Lots of good comments and I will try to not repeat what others have already said.
Oh... can we rename this thread... How to fix F1?
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Originally Posted by Peter Mallett
You have a contract for a scope of work, in this case a massive bridge. You've agreed a lump sum for the scope of work of say $500m.
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Your analogy starts out from the wrong position. It assumes at the end that the bridge will meet a given spec. That is completely wrong. F1 expects a VERY minimal spec and that is the safety requirements. Which clearly can be achieved for little money (when looking at the scope of the total capped budget)
A better example would be if you were running a reality TV show about home remodeling. You pick three identical apartments, give the designers the same amount of money, let them have at it. In the end a panel of judges votes on who does the best job. Receipts must be kept during the remodel. You will be able to rank them first to last. Cost capped F1 is pretty much the same thing.
The goal is to not make a specific product and hope it comes in under budget, but to see who makes the best product within a fixed budget.
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Originally Posted by Peter Mallett
As a result, the teams will be seeking shortcuts in order to stay afloat. And those short cuts will inevitably involve safety in terms of the structure of the car, engine longevity and all other things where a manufacturer can control expenditure or they will be banging on the door seeking additional funds and there will be no racing anywhere.
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I think this can be proven to be false. Especially with respect to teams funding development by skimping on required safety. I don't think it happens today, so why would it happen in the future. Ask any group inside a team if they could use more money. The answer will always be "yes". So why are they not stealing it from the safety budget today?
So the cost cap clearly sets the budget, but clearly that means you have to spend less money. I guess by definition that means spending less money than they would normally. It DOES mean lesser solutions. Or at least lesser somewhere, but not safety (as the car would not pass safety tests and inspections). It is likely to result in less than currently stellar reliability that we see today. All of which... gasp... might bring a level of unpredictability to the sport and in a less contrived way (i.e. DRS and tires that are engineered to perform badly).
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Originally Posted by Peter Mallett
So, IMO we don't need cost caps, we need to make the whole thing cheaper to enter and that means returning to realistic technology.
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Please explain how creating tighter technical regulations (such as simpler power units) will reduce overall budgets. It may shift spending around, but it's unlikely to shrink them. I may put it in my signature line as I say it enough... "Budgets are based upon the perceived prestige of the series and your ability to source funding, not by the complexity of the technical regulations." I would say the only exception to this rule is if the regulations are EXTREMELY tight so as that nearly any budget to improve things is very deep into the realm of diminishing returns. NASCAR has relatively tight technical regulations and a desire by the rule makers to keep it "low tech". Budgets for those teams were only as limited by how much funding they could get and they always found ways to spend the money.
Quote:
Originally Posted by Peter Mallett
Indeed but they can afford it because they aren't cost capped.
Can you imagine the scene, only two cars on the grid for Abu Dhabi because the others have too much season at the end of their money.
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So teams run under budgets today. I expect there is some flexibility and potential for the budget to grow if needed, but broadly speaking the team operates on a value that is known at the start of the season. So why are teams not running out of money and not being able to attend the last races today? Maybe because they actually operate against their budget and plan ahead? That includes development over the span of the season as well as some contingency funding set aside for emergency purposes.
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Originally Posted by chillibowl
as for cost overruns...allowance can be made under a soft cap scenario (used by other sports sometimes called a luxury tax) whereby overspending is taxed and with that tax money being redistributed in some fashion among those that live under the cap.
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Yes! There are solutions for unexpected expenditures, etc. It could be done in a number of ways. Soft caps is just one of them.
Richard