Improving F1

[csirl]

Ban all those steering wheel buttons that change the set-up, brakes, engine etc. multiple times a lap to the extent that a car is always perfectly set-up for every corner. This is a major reason for the lack of overtaking. It is difficult to overtake a car that is always perfectly set-up.

Let each driver chose one setting which has to be used for the whole race - brings back the old fashioned driver skill of chosing the optimum single setting for a circuit. And the driver having to compensate with skill in those corners where the car isnt perfect.

[Moneyseeker]

Originally Posted by bella

have to say i think f1 hasn't been about prize money for so long that it may as well be a flat rate to all teams to ensure that everyone gets a fair deal. however, that would mean some big egos having to take a seat, so it's totally never going to happen.

i wonder how much each team could expect to receive if everyone was equal?

The new deal that FOM has with the teams is they get 63% of F1's operating profit which was £468M last year. It is estimated that 60% of the £468M goes to the top 5 teams (I presume scaled) with the remainder shared by the next 5 (again scaled), and the 11th team getting nothing.

So if it was shared equally, based on 2012 figures they would get approx. £46M each.

[Marbot]

From what I can make of the posted article, it appears that the whole fund is divided into two and one half of that is divided into ten, so that each team who finish in the top ten get a substantial, and equal, pay out from BE/CVC. The other half is divided, by means a sliding scale, among the teams according to the finishing order in the constructors championship. Ferrari also get an additional sum of money from the funds just for being Ferrari. It's a sweetener that stops them from taking their ball home, and then playing with some other kids, just to spite us all.

[chillibowl]

im know im beating a dead horse with the cost cap stuff but i dont see why its unworkable considering they are already adding up everything and then reporting that to their local tax authorities who have far more punishments (and ability to conduct audits) at their disposal then the FIA.

i agree that it would require more honesty on the part of the teams then we are used too but surely that also applies to adhering to the technical rules which for the most part they do follow.

i could be persuaded that a budget cap may not be in the best interest of the sport but given my profession (accountant obviously) i cannot be convinced that adding up numbers is an unworkable task. hard sure but not impossible

[Moneyseeker]

Originally Posted by chillibowl

im know im beating a dead horse with the cost cap stuff but i dont see why its unworkable considering they are already adding up everything and then reporting that to their local tax authorities who have far more punishments (and ability to conduct audits) at their disposal then the FIA.

i agree that it would require more honesty on the part of the teams then we are used too but surely that also applies to adhering to the technical rules which for the most part they do follow.

i could be persuaded that a budget cap may not be in the best interest of the sport but given my profession (accountant obviously) i cannot be convinced that adding up numbers is an unworkable task. hard sure but not impossible

If we work on the basis that the teams are more ingenious than the regulators, which has been shown on many occasions over the years than a cost cap is going to be unworkable.

I am sure you will know all of this and more, but you only have to look at how big corporations are running rings around various governments around the world in terms of tax reduction/avoidance call it what you will.

If you were a government tax inspector sitting down compiling tax policy would you have ever dreamt of trying to cover a scenario where someone buys a £2.50 coffee in a café in London, who then charges another division of the same company to use the brand name of the company and then charges themselves for the right to sell the item and all of it is administered(eventually) out of the Cayman Islands or Luxembourg?

That is what you are up against. You can imagine that Red Bull (for example) could set up 100 companies to supply Red Bull Racing with parts and services at below cost in order to be under the cap.

[chillibowl]

i so want to write a long response and maybe i will and we can continue this via PM because i do find this topic fascinating but for now ill try to keep it short.

you make great points and i dont disagree with most of you are saying because monitoring a budget cap is fraught with challenges. however, the existence of soft and hard budgets in other sports means that many of the rules and processes needed to create a framework for how it would work already exist so for that reason alone i dont think the idea can be dismissed as unworkable.

second, without a doubt i believe that each team principle knows within a penny how much their team has spent in a given year so the work of calculating those amounts has already been done. for me that suggests all that is required to make this work is a mechanism through which it becomes in all the teams interests to disclose those numbers freely.

maybe its a payout based of coming below the budget cap number or maybe its a graduating system of fines for overspending. by that i mean the penalties for being caught overspending is less then the fines for voluntarily disclosing the overspending. such a mechanism (called the luxury tax in the NBA) means the big boys gets to throw their money around but that there remains restraint and that creates the parity required for all the teams operating on a more level playing field then we currently have.

the point is that this has all been done before and usually to the benefit of the competition level in the sports that adopt these rules.

that was still too long!

