FIA Plan to Introduce Budget Cap for 2009

[Red_Bull]

Max outlines plans for a budget cap


FIA President Max Mosley has revealed that Formula One will introduce a budget cap at the start of the 2009 season.

In a letter sent to all the teams, Mosley outlined plans for a budget cap discussed during last weeks meeting in Paris. He stated that it would apply to all costs excluding engines, drivers' salaries and promotion and marketing.

"Starting in 2009, there will be a cap on expenditure for all Formula One costs other than engines, drivers and expenditure exclusively for promotion and marketing," Mosley said in his letter.

"Because of the variety of arrangements, particularly shareholdings, team principals' remuneration will not be included in the cap."

However, the cap won't be decided upon until a meeting that will be attended by a financial representative from each of the 11 teams takes place in Paris at the end of the month.

A financial working group will also be appointed at the same time to try and finalise regulations before June 2008.

"If the financial working group are unable to devise a satisfactory method of checking expenditure or if a majority of the competing teams do not agree the proposals by June 30th, 2008, the cost reduction measures voted by the World Motor Sport Council will be adopted for 2009 in their entirety," Mosley added.

The idea of a budget cap was welcomed by the majority of the teams during last week's meeting, however, according to reports, one team, Ferrari, were opposed to the idea.

Source

I think this is a very good idea. I've thought for a while now that a budget cap is a positive step for F1 as it will mean teams will have to be a lot more efficient with their expenditure. Toyota for example, have been prolific spenders and have nothing worthwhile to show for the massive amounts of money spent each season. Clearly it's a gross waste when teams such as Renault can get the job done on half of what Toyota spend. Still, the article doesn't give any indications as to what the cap will be, or how it would be enforced. I mean, whats to stop manufacturers from creating a new division and spending the money there on research and development, then carry the benefits over into their F1 program?

However, I just wish that the budget cap was introduced years ago and that we don't have to suffer the FIA's alternative cost cutting measures such as engine limitations, or standard ECUs or whatever.

Of course, one team is opposed to the idea....Ferrari, as usual, standing in the way of any beneficial plans for the future of the sport

[-Cpt. J.-]

I hate the idea.

If you think about it from the sporting side, it's good. It will still be about who has the better car and who has the best driver... and over all team performance. It would really bring the teams closer together in terms of performance, and if there is one team well above all, that means they've clearly done their homework. Hell, it sounds too good to be true.

What I wonder is how will the FIA monitor the spending? It will take 5minutes for a weaker team to say "They cheat with their budget, there's nothing wrong in our car or team. We're the only team that stay within the rules. ALL OTHERS CHEAT!!!" Ok so I'm exaggerating abit but you get the picture. More technical bureaucracy... isn't good. And I bet my left nut the rules will not regulate drivers salaries.

[Viper007Bond]

F1 is turning into NASCAR. Rather than being the ultimate and as fast as possible, they're slowing things down and making the cars more the same.

[avanti]

I don't see the point. If Renault can do the job for half the amount compared to Toyota that is Toyotas problem. Either way there is no problem getting around it.

[GraemeH]

Pretty terrible idea. Apart from the specific, practical impossibilities of monitoring such spending, what's wrong with spending anyway? If teams have the money and decide to spend it how they wish, how is it a "waste"? It's only a waste to the team that chose to (mis)spend it.

Spending of teams is already limited by a much better cap; the economy. They can only spend what they get in from sponsors and other incomes.

[Red_Bull]

Originally Posted by GraemeH

Pretty terrible idea. Apart from the specific, practical impossibilities of monitoring such spending, what's wrong with spending anyway? If teams have the money and decide to spend it how they wish, how is it a "waste"? It's only a waste to the team that chose to (mis)spend it.

Spending of teams is already limited by a much better cap; the economy. They can only spend what they get in from sponsors and other incomes.

