The Budget Cap

[chillibowl]

Originally Posted by Tourer

Many unknowns in regard to how it will be policed and dealt with - really no way of knowing how it all might end up.

yep!

Originally Posted by Casper

...I wonder if the bigger teams always had in mind to start complaining and never had any intention of trying to comply being the bullies within the sport that they are when it comes to stuff like this...

no doubt they will always work towards their own advantage, but they seemed to have been willing to live with the cap last year in what was perhaps the most closely contested season ever.

if RB had overspent then im sure Merc would have gone absolutely mental...and vice versa.

i suspect the teams themselves have a pretty good idea what things cost and are probably pretty good at figuring out what the other guy is spending. self policing, in the same way they police each others updates and interpretations of the rules, does sort of work.

as mentioned, early days though and we havent seen a true challenge to the system yet so until then who knows what will happens?

Originally Posted by Richard Casto

3. What if a team overspends but wins a championship? If the financial reporting period is annual, do you overturn in January a championship that ended the prior November? The final numbers will not be reported until end of December.

for my part, i would be fine if they kept their title but accordingly they should face a financial penalties sizable enough (well more than Mclaren's 100m for example) to render them uncompetitive for the next several seasons. would also also be fine with key staff being suspended or other creative solutions if monetary fines prove ineffective.

but again as the system is new, it will take a while before it gets worked out.

[Richard C]

Originally Posted by chillibowl

for my part, i would be fine if they kept their title but accordingly they should face a financial penalties sizable enough (well more than Mclaren's 100m for example) to render them uncompetitive for the next several seasons. would also also be fine with key staff being suspended or other creative solutions if monetary fines prove ineffective.

I think that is the goal. Either you have intrusive mid-season reporting (catch things PRIOR to end of year conclusion), or you do as they have, but with the hammer coming down later. Even if a team or driver might be able to keep any title after the fact, you would hope that they want to prevent having an asterisk tagged to any championship (not to mention being hobbled in the future). Fans will say.. "Yeah, X team won, but they cheated that season and were punished next season".

Richard

[chillibowl]

Originally Posted by Richard Casto

Fans will say.. "Yeah, X team won, but they cheated that season and were punished next season".

fans will say this! lol

accusation of cheating/manipulation does erode faith in competition and of course this is a bad thing (see the fall of heavy weight boxing or road racing cycling).

they really will need to go very aggressive against the first major violator in order to set the tone going forward.

[PhilipR]

It will be interesting to find out what happens if teams breach the cap and what the punishments will be. It will also be farcial if a champions are changed in April after the spending is reported

However I imagine the issues with the cap will be mostly for this and maybe next year. For this year they had to develop to new regs , invest heavily into R&D and the cars being new they have a large potential for fast development. I imagine once teams get a hang of their cars and concepts, spending will go down and will be manageable - similar to last season when teams carried over the 2020 cars and chasis.

I do worry if a team starts a season with a massive advantage, would the 2nd and 3rd place teams be willing to invest to catch up or use the budget to develop the following years car - they would also receive more CAD and Windtunnel time as well. It could lead to advantages being preserved for the year if teams decide shift focus to following year - also under the cap prize money is not as valuable as it was before and can see teams give up on a season for a better chance the following one

[Casper]

Horner is getting very excited and vocal about his need for a more money. When every team is up against the cap figure maybe he will then have a point but his constant lobbying and the political antics he is willing to engage in are simply that...antics. Are RB running out of capital to continue funding development of the car this year, I guess that is the question.

[VIVA GT]

Maybe they've done a projection and can see that although they haven't spent everything they're allowed to do yet, but if they carry on spending the way they are doing they soon will?

[chillibowl]

horner's the boy who cried wolff one too many times!

perhaps he has a valid point here but between all the other noise surrounding this team, i cant say i care at all what their issues are.

[Richard C]

Who of the current teams are operating under the current cap? Where is the outcry for them?



If anyone needs assistance, maybe it's the small and not the big teams?

Anyhow, I still think the teams have enough wiggle room to cut development to make it through the end of the year. Frankly this is exactly what the cap is in place to do.

Richard

[Casper]

Originally Posted by Richard Casto

Who of the current teams are operating under the current cap? Where is the outcry for them?