[wnut]

OK Chillibowl, I am the managing director of Magnetti Marelli (I wish!) and we have spent a billion dollars developing electronic control of boundary layer aerodynamics.

I wish to have all my electronic components inserted into FIAT and its subsidiaries products! I go to Ferrari and say, "If you can get the FIAT deal, Magnetti will give you the technical assistance to run ECBLA (electronic control boundary layer aerodynamics - couldn't resist!) on your cars in F1 at no cost!"

All possible with 5 manufacturers, hundreds of suppliers and hundreds of components!

How do you account for that?

[Paradise City]

You could introduce a cost-cap and it might have a salutary effect for awhile but then it would crumble as struggling teams will devise accounting strategies and commercial devices that would circumvent that. It's frankly inevitable as teams are desperate to recoup any slipping advantage or prevent a slide down the grid which would have serious commercial implications. Alot of these teams are particularly cash intensive and the kingfish that run them have multidisciplined business empires.

Maybe that 'salutary effect' is enough to justify a cost cap even if it only lasts awhile - I dunno. But don't have any illusions about it being watertight or that there are clever brains readily available to circumvent it to the degree that the authorities would be hamstrung to prevent it. It's kinda like the way you can't deliberately cause a yellow in NASCAR to help yourself or your teammate. You can if you are clever enough so much so the governing authority would have no decisive evidence and therefore would be powerless to act. A surprising amount of sport depends on such an honour system.

We're dealing with teams owners and investors in F1 that have founded big fortunes by playing on the edge of ethical business practice. An agreement with a promise of a bright future is OK today but is a distant memory tomorrow when the seas are rough.

[wnut]

Originally Posted by Paradise City

A surprising amount of sport depends on such an honour system.

We're dealing with teams owners and investors in F1 that have founded big fortunes by playing on the edge of ethical business practice. An agreement with a promise of a bright future is OK today but is a distant memory tomorrow when the seas are rough.

Claimer rules would seem the only way to do a cost cap properly!

They most assuredly work, and stop people spending ridiculous amounts.

F1 is however about fleecing the sponsors, so don't expect any solutions that are anything but window dressing!

[Marbot]

Originally Posted by wnut

Claimer rules would seem the only way to do a cost cap properly!

They most assuredly work, and stop people spending ridiculous amounts.

It certainly works in MotoGP, or at least it does for half of the teams! About 50% of the grid are running what amounts to something that's not much different to a road bike, whilst the other half continues to spend lots of cash on finite improvements to engine and chassis design. Try to imagine that half of the F1 grid is basically made up of F3 cars of variable description, and you'll get the picture.

Ironically, Honda is now producing a customer version of its prototype machine.

[wnut]

Originally Posted by Marbot

It certainly works in MotoGP, or at least it does for half of the teams! About 50% of the grid are running what amounts to something that's not much different to a road bike, whilst the other half continues to spend lots of cash on finite improvements to engine and chassis design. Try to imagine that half of the F1 grid is basically made up of F3 cars of variable description, and you'll get the picture.

Ironically, Honda is now producing a customer version of its prototype machine.

If there are claimer rules, then people stop spending money, because the opposition can buy your expensive unobtanium for a set price and it is just expensive self defeating to try and build exotic components.

A team from the other half of the grid just puts down $6000 and walks off with your $ 100 000 version of the road bike engine.

Stops the spending race very quickly and shows everybody your clever tricks! Parity!

[Moneyseeker]

Some good points made on cost cutting, the general consensus is that if a cap were brought in the teams would very quickly find away round it, which probably says a lot about how F1 teams are perceived these days....

[JacobP]

Originally Posted by csirl

Ban all those steering wheel buttons that change the set-up, brakes, engine etc. multiple times a lap to the extent that a car is always perfectly set-up for every corner. This is a major reason for the lack of overtaking. It is difficult to overtake a car that is always perfectly set-up.

Let each driver chose one setting which has to be used for the whole race - brings back the old fashioned driver skill of chosing the optimum single setting for a circuit. And the driver having to compensate with skill in those corners where the car isnt perfect.

Fixed but suboptimal brake bias could potentially be a safety issue, wouldn't it? As for engine tunes, I think those have to do more with fuel flow than with handling. That one is important when the car is running low on fuel.