The problem is that F1 is now dominated by the manufacturer teams who can afford to spend whatever they want. Toyota, BMW, Mercedes, etc. Smaller, independent teams such as Williams simply cannot compete with the amount of spending, and therefore are no longer at the front of the grid. I realise there's a flaw in my statement represented by Toyota, but thats the general trend, and has been since about 1999.

Williams, (and to some extent Red Bull) are dependent on the income they recieve from sponsors and the FOCA package deals each year. Teams like Honda don't have to worry so much about sponsorship (and we've seen this with their Earth car concept) because the parent company will bail them out regardless.

Worse yet, there's the threat of the national team with increasing interest being shown by India, China, the Middle East...developing countries that suddenly have an enormous amount of money to throw at F1 projects. We've seen evidence of this with the circuits that are popping up in these areas, and it isnt such a big step from owning a race track, to owning a team. Force India could be just the start of a new trend in F1. Expect costs to escalate.

Some might say 'tough luck'. If the independents can't handle the costs then they shouldn't be there, but F1 has a rich history and it would be sad to see teams like Williams hit the wall due to insufficient cash flow a la Jordan, Brabham, Lotus, Minardi. Oh, and what happens when the manufacturers get bored with F1 and realise that the project isn't working, such as Ford? If two or three manufacturer teams leave the sport in the next few years, F1 will be effectievly finished, simply because the costs are too high for new teams to join. Prodrive, with all their resources couldn't do it alone, and there arent many other teams/companies that are in any sort of position to make the step up.

[avanti]

Its a shame about Williams, but it doesn't seem right that the others have to limit themselves because independents can't afford to keep up.

F1 should be without limits, if we lose some teams so be it, new ones will come. The world moves forward, if it moves to fast, too bad...

[hajj]

If you want to keep costs down, then this plan is the best there is. But the gains of breaking this rule can be potentially huge, so some teams might be tempted to.
I also see much more practical problems here: Teams can decide to develop parts somewhere else, at the parent company for example, and only pay a smaller price for it. There is also a huge potential for creative accounting in this plan

[MattD1zzl3]

Originally Posted by Viper007Bond

F1 is turning into NASCAR. Rather than being the ultimate and as fast as possible, they're slowing things down and making the cars more the same.

X2 I just got into F1 last season, and they are already making it boring? Wtf >.<

[Sir Stiggington]

And the crap continues.

[MattD1zzl3]

NEWS FLASH!

Ferarri test drivers are putting the finishing touches on the F2009 prototype already, as shown in this spy photo below.

[otispunkmeyer]

to be absolutely honest they should of done this in the first place.

putting in engine regs and sometimes dangerous tyre regs, like when we had to have just one set of tyres for the quali and race, and allowing customer cars and stuff like that in some kind of attempt to reduce the costs of the sport were just a dumb, around the houses idea.

budget capping is straight to the point and concise. the simplest plans are always the best.

[Cobol74]

In come the "creative Accountants" - 25 GBP for a race engine anyone?

[HondaF1]

I like it, cos as I have said before, I think Honda could benefit from this.

[Devon]

I think it is a good idea, Red Bull summed it up nicely in his posts.

[yooker]

So basically we will have 4 cylinder, hybrid powered, bio-diesel F1 cars with a $150 million budget. I wonder if the FIA takes into account for inflation rates that could affect the budget.


Gentlemen start your computers, May the best accountant win!

[YF19pilot]

Originally Posted by avanti

Its a shame about Williams, but it doesn't seem right that the others have to limit themselves because independents can't afford to keep up.

F1 should be without limits, if we lose some teams so be it, new ones will come. The world moves forward, if it moves to fast, too bad...

The problem is that no one without a manufacturer or nation behind them can join F1 at this point in the game. The reason there are only 11 teams on the grid is that no one else can affoard to join! Really, what F1 needs is to bolster its competitiveness. Imagine if going into the final race, there were 4 or even 5 teams contending for the title.