If anyone needs assistance, maybe it's the small and not the big teams?

Anyhow, I still think the teams have enough wiggle room to cut development to make it through the end of the year. Frankly this is exactly what the cap is in place to do.

Richard

Maybe the teams whose funding is short of the cap should have subsidy payment to be able to reach the cap. As it stands now the cap when looked at in that way is still not a level playing field. I can't think of any way that is truly equitable to all the teams so they may as well remove the cap and stop pretending that is is a level playing field for all the teams when clearly it is no such thing. Lifting the cap now allows the top teams to further the technical gap from first to last which makes the whole thing a total nonsense.

[P38 in workshop]

I am unimpressed by the whining about the budget cap.The whole F1 environment is numbers driven and has been for a long time so why it should be so hard to adapt to working with another set of numbers is a mystery.Eliminating monster hospitality centres and carbon wastepaper baskets might have been the easy part.Now they will have to rediscover the art of achieving more with less,which used to be a British speciality.It used to be what allowed tiny (mainly) British teams to compete with the factory teams based in Europe.What we seem to have now is a uniform approach with nobody deviating from the "accepted" way of doing things and I would predict success coming to the first outfit bold enough to deviate in their approach.

[S griffin]

All the teams knew what they signed up for when they agreed to the budget cap. Whining about it now is not fair

[Akrapovic]

https://www.autosport.com/f1/news/re...rcar/10329509/

So this is where the Budget Cap falls down. Red bull just happened to have a brand new ground-effect hypercard, designed by their F1 team, ready for sale. So it's now extremely evident that Red Bull has skirted around the budget cap and has been developing outside of the F1 team.

[Richard C]

Originally Posted by Akrapovic

https://www.autosport.com/f1/news/re...rcar/10329509/

So this is where the Budget Cap falls down. Red bull just happened to have a brand new ground-effect hypercard, designed by their F1 team, ready for sale. So it's now extremely evident that Red Bull has skirted around the budget cap and has been developing outside of the F1 team.

I would argue that "falls down" is a bit much. Frankly there is nothing that stops teams from benefiting from projects that exist within their larger ecosystem. The F1 budget cap does not solve ALL problems, nor should it be expected to do so. We are talking about road cars and F1 cars sharing aero concepts. If there was no ground effect cars would we claim Ferrari was doing aero development via their road car division? What happens when Porsche shows up and they are also building prototype race cars with near F1 performance. Are they allowed to bring in that knowledge and experience?

As to Newey learning something by doing R&D on first the Aston Martin Valkyrie and not the RB17, I tend to think that while no doubt they felt there was something that could be brought back into the F1 team via Newey's brain, I question how much it really tipped the scales. The implication here is that RB has better underbody performance because of this. I expect it did contribute. But it also seems likely that some other teams were just caught caught flat footed with respect to the dynamic nature of the new aero formula. Is it that RB is so good or that the other teams (such as Mercedes) are so bad?

Where is the Mercedes, Ferrari or McLaren ground force road cars? Or even development mules that could never have made it to production?

Of course the smaller teams could not do this. They probably can't afford to run up to the cap let alone fund commercial projects on the side that might increase their technical knowledge.

Richard

[Mike Harte]

Reality is that this is no different to when the new engine regime began with the introduction of the hybrid. At that time Mercedes had a huge advantage, which has lasted almost until this year because they had been developing a similar system for their road going vehicles.

So they transferred a number of the engineers, who had been working on that project, to the engine factory at Winkworth.

Should they have been penalised? Of course not, it was merely luck on their part, and not an infringement of the rules.

[Richard C]

Originally Posted by Richard Casto

...first the Aston Martin Valkyrie and NOW the RB17...

Small typo correction in bold

[Akrapovic]

Originally Posted by Richard Casto

I would argue that "falls down" is a bit much. Frankly there is nothing that stops teams from benefiting from projects that exist within their larger ecosystem.

Completely disagree. Because there's absolutely no way Williams and Haas, for example, are playing these sort of games. All this does is allow big teams to skirt around the regulations, where smaller teams are held to it.

Also, I'd argue "falls down" is completely correct. Have Red Bull spent more than the budget cap developing their car? Absolutely. So the rule has fallen down.

