V8's hit with a Salary Cap

[ozrevhead]

Originally Posted by foxsports.com.au

V8 Supercar teams will be liable for sanctions of up to $1 million for breaches of a salary cap to be introduced next year.

Two-car teams will have a total of $6.75million to spend under the Total Racing Expenditure Cap introduced to make the series more competitive.
The difference between corporate-backed teams and the independent outfits will narrow further when the cap is reduced in 2008.

The operating fund will cover everything from driver salaries to the cost of running a racing operation, but it will not apply to spending on promotion and marketing.

Fines for exceeding the limit can range from $1million to starting from the back of the grid for an entire season or starting an endurance race two laps down on the field.

The cap was designed by the Touring Car Entrants Group (TEGA) commission that includes former AFL boss Ross Oakley and former Federal Opposition leader John Hewson. The group was formed after approaches from several Supercar teams worried about the continuing viability in an environment of spiraling costs.

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Interesting

[peckstar]

i have no problems with this as a theory. how will it be enforced will be the question. maybe GTR is looking for a move from PMM to V8SA. I would imagine most of a drivers wage will be considered a marketing expense.

the potential penalties concern me. loss of all points for a year, starting negative next year, cash fine, the possibilities are endless.

and you know TW is going to push this to the N'th degree

[cavvy]

Originally Posted by peckstar

and you know TW is going to push this to the N'th degree

A canny Scot will surely get more for his dollar - not sure thats what you mean peckstar??

[peckstar]

not quite what i meant. we know that he pushes the rules toi the absolute limit, and im not sure V8SA have the resources to keep him under control on this

[Raglanparade]

Maybe the price of certain things will be discounted..

Ie. the staff at HRT go onto Holden Australia's payrolll instead of HRT's... and the FPR staff become staff of Ford Australia that just happen to go racing on the weekends...

[Armco Bender]

or the drivers are given a few shares so they become "owners" instead of drivers.......theres a million way round salary caps.
If they phone any NRL Team they can probably learn another million.

[Just Do It!]

It still makes it easy for the big teams a they can share staff.

Also, how will drivers salaries that come from the manufacturer be included? Lowndes gets $1 million from Ford and $300,000 from 888 for example. Is the $1 million from Ford included??

[WebberForWDC]

Yes of course it is.

The thought of Skaifey starting every every Race 1 from 31st, instead of his usual efforts in R1 ensuring he starts from P31 in race 2 should be enough to keep Walkinshaw Performance in line.

[D.R.T.]

Cant say I agree with this move. Time will tell how long it lasts.

[kramer]

So you blow up a couple of extra engines or have a couple of big crashes - do you get an allowance for that? IMO cost cutting only ever means the same money gets moved to another area.

I reckon it'll be unenforcable and unworkable. But it will allow TEGA / VESA to employ a few more mates at the expense of the teams, sponsors and fans.

And now their's drug testing in chess! Where does it all end?


Kramer

[racer69]

Originally Posted by WebberForWDC

Yes of course it is.

How can that be included, it is a TEAM expenditure cap, not a manufacturer spending cap.


Will VESA start demanding to have a look at Ford Australia's books

[Ross Cadell]

Originally Posted by Just Do It!

It still makes it easy for the big teams a they can share staff.

Also, how will drivers salaries that come from the manufacturer be included? Lowndes gets $1 million from Ford and $300,000 from 888 for example. Is the $1 million from Ford included??

If it is like the NRL salary cap it will count. It is the bane of my existence in setting up player appearances and advertising at the Knights

Under the Rugby League model all income from the club, related entities and club sposnors count under the salary cap.

Just say the Knights are sponsored by Coal & Allied (well we are!) and say Coal & Allied want to get Andrew Johns to appear on an advertisment to tell the world that their coal is the best in the world. Andrew's agent then negotiates a private fee as a single player is not included in club Intellectual property rights. The knights then get that included on salary cap limits.

Their is a full time auditor Ian Schubert that has the ability to examine all financial records of any club. Most of us run things past him before they happen and he is quite reasonable. We wanted to be able to supply the food for the players during training days but technically it could be seen as a benefit to them so he had to sign off that it was a football performance measure and not an inducment to play.

From time to time he will see a player in an ad or brochure and write to us with a please explain and if we cant we get pinged.

I prefer the model that would see teams be able to spend whatever they want but they are "taxed" by the organising body for all expenditure over a level and that is redistributed to the teams that dont breach that level for example.

Cap = $5 Mil Tax = 0-$1 Mill 20%, $1-2Mill 40%, $2Mill-4 60%, $4Mill+ 100%

So

team A spends $8 Mill
Team B spends $6.5 Mill
Team C spends $5 Mill
Team D spends $3 Mill

Under that Team A would pay $1.8 mill (60% of 3 mill) team B would pay $600K (40% of 1.5Mill) and teams C & D would recieve $1.2Mill each (2.4 Split) equally amongst the teams not breaching the cap. (means a great xmas party)

It leads to greater transparency as the consequences are not as great as exlcusion or million dollar fines and actually empowers the smaller teams with some cash. It allows the have's to keep going but with penalties and at a point that spend becomes overly negative.

It is an economic rationals solution. From a non rational, non economist

[Peddler]

If it is a step in the direction of creating REAL parity... i recon it should be welcomed with open arms. The thing is, i dont think that it is

[cmifsud]

But what will stop, for example, "Perkins Engineering", "Triple 8", or "Skaife Sports" spending money for "Jack Daniels Racing", "Vodafone Racing", and "Holden Racing Team".

