lessons are to be learned. I don't think any solution that F1 might use has to be a huge experiment, but rather I think there are likely plenty of other sports that have similar issues that F1 can learn from. Be it motorsports or something else.

Richard

The Nissan effort is what a Garagiste looks like in this era. The WEC rules are highly restrictive, but they are more open than F1 rules, and somebody's found a hole in them. It's really just a peek through a knothole at the possibilities of greater design freedom.

No, they are not doing this out of an old garage, but they are trying to win using a substantially smaller budget than their competition, and doing it using innovation instead of refinement. It might work. If the car comes together in any reasonable fashion, I expect them to take fastest race lap. If so, that will grab the attention of the other manufacturers.

[Oldtony]

Originally Posted by miatanut

The Nissan effort is what a Garagiste looks like in this era. The WEC rules are highly restrictive, but they are more open than F1 rules, and somebody's found a hole in them. It's really just a peek through a knothole at the possibilities of greater design freedom.

I think that is a pretty shrewd observation.
And to me it indicates that manufacturer involvement, a cost cap and a suitable level of freedom in the regulations is the way to go.
If a corporation, no mater how big, can avoid spending money while remaining competitive they will do it every time.
Race teams for manufacturers are very nearly as much about developing, and incentivising, engineering teams as the are about product development, all of course with an eye on marketing.
If those three aims can be achieved at lower cost F1 becomes a more attractive proposition.

[VIVA GT]

Originally Posted by Oldtony

I think that is a pretty shrewd observation.
And to me it indicates that manufacturer involvement, a cost cap and a suitable level of freedom in the regulations is the way to go.
If a corporation, no mater how big, can avoid spending money while remaining competitive they will do it every time.
Race teams for manufacturers are very nearly as much about developing, and incentivising, engineering teams as the are about product development, all of course with an eye on marketing.
If those three aims can be achieved at lower cost F1 becomes a more attractive proposition.

I suppose that we have to amend the old saying:
'The aim is to win at the slowest speed and at the lowest possible price'

[Casper]

Any cost cap if those who want it will only be implemented if it is at a level above which the smaller teams can reach. That makes the big teams being seen as the good guys and the status quo will remain unchanged. I don't think it is likely to happen due to vested interests and if it does is unlikely to last long in the initial form. racing has always cost more money than most of the participants can lay their hands on from the lowest club racer to the top of the professional tree, manufacturers excepted most of the time. The problem now is the technology to go faster used to be fairly limited and these days there is so much technology available it has outpaced just about anyone to keep up with costs. Limit the technology by limiting the team size at the track, they can only use as much as can be managed at the track and prohibit the networking back to the factory, this will reduce costs. Allow one laptop per team and see how much they can cram into that. If they can't manage it they can't race it.

[Richard C]

Originally Posted by miatanut

Actually, we agree on that, but my argument is that if a large team can get blind-sided by a little team with some-off-the-wall idea, the BOD of the company sponsoring them will be very unimpressed. The result of this is budgets for the largest teams drop because the ROI goes down and they become impossible to justify.

Regarding your very last sentence... I know budgets are potentially variable from one year to the next, but I wonder if there is much or any examples of budgets being reduced because they view the ROI is lacking WITHOUT a resulting exit from the series within a short period of time?

I know I am grinding away at this, but I think generally speaking year to year budgets are more likely influences by external factors (economy, etc.) and that if there are significant cuts due to perceived lack of ROI (i.e. lack of success), that the team is really circling the drain at that point.

Regarding being blind-sided, I think the solution that is really used is…

1. Change the rules to ban the new concept (most often)
2. Leave the series/change of ownership (less often)

Regarding changing the rules, it is due to political pressure being applied by those who are losing and its success is a measure of how much influence those who are pushing have. The history of F1 (and other series) is truly defined by #1 above.

Originally Posted by miatanut

This is a place I disagree. I think there will always be young star designers with big ideas coming up through small teams. Eventually they get poached by larger teams, but the muse can be unpredictable and may not visit them again at the large team.

We disagree on if or how open rules may impact cost, but I agree with the rest of your statement. I am not sure how the two are related?

Originally Posted by miatanut

The Nissan effort is what a Garagista looks like in this era. The WEC rules are highly restrictive, but they are more open than F1 rules, and somebody's found a hole in them. It's really just a peek through a knothole at the possibilities of greater design freedom.

I think it is hard to extrapolate the WEC rules situation and decide how far down the path of open rules will be successful. And to be clear, I think WEC is doing a great job right now with their rules!

Let’s say the rules were virtual open (F1 or WEC, doesn't matter). There are plenty of interesting ideas on how to make a fast car, but you just don’t know what works until you try it on track. So you create the situation of a single team getting it right and winning all of the races and everyone else getting it wrong and maybe for many embarrassingly wrong. If that team is able to keep the secret sauce from getting out, they could potentially dominate year after year. This brings up your ROI point. For those who are in the sport for PR purposes, they will ask "Why they Hell are we doing this?" Notice, they are not asking what can they do to fix it, but rather that they doubt the entire thing. See my points above about what happens next. Either they tighten the rules to remove unpredictability and add stability, or there is an exodus.

The purist of us (and I have that side in me at times) would say... Ok, that is fine. Best man wins and the others just need to try harder next time. The problem then is that IMHO, that level of unpredictability can undermine the health of the series. Nobody who runs a business wants that level of unpredictability and something like F1 is a business. I can't imagine those in charge would let it get to that point, but if it did, I could imagine those with deep pockets (unhappy manufactures) would walk away and build an alternative series that would look very much like what we have today (i.e. very tight rules and mostly predictable results)

I think that at the moment, the WEC has more open rules than F1 and it allows just enough unpredictability to keep it interesting, but no so open that it risk the loss of close racing. Time will tell if the Nissan effort is revolutionary or a flop.