[thetool]

One big problem I think the budget cap and associated cut back on testing has is the increasing staleness of the driver line-up. With such limited opportunity for drivers to get running in contemporary Formula One cars, most teams find it profitable to stick with who they've got rather than offering opportunities to potentially better drivers.

The average driver on the 2022 grid is in their 7.4th season whereas in 2002 the average driver was in only their 5.1th season. Maybe 2002 was a particularly inexperienced year, I haven't calculated them all, just took the season 20 years prior as a reference.

[Richard C]

Originally Posted by Akrapovic

Completely disagree. Because there's absolutely no way Williams and Haas, for example, are playing these sort of games. All this does is allow big teams to skirt around the regulations, where smaller teams are held to it.

Also, I'd argue "falls down" is completely correct. Have Red Bull spent more than the budget cap developing their car? Absolutely. So the rule has fallen down.

I guess it "falls down" if everyone's expectations were that it was going to solve the disparity between teams and their ability to overspend. Only the teams know, but it is generally assumed that a number of teams have budgets UNDER the established cap. The only way to achieve what you are asking for is to both push the budget cap down to the lowest common denominator, or have a system to provide funding to the smallest teams to boost them up (which sounds good, but no doubt a bridge too far in this iteration of cap regulations). Plus additional expansion of regulations to completely firewall off teams from any outside knowledge. None of that is realistic.

IMHO, the caps are meant to be much more practical. They are pushing down the previously unlimited spending to some level. The unstated goals is to take the wind out of the sales of the big massive teams (Mercedes, Red Bull and Ferrari) and it seems to maybe be working given how much they are squealing at the moment.

There is always going to be some level of "squishiness" around teams getting some type of new knowledge (or however you want to phrase it) from money spent elsewhere. But the question is.. Is it an "egregious advantage" or some type of "blatant hole" in the regulations? I don't think it is. As I pointed out a number of teams are tied to auto manufactures and more are coming. They WILL bring in knowledge and experience from outside of the teams. Short of banning manufactures that will not happen (which I frankly would be OK with, but think mole people burrowing up from underground and revealing their existence is are more likely happen than manufactures getting kicked out)

Then we have to question... If manufactures are creating projects to sidestep the capped budgets, where do we draw the line for what is or is not OK? I think making road cars that have technical similarities to those of the F1 cars is FAR away from whatever line might be in place. Because placing the line in the location you suggest would be a nightmare to police and effectively says all manufactures are in violation. It is much better to draw a line where it can actually be governed and take what wins you can vs. trying to solve for perfection/world peace and not accomplish anything. Is the alternative to revert to what we did before which was a financial free for all? And I am not saying the caps are good just because the alternative is bad. I am saying they both seem to be working AND the alternative is bad.

Richard

[Akrapovic]

It falls down when you have a cap on spending and the result is teams spend even more money than before by going off and building what are essentially F1 prototypes for the new regulations, whilst also being able to bill that spend at £0.

There is a difference between knowledge squishiness and putting your design team to work on multiple prototypes, outside of spending regulations.

[Richard C]

Originally Posted by Akrapovic

It falls down when you have a cap on spending and the result is teams spend even more money than before by going off and building what are essentially F1 prototypes for the new regulations, whilst also being able to bill that spend at £0.

There is a difference between knowledge squishiness and putting your design team to work on multiple prototypes, outside of spending regulations.

It's OK that we can disagree on this. One season is not enough to see if this works. I think it is promising so far. Lets see what happens end of this season and maybe next. It's too early to write it off IMHO.

Richard

[chillibowl]

in fairness how much extra are they asking for?

lets say they are experiencing an extra 10% increase in (un)anticipated costs because of inflation...so that means what?

an extra 10-15mil over the cap that they are looking to access?

rules are rules so i agree they shouldn't get it (or it should come with such a penalty that they wouldn't bother taking it)...but its not a relatively huge amount not really a failure of the system is it?

[Tourer]

Originally Posted by Akrapovic

https://www.autosport.com/f1/news/re...rcar/10329509/

So this is where the Budget Cap falls down. Red bull just happened to have a brand new ground-effect hypercard, designed by their F1 team, ready for sale. So it's now extremely evident that Red Bull has skirted around the budget cap and has been developing outside of the F1 team.

