The 2010 budget cap discussion thread

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http://www.autosport.com/news/report.php/id/74947

FIA confirms ?40m budget cap for 2010

By Edd Straw Thursday, April 30th 2009, 10:54 GMT

The FIA has announced that Formula 1's cost cap will be increased to ?40 million when it is introduced next season.

The original figure mooted was ?30 million, but has been revised upwards following consultation with Formula 1 teams instigated by FIA president Max Mosley last week.

The FIA confirmed that the budget cap would run from January 1 to December 31, with the ?40 million figure covering all team expenditure, with certain exceptions.

Most notable among these is that engine costs will not be included in the budget capped expenditure for 2010.

Also excluded from the budget cap are marketing and hospitality, driver pay, fines and penalties imposed by the FIA, anything that teams can demonstrate has no influence on its on-track performance and dividends paid from profits relating to participation in the championship.

The FIA will allow those teams that sign up to the budget cap to have increased technical freedom to make it easier to compete with the uncapped teams. This includes adjustable front and rear wings as well as an engine that can run without a rev limit.

In addition, the budget cap teams will be allowed unlimited testing outside of the racing season, and will not be restricted by the wind tunnel scale and speed stipulations

The budget cap will be monitored by a new Costs Commission that will be set up to ensure that teams are adhering to the regulations. A chairman and two commissioners will be appointed to the body by the WMSC for a term of three years.

It was also stipulated that one of the commissioners should be an expert in finance and the other someone with high-level experienced in motor sport.

The governing body also annouced that the maximum number of cars permitted to enter the championship has been increased to 26, from 24.
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http://www.autosport.com/news/report.php/id/74949

FIA's budget cap Q & A

Thursday, April 30th 2009, 11:15 GMT

Provided by the FIA's press office.

Why does Formula One need cost capping?

Formula One faces a period of great uncertainty during this harsh recessionary period. Funding a team is increasingly seen as a discretionary spend for the majority of team owners and sponsors. To ensure a healthy grid all are agreed that costs need to be cut.

Two main philosophies have emerged, either i) reduce activity levels through very restrictive technical rules, plus a degree of standardization if required; or ii) restrict the money that teams are allowed to spend (cost capping).

The FIA believes that unfettered technical competition is part of Formula One's DNA, and would like to see this flourish, but in an environment of strong, responsible and innovative management, not a spending race. For these reasons cost capping is preferred.

What is covered by the cost cap?

Everything except:

? Marketing and promotion - we want Formula One teams to look good and to entertain their partners. We want manufacturers to show off their cars at exhibitions and city centre displays, and we want teams and their sponsors to promote Formula One through inclusion in advertising campaigns.

? Drivers and young driver programmes - Formula One is the pinnacle of motor racing. Fundamental to this is attracting the world's best drivers. Moreover we wish to encourage continued investment in young driver programmes.

? Engine costs ? In order to attract manufacturer owned teams to take up the cost capping option, the FIA have decided to exclude engine costs for 2010 (only).

Furthermore, we are allowing manufacturers to honor existing supply arrangements, provided there is no element of subsidy that could have a cartel-like affect on the engine market.

How did the FIA arrive at the ?40m figure?

We arrived at the figure by analysing both revenues and costs in Formula One.

We know what the FOM (Formula One Management) revenue is likely to be in the future, and we have some understanding of realistic sponsorship revenues during the recession. Taken together,it's possible to project total external revenues for all finishing positions in the Championship. At ?40m we believe that 70 per cent of the grid can generate a profit. This transforms the business case for owning a Formula One team, for both manufacturers and private investors. The desired net result is to have a very healthy commercial environment for present and new owners.

We also had a good look at costs, and believe that ?40m in combination with greater technical freedom will allow engineers to create Formula One cars even more interesting and exciting than today's cars.

Will the ?40m cap for 2010 be changed for future years?

As set out in the Regulations, the cap for future years will be decided by the FIA. In setting future years' limits, the FIA will have regard to the progress of the project and the feedback from all stakeholders to the sport.

How does the FIA intend to police the cost cap?

Throughout the construction of the Regulations we have worked with expert forensic accountants.

The Regulations allow for the establishment of a Costs Commission to monitor and assist teams in complying with the Regulations. The Costs Commission will appoint auditors, and other financial experts as required, in order to do this.

A key factor is that all cost capped teams are businesses engaged in exactly the same activities and this enables consistent interpretation of the principles of the regulations. It is difficult to hide engineering activity or to falsify accounts consistently, given the traceability of transactions in today's world and the access and inspection powers which the Costs Commission will have. The penalties for defrauding the FIA with regard to any willful transgression of any Regulation or any subversion of an investigation are well established.

Is a Costs Commission really needed?