[JacobP]

I don't think anything should be done about the "escalating" costs. F1 was just as expensive 30 years ago. A lot of mismanaged teams have gone through the usual birth-life-and-death cycle. The original Lotus, Ligier, Tyrrell, etc, went out of business or got sold. Now we have some people advocating that if you cap every team's budget at the level of Marussia, then every race will end in a 10-way tie. I really doubt this will happen.

A more reasonable approach is to ban certain practices and technologies. For example, the ban on unlimited testing is good to control the costs. (But it's probably bad for other reasons..). And, restrict engine and chassis rules to a tight spec so that there is very little room to spend millions on blue skies research.

[Marbot]

Originally Posted by JacobP

I don't think anything should be done about the "escalating" costs. F1 was just as expensive 30 years ago.

Not even close to being just as expensive, even allowing for ridiculous amounts of inflation.

Ferrari's two new race trucks cost a cool £3m and they are some of the least expensive items in F1. New wind tunnel: £50m minimum. Floor: £300K minimum. Monocoque/Chassis: £1m minimum, etc and so on.

Originally Posted by JacobP

I really doubt this will happen.

So do I, and so you would wonder why the big spenders have such a big problem with it.

Originally Posted by JacobP

A more reasonable approach is to ban certain practices and technologies. For example, the ban on unlimited testing is good to control the costs. (But it's probably bad for other reasons..). And, restrict engine and chassis rules to a tight spec so that there is very little room to spend millions on blue skies research.

Ironically, this is exactly what F1 has been doing, much to the chagrin of others. Even testing has been increased for the end of the season (tyres) and for next season.

[chillibowl]

Originally Posted by Moneyseeker

You can imagine that Red Bull (for example) could set up 100 companies to supply Red Bull Racing with parts and services at below cost in order to be under the cap.

Originally Posted by wnut

I wish to have all my electronic components inserted into FIAT and its subsidiaries products! I go to Ferrari and say, "If you can get the FIAT deal, Magnetti will give you the technical assistance to run ECBLA (electronic control boundary layer aerodynamics - couldn't resist!) on your cars in F1 at no cost!"

several ways to handle that imo. in wnut's example the brakes do have a fair market value even if the F1 team got it for free so the FMV would be the hit that the team takes against its cap. one could argue that these brakes only have value to an F1 team or were part of a larger commercial deal so how do you get to a FMV? in the absence of a compromise then an average of what other teams are spending on a similar part could be used. its boring stuff but Canada has (and im assuming most western tax authorities do as well) have very clear guidelines on how to value deals involving with non arm's length transactions between related parties.

but thats unnecessarily complicated as the team would have done the work for us. when they listed that part in the inventory system or on a cargo manifest (which they already voluntarily turn over to FOM) they also would have assigned a replacement value to it as a matter of course of insuring the container and for the customs officers of the country they are visiting so they are already assigning a value to it themselves.

so a variety of methods would be available to determine what their cap hit would be.

anyway we could do this all day, you guys come up with reasons why it wont work and me responding with pie in the sky solutions that sound good on paper but wholly untestable. while thats fun i would say it gets us nowhere because,

Originally Posted by Moneyseeker

Some good points made on cost cutting, the general consensus is that if a cap were brought in the teams would very quickly find away round it, which probably says a lot about how F1 teams are perceived these days....

true. perhaps thats the area which F1 need the most improvement in.

[Moneyseeker]

Originally Posted by JacobP

For example, the ban on unlimited testing is good to control the costs. (But it's probably bad for other reasons..). And, restrict engine and chassis rules to a tight spec so that there is very little room to spend millions on blue skies research.

They have spent it on simulators and millions of pounds of software, so I doubt the testing ban has saved much in real terms.

This is where the naivety of regulation comes in, those making the rules think that by banning or controlling X,Y and Z it will 'save' money, it won't the top teams will simply spend it on another area of the team or development.

[miatanut]

Originally Posted by chillibowl

but thats unnecessarily complicated as the team would have done the work for us. when they listed that part in the inventory system or on a cargo manifest (which they already voluntarily turn over to FOM) they also would have assigned a replacement value to it as a matter of course of insuring the container and for the customs officers of the country they are visiting so they are already assigning a value to it themselves.