Originally Posted by Akrapovic

Completely disagree. Because there's absolutely no way Williams and Haas, for example, are playing these sort of games. All this does is allow big teams to skirt around the regulations, where smaller teams are held to it.

Also, I'd argue "falls down" is completely correct. Have Red Bull spent more than the budget cap developing their car? Absolutely. So the rule has fallen down.

We can't say that RB has spent more than the budget cap "absolutely" any more than we can say the same thing for Mercedes, Ferrari, Renault, Aston - but there is the POSSIBILITY that those teams may have avoided the budget cap by using their other divisions - but that in turn depends on exactly how well the budget cap rules are written and policed.

It was only a few short months ago that there were suggestions that Mercedes in particular could skirt the budget cap and use other divisions to hide spend - but all those suggestions died away with the ordinary performance of the team so far this year.

The point that Horner's been making about budget cap adjustment is based on the inflation spike of recent times & I can see his point although I would have thought that any well-thought-through budget cap would have some allowance for inflation adjustment built in. If allowance such as that is not in the budget cap structure, it makes me question whether the structure is fit for purpose.

[Richard C]

Originally Posted by chillibowl

in fairness how much extra are they asking for?

lets say they are experiencing an extra 10% increase in (un)anticipated costs because of inflation...so that means what?

an extra 10-15mil over the cap that they are looking to access?

rules are rules so i agree they shouldn't get it (or it should come with such a penalty that they wouldn't bother taking it)...but its not a relatively huge amount not really a failure of the system is it?

I have not seen a specific value mentioned in any of the articles I have looked at. The financial regulations allow up to 5% overage without serious penalties kicking in. So it is expected that those teams with money will see how close to 5% over they can get.

The teams have talked up primarily the impacts to shipping costs, but sometimes other things as well (material, staff salary). I "think" I heard someone mention cost of utilities, travel, etc. But I think facility costs and travel/lodging for staff are excluded from the caps. So the question is... what are the "unplanned" increases. I think that is mostly shipping??? So how much of each teams budget is "shipping" and how much extra is that.

Frankly, I think the teams who could spend more than allowed will take whatever they can get and then adjust to that value. Including... no change to the caps. I will be frankly shocked if any of the large teams purposefully spend MORE than the 5% overage without being told they can. Imagine if Ferrari wins the WDC or WCC and spend OVER the 5% but RBR comes in second and spend under the 5% overage. Do you think Ferrari would come out of that unscathed? No. The next option is for the big teams to all overspend. But they would have to collude to do so. And even then, would they trust their peers to not screw them in the end (agree to overspend, then not overspend and then protest those who did overspend). And I am not sure if any type of collusion is legal (either in F1 or in general law) on something like this.

Richard

[VIVA GT]

Just a little sideways thought from me here. From what has been said it would appear that there are two (or maybe three, but I want to keep this simple) types of teams here; There are the big, wealthy teams who have budgeted to spent up to the prescribed budget cap (maybe already including the +5% tolerance), and other, smaller teams whose budget doesn't even reach that far.
The rise in costs due to inflation and whatever will have exactly the same percentage effect on ALL of the teams budgets, so why aren't the little guys whinging about it too?

[E.B]

Originally Posted by VIVA GT

Just a little sideways thought from me here. From what has been said it would appear that there are two (or maybe three, but I want to keep this simple) types of teams here; There are the big, wealthy teams who have budgeted to spent up to the prescribed budget cap (maybe already including the +5% tolerance), and other, smaller teams whose budget doesn't even reach that far.
The rise in costs due to inflation and whatever will have exactly the same percentage effect on ALL of the teams budgets, so why aren't the little guys whinging about it too?

Exactly right Viv..... the likes of Haas are working to a budget, one that happens to be below but close to the cap. The wealthier teams are having to make cuts from their previous budgets, as was the purpose and intent of the cap. They now say they cant meet that cap.

It seems the likes of Haas, when faced with inflationary items such as freight and overheads, have had to trim development costs to keep within their budget. They had to act in advance as soon as they became aware of increased costs over those allowed for in their budgets.

However, the wealthier teams have continued to develop and now find their expenditure, given the inflation aspect have or are likely to exceed the budget cap. In a nutshell it would appear they have been a bit more blasé about controlling their overall costs, with no (attempt at) trimming back to counter the cost increases.