The emphasis is on teams to demonstrate compliance, and to pro-actively seek clarification and interpretation of the Regulations. As the Cost Cap Regulations are new the FIA has decided to provide an appropriate resource, staffed with a small number of financial and technical experts, to deal with such issues, and to monitor compliance, such that the Regulations are effective.

Who pays for the Costs Commission, auditors and other experts, and doesn't this just add costs, rather than removing them?

The cost capped teams will each pay an equal contribution to cover these costs. The costs involved will represent a tiny fraction of the costs saved in Formula One.

What is the penalty if a team exceeds the cost cap?

This depends on the case. The International Sporting Code covers transgressions in the same manner as for the technical or sporting regulations. There are no 'fixed penalties'. The Cost Commission will judge the degree of misdemeanor and advise the FIA , who will determine any penalty.

What measures are there to prevent teams spending money this year on a car that will compete under cost cap in 2010?

The teams must demonstrate that they have adhered to the spirit of the regulations and spend no more than 50% of the value of the 2010 cap on the development of the 2010 car (in 2009). Furthermore, there are limits on the value of stock of car parts which can be carried into 2010.

How will you stop manufacturer backed teams from running hidden F1-related projects in their parent companies?

The question is actually asking 'how will we stop manufacturer teams from cheating'. The principles of determining a fair market value for all activities which are undertaken for the benefit of a team (whether a manufacturer or not) are clearly set out in the Regulations.

No team would wish to be exposed as cheating, so we expect a healthy amount of self-policing. However, the rules are clear on this point, such activities must be declared and appropriately valued. Bear in mind the access that the costs commission and auditors have and their ability to compare reported costs across all cost capped teams.

Will teams be allowed to buy parts from other teams/manufacturers?

Yes, according to the FIA regulations, but one should bear in mind that contractual arrangements with the Commercial Rights Holder will place restrictions on such activities. Inter-team transactions are covered by the regulations.

How many teams do you expect to take up the budget option?

All those who wish to transform the commercial basis of participation for their owners and investors. The FIA believes that cost capping will prove attractive, and it hopes that over time all teams will join. So far, interest has been extraordinarily high from both existing teams and potential new entrants.

If a team decides not to become cost capped now, can it do so at a later date?

Yes, a team will be able to opt to become cost capped in advance of each year of its participation in the Championship.

Are you worried that F1 will effectively become a two-tier championship?

There is one set of Technical Regulations and as always there are choices for all teams as to how they decide to attack the Championships.
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http://www.autosport.com/news/report.php/id/74948

Refuelling ban confirmed for next season

By Pablo Elizalde Thursday, April 30th 2009, 11:03 GMT

The FIA has confirmed a ban on refuelling from the 2010 season, the governing body citing cost-saving reasons for its introductions

"It was confirmed that from 2010, refuelling during a race will be forbidden in order to save the costs of transporting refuelling equipment and increase the incentive for engine builders to improve fuel economy (to save weight)," said the FIA in a statement following a meeting of the World Motor Sport Council.

The governing body also confirmed that tyre blankets will be banned from 2010 and that the ban on other tyre-heating devices will be maintained.
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http://www.autosport.com/news/report.php/id/74950

New teams to get financial support

By Edd Straw Thursday, April 30th 2009, 11:21 GMT

The FIA World Motor Sport Council has announced that financial support will be given to new teams entering Formula 1 next year.

Bernie Ecclestone's Formula 1 Management (FOM) has agreed to make an annual payment of $10 million to each new team as well as offering free transportation of two chassis, plus 10,000kg of freight, to each race.

It will also offer 20 economy class air tickets for each new team for events held outside Europe.

The number of cars permitted to enter the world championship has been raised from 24 to 26 cars, leaving the door open for three new teams to join in 2010. A number of operations have already expressed a serious interest, including the new USF1 operation and British race car manufacturer Lola.

Applications for new teams will be open on May 22-29, with the FIA publishing the list of accepted entrants on Friday June 12.

The FIA will select the successful candidates based on their ability to qualify as a genuine constructor, as well as their ability to demonstrate they will have the required facilities, financial resources and technical expertise to be competitive in F1.

The applicants will be expected to declare whether they want to compete under the newly-confirmed ?40 million budget cap, although it is unlikely that any of the teams would choose not to do so.
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Discuss away... All the material for the debate is here.
 
Glad that refuelling is gone, but once again this is going to require a redesign of every car in order to have a bigger fuel tank. As for the budget cap, well its just stupid, if you want to bring in a budget cap then do it, don't have it as an option where those who do it race under different rules! However the removed rev limiter could be interesting if Cosworth come back seeing as they have tested their engine up to 24,000RPM (possibly higher), will be interesting how high the manufacturers engines can go up if they are used by a budget team.

As for the tyre warmer ban, well firstly the drivers have said that it is dangerous but ignoring there concerns for safety I really don't see the point of it? If there were two tyre manufacturers then it would create a competition for them to develop a tyre that starts working from a lower temperature, but there's there's not.
 