Originally Posted by miatanut

No, they are not doing this out of an old garage, but they are trying to win using a substantially smaller budget than their competition, and doing it using innovation instead of refinement. It might work. If the car comes together in any reasonable fashion, I expect them to take fastest race lap. If so, that will grab the attention of the other manufacturers.

Only Nissan knows how much they buy into the entire idea. I somewhat believe that while I am sure the technical team believes in the solution that the larger “Nissan” is less about “winning for less” than getting “more PR for less” (of which they are doing an awesome job). If they are lucky they can get both for not much money. Maybe they are the new Garagista?! However, I wouldn't bet money on them setting any type of trend regardless of the level of their success. My prediction... They succeed and the rules get tweaked to prevent repeat, or more likely they flop due to not having the budget to really do it right (i.e. reliability issues, etc.). Increase the budget to succeed and they become just like anyone else. Rinse and repeat.

This sounds critical of the concept of trying something new. I actually am just critical of them potentially overselling the chances for winning "on a limited budget". I would rather see them do it right vs. potentially flopping and moving onto something else next year. They are clearly behind the ball and struggling to keep up. I wish them well (just as long as they don't beat Porsche! )

Originally Posted by Casper

Any cost cap if those who want it will only be implemented if it is at a level above which the smaller teams can reach. That makes the big teams being seen as the good guys and the status quo will remain unchanged. I don't think it is likely to happen due to vested interests and if it does is unlikely to last long in the initial form. racing has always cost more money than most of the participants can lay their hands on from the lowest club racer to the top of the professional tree, manufacturers excepted most of the time. The problem now is the technology to go faster used to be fairly limited and these days there is so much technology available it has outpaced just about anyone to keep up with costs. Limit the technology by limiting the team size at the track, they can only use as much as can be managed at the track and prohibit the networking back to the factory, this will reduce costs. Allow one laptop per team and see how much they can cram into that. If they can't manage it they can't race it.

So this to me brings up a good point. Cost caps may not reduce the cost of racing! It may just set the upper limit of what can be spent. It potentially can reduce the success of the top teams and allow someone smaller to challenge them, but it doesn't help fund the smaller teams and that seems to be the real issue.
I think a number of approaches need to be tried in parallel. I think if you move beyond the idea of a pure “aggregated cost cap” that you can put in place caps in specific areas and that can reduce overall costs for all teams. I think the best example of a good cap is a fixed (but low) cost for power units. Let those who provide them decide if they want to sell them at a loss or not. Little or no intrusive accounting needed. A better revenue sharing model will also benefit the smaller teams. The current model makes it nearly impossible for small teams to break into the sport, grow and then survive.

Richard

[Oldtony]

Originally Posted by miatanut

This is a place I disagree. I think there will always be young star designers with big ideas coming up through small teams. Eventually they get poached by larger teams, but the muse can be unpredictable and may not visit them again at the large team.

This, together with a limited freeing up of the regs. and some form of cost cap is where the potential future for keeping F1 exciting lies.
Cost caps can only stifle the availability to a team of physical resources, contracted services or wages. It cannot cost the value of ideas until they become proven intellectual property with a set cost.
The teams that those on this forum tend to call the ones with racing DNA (Williams and McLaren) are very much involved in the development of intellectual property. This is the real reason for their existence and F1 racing is the catalyst and vehicle for it happening. That is why tight regulation and the rapid banning of new concepts is so counter productive.
F1 has to make a decision, is it just about the entertainment or is it an area of technological and scientific progress. If it is just about the show luddites like Bernie can keep running the show for their own profit with a spec formula.
Otherwise let's give the dedicated intelligent young men the opportunity to try new and exciting concepts.
In the end the rich corporate type will gain control of their intellectual property and turn it into another corporate enterprise.

[Casper]

The approach I am leaning to is no cost cap and no technology limits but limit the resources at the track. Doing that makes the teams cherry pick what they can utilise because they will not be able to manage it. Take away the unlimited computer management and engineers, the steering wheel controls and the drive by wire and it effectively limits the amount of money they can spend because they will not be able to manage it without the equipment or manpower. They can still think and use technology but there will have to be trade offs due to everything they want to use not able to be manged/repaired at the track side. One man with one laptop and no networking back to anyone else and costs will instantly fall. All that can do for the lower financed teams is help them. It won't make them win on its own but it will bring them closer the the field. Cars will instantly became far more simple as complexity will not be rewarded.

[Oldtony]

The data situation in F1 is a very large part of the technology but I would suggest a comparatively small portion of the cost. And it is in fact probably the area in which transfer of technology via drivability improvements can contribute to progress.
With the increasing miniaturisation of technology you would probably have to impound watches etc to police it anyway. Probably tougher than the accounting process.
Maybe some limits on sensors could help but I think that may be a dead end.
I suppose I am thinking more how can cost capping work rather than reasons that it won't.

[Casper]

OT, the data is not the problem it is the management of the systems that are designed into the cars and the huge resources the teams take to the tracks to manage those systems that are costing a lot of money. Eliminate the tools they use to manage that technology and reduce the management resources at the track and costs will fall. Get rid of the steering wheel full of buttons, get rid of the radios, both are neither here nor there as far as costs go but they are management tools that drive a lot of costly technology and without them the technology fails.

[Richard C]

I know this stuff is generally proprietary, but can anyone point me to an online source of an educated guess as to the breakdown of a modern F1 Teams budget? I am curious where exactly the money is spent. Is it a little bit everywhere or is there a few items that are always the big spends. Point being focus in the right areas.

Richard