[RotorFan]

For what its worth, I am against this 100%. V8 Supercars should be about the pinnacle of racing, engineering and people in this country (as it basically is now). Instead, they want it to be the pinnacle of accounting.

The overhead of this exercise should make it infeasible.

At what point will there be no incentive left for teams to compete? The more freedom you remove from the paddock, the more it becomes a marketing exercise.

I know this isn't alot better than what they are already planning to do, but what about somehow banning manufacturer support? That seems to be the real issue that the smaller teams are complaining about.

Originally Posted by Ross Cadell

I prefer the model that would see teams be able to spend whatever they want but they are "taxed" by the organising body for all expenditure over a level and that is redistributed to the teams that dont breach that level for example.

Now here is a bloke who is actually giving some intelligent thought to the matter!

[aussie_f3]

Great post Ross.....cant see why a similar system couldnt work in V8SC....if it is deemed to need a Salary Cap!!....for mine it would be pay what you need to go faster - if you cant pay you go slower!

[touring fan01]

"The operating fund will cover everything from driver salaries to the cost of running a racing operation, but it will not apply to spending on promotion and marketing."

Well there's a terrific loophole, for a start!

Define "promotion and marketing"?

Let me give just one example; The driver gets paid, say, $100,000 from the team for driving. But he gets paid $700,000 for "promotional & marketing" duties from the manufacturer or sponsor etc.

Or what about this one; Tell me the difference between racing in the championship, or racing for "promotional and marketing" purposes? Some team could say it has a budget of, say, $3 million for competing in the series and another $8 million for competing in a "promotional & marketing" program - which just happens to coincide with the races.

If they think the shrewd operators are going to meekly comply with the "cap", they are dreaming.

[cavvy]

Originally Posted by touring fan01

"The operating fund will cover everything from driver salaries to the cost of running a racing operation, but it will not apply to spending on promotion and marketing."

Well there's a terrific loophole, for a start!

Define "promotion and marketing"?

Let me give just one example; The driver gets paid, say, $100,000 from the team for driving. But he gets paid $700,000 for "promotional & marketing" duties from the manufacturer or sponsor etc.

Or what about this one; Tell me the difference between racing in the championship, or racing for "promotional and marketing" purposes? Some team could say it has a budget of, say, $3 million for competing in the series and another $8 million for competing in a "promotional & marketing" program - which just happens to coincide with the races.

If they think the shrewd operators are going to meekly comply with the "cap", they are dreaming.

Ross Oakley was involved in the application of the salary cap in AFL & just because you dont believe in it does not mean it wont work.

The wages/promotion issue is addressed by the AFL & policed - go & research its application in the AFL, google it

The biggest problem for most teams is raising the budget.

[kmsport]

I would assume then, that a standardised and transparent accounting system will be applied to all?

[Senna05]

How did the Western Force openly pay Mat Giteau X and he gets 1.5 mil?

I then have to ask - are "Donations" to a person/team then permitted?

I like your idea, Ross. I think it could work with most sports.

I have to ask, is this an ideal cost cutting measure, OR is it the end of marketable and intelligent engineers in VESA? Becuase some of these guys could earn millions in open wheelers or NASCAR.

I guess with the onset of control components we don't need ace engineers anymore, eh?

[cavvy]

Originally Posted by Senna05

How did the Western Force openly pay Mat Giteau X and he gets 1.5 mil?

I then have to ask - are "Donations" to a person/team then permitted?

I like your idea, Ross. I think it could work with most sports.

I have to ask, is this an ideal cost cutting measure, OR is it the end of marketable and intelligent engineers in VESA? Becuase some of these guys could earn millions in open wheelers or NASCAR.

I guess with the onset of control components we don't need ace engineers anymore, eh?

No wonder you are battling to comprehend - rugby union is hardly professional sport (get John O'Neil back).

Ross Oakley brings to bear his AFL experience & both the rugby codes play second fiddle ... compare the dollars paid for the TV rights & soccer cant yet make it on to free to air.

Drivers wages are more likely to feel the razor than the engineers - V8 drivers have no international value & the market will dictate, particularly with both Ford & GM struggling internationally.

Salary caps are only as good as those who police them.

[retro]

click here

[Armco Bender]

No wonder you are battling to comprehend - rugby union is hardly professional sport (get John O'Neil back).

Errr the world is slighty larger than Melbourne,Victoria,Rugby is bigger than AFL/League/V8's combined and then some.And Rugbys been getting around salary caps for years.

[Azza500]

Originally Posted by Armco Bender

Errr the world is slighty larger than Melbourne,Victoria,Rugby is bigger than AFL/League/V8's combined and then some.And Rugbys been getting around salary caps for years.

couldnt agree more armco most aussies think because their land mass is quite big that they are the be all and end all of the planet someone should remind them that this is not the case and that rugby is a worldwide sport
by the way i think the A1gp also has a bigger audiance worldwide than the V8s do they also dont lie about crowd attendance, the cochroach must be dissapointed that phillip islands attendance didnt top last years despite his attempts at manufacturing the result for more bums on seats

[Azza500]

i dont think the cap is going to change the TWR situation hes always been good at bending rules and getting away with it and if he doesnt get away with it i think hell just drive it into the ground like he did with arrows