While I have long argued for open technical regs with cost caps, this does bring up a good point. On insurance and customs docs they would just lie. The form says "Automotive brakes" @ $150 ea. That wouldn't arouse any suspicion, right? If a shipment of some $250,000 item goes missing or gets damaged, they would just figure that is a cost of business. The bigger problem would probably be that it is most likely impossible to replace it in time.

My thinking was most of what goes into an F1 car is stuff bought from various speed shops who are in it to make a buck, which would discourage them from selling the stuff below cost. It hadn't occurred to me the team would buy suppliers. In that case, I would say one would need to apply "program accounting" like Boeing uses to track the costs of each new jetliner. All the cost of the engineering staff, proportionate tooling costs, etc. and presumably an allowance for profit would have to be combined to identify the true cost of producing that item. Given what design and development cost, an F1 team would probably rather an independent supplier take on that cost and risk. In a lot of cases, the supplier can try to sell their trick new item to other teams and defray the cost, allowing them to actually sell it cheaper and still make a buck.

[spider]

One thing I'd say about F1 and the issue of getting fresh drivers into the sport, and forcing even the top teams to run a new/exciting driver, a rule on one driver in each team having have had less than x amount of races, could spice things up.

Each of the top teams, the Red Bull's and Ferrari's would no longer have a steady Eddie in a Webber/Massa in the second car, but an up and comer. Perhaps having a rule so the person in the second seat has to have had less than 40 races at the start of the season, could be interesting. Just a thought...but it'd at least see the likes of Vettel/Alonso paired with young/exciting drivers...

Team's would have one experienced driver paired with a moderate rookie...

[Marbot]

Some would say that the only reason they watch F1 is because they like to see supposedly 'equal' team mates going head-to-head with one another.

And it's also possible that only a few of these 'up and coming' drivers have huge amounts of sponsorship money that might not only get that driver chosen, not because he's an especially good driver, but because his sponsorship money will, most likely, bring the most performance to that teams car, which means a better chance of even more money from FOM/CVC, which would also mean that they then have more money with which to tempt the the rookie driver with the most sponsorship money.

It's all very well having a 'rookie' driver in your car, but most performance for your car will come from having a rookie driver with the deepest pockets.

[wnut]

Originally Posted by Marbot

And it's also possible that only a few of these 'up and coming' drivers have huge amounts of sponsorship money that might not only get that driver chosen, not because he's an especially good driver, but because his sponsorship money will, most likely, bring the most performance to that teams car, which means a better chance of even more money from FOM/CVC, which would also mean that they then have more money with which to tempt the the rookie driver with the most sponsorship money.

It's all very well having a 'rookie' driver in your car, but most performance for your car will come from having a rookie driver with the deepest pockets.

I would like to see a trade off analysis between a rookie driver and a good driver.
I would submit that the only place for a rookie driver with deep pockets is in a second car, and you can work out exactly how much his incompetence has cost you!
Two deep pocketed rookies is just a plain, expensive disaster!

[wnut]

Originally Posted by Moneyseeker

They have spent it on simulators and millions of pounds of software, so I doubt the testing ban has saved much in real terms.

This is where the naivety of regulation comes in, those making the rules think that by banning or controlling X,Y and Z it will 'save' money, it won't the top teams will simply spend it on another area of the team or development.

When you look at the simulators, you have to include that banning testing, was just a way of ensuring any small team had no chance of crawling on to the playing field.

So much money!

[csirl]

F1 should focus on the running costs of the cars i.e. how much it costs per km to drive a F1 car around a circuit. This could involve banning various short lived components that are changed from race to race. It would be good to get to a situation where the cost of running a car is not much more than the cost of a tank of fuel and the tyres.

Then introduce unlimited testing. This would level the playing field. Would help eliminate big advantage that the rich teams with sophisticated rigs/simulators have. Would also allow the smaller teams to develop theior cars more effectively during the season. A small team could simply go on circuit and put in the mileage with a test driver.

[wolfhound]

One advantage of cost limited F1 would be to allow the rule book to be opened up. You could be allowed to test as much as you want for example but it would have to be accounted for under the cost cap.

However you would not want a driver who spends a lot of time armco testing as that would be a cost not budgeted for!

[wnut]

Originally Posted by wolfhound

One advantage of cost limited F1 would be to allow the rule book to be opened up. You could be allowed to test as much as you want for example but it would have to be accounted for under the cost cap.

However you would not want a driver who spends a lot of time armco testing as that would be a cost not budgeted for!

If you are on a current F1 track, you would have to screw up mightily to conduct an armco test!