I read technical freedom and nocost cap on engines. Does that mean engines will be more powerful?

What if big teams already spend over 40k on their 2010 car?

Why isnt qualifying format changed since all teams will have the same fuel at the start meaning Q2 and Q3 both will be run with 2/3 laps of fuel?

but no tire heating seems dangerous to me (
 
And they still run the same amount of laps in each race as per previous years?

And flexible wings like this years 2 adjustments per lap from wings or complete control?

That unlimited testing sounds like the costs will just skyrocket. What's stopping teams secretly commissioning a small company to test the components for them?
 
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Wait...so the budget cap will include the drivers' salaries afterall ?? Interesting...

Edit: No it's not, my bad.

While the idea is quite good, but as usual with decisions and ideas made by the governing bodies of..well....everything, it isn't all that great and ends up being just a quite brainfart.

First of all the obvius thing: It should be either mandatory for everybody or not at all. It will get way too confusing to have two different sets of rules. We have all seen the debacle caused by just one set of unclear rules this year, just imagine what it will be with two ! Second of all I do not believe the freedoms given to the capped teams are substantial enough: while they do get the adjustable aero bits and free revving engine, one must wonder, what will happen if/when FIA in all their endless wisdom (sigh...) force all the standardized parts, including those of aero purpose.

My biggest gripe by far is the timespan they, again, decide to do this in: By 2010 ? Next season ?!? No fucking way. It has allready been complained over and over inside F1 that the rule changes come too often, every year even, making it very difficult and expensive, because you pretty much have to develope wn entirely new car for each season, because the twats in congress rooms have decided once again to mix things up.
What I suggest is that you start taking entries for new teams now, give them a deadline, for example june 2010 to announce their joining to the grid. This gives the new coming teams time to first of all investigate the possibility of F1 in the first place - it's not something you just decide and do in a blink of an eye. More importantly it would give the teams substantially enough time to explore the new rules and develope their cars.

This would naturally be applied to all the teams, if there are any new rule changes: if the engineers and designers know already what they are up against, they can start designing their cars in advance instead of rushing things like they had to do after the last season preparing for the 2009 season. If you are battling for the title, driver or manufacturer, up until the chequered flag of the last race, you will have a hell of a job on your hands, because the other teams have already started working on their new cars, since they have dropped out of the championship running many races back.

I do not understand why they couldn't just do two seasons back to back with pretty much the same rules. Listen here Max: IT DOES NOT MEAN THERE WILL BE NO PROGRESS !! That is exactly how progress is made: stick to one plan and commit to it. Why do you think Brawn GP actually is as fast as they are now ? Because the car has been in the making for some two years now, of course it will be quick !

Also about the sum itself: ?40 million sounds a bit....cheap to be honest,even if it doesn't include driver salaries and engine costs. And that is actually interesting right there: the engine costs. Does that mean that everything that has to do with the engine, is fair game, possibly making the engine costs huuuuge ? And still for the ?40 million you would have to design, engineer and build the two whole cars, bar the engines, a possible third car for backup AND run the team ? Sounds like a steep hill to climb, because if you can freely develope a great engine, you need a great gearbox to go with it. And that is NOT cheap. I'm still sticking to my guns on this one: for the longest of time now, some of you may even remember me ranting about this before, I have been saying SIMPLIFY.

A budget cap as an idea is great, but make it roughly ?80 million, including everything, except maybe some small things having to do with sponsorship things and driver/staff facilities, 3.5 V10 engines, one engine has to last for 3 races and go nuts. And with these rules, freeze it so that there will be no major rule changes in the next 3 years. This way we would see actual developement and progress. And this would go for every single team.

I'm not convinced. As I said, I don't think this is tempting enough for new teams, because they would need to join in NOW and then rush the car plus find the drivers. Furthermore I do not believe any of the existing teams would opt for the budget cap, just don't see it happening.

And another thing...about the complexity of this all ? How did the FIA imagine they would control all this and keep track of who is using how much money ? Having skimmed through the articles (and missing a few points) it seems awfuly difficult and complicated: what exactly is included in the budget limit and what is not ? What can be labeled as marketing costs and what goes into engine developement ? I'm telling you, this will be a juridicial nightmare ready to explode, because there is no sense in the whole thing ! You can see it has been made up by lawyers and accountants...

Great idea ruined by a bunch of ignorant lawyers. I didn't read the whole thing in the OP and I wrote this in a rush, so forgive me if it is a bit messy at times. I'll dig up on this and maybe write something more profound and thoughtful later on.

Edit: Thanks zephyrus17m didn't see that there until you pointed it out. Made some changes to my post.
 
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Whats unlimited testing without money - they can't afford to keep designing and producing new parts. But the extra power from the extended revs can be quite significant.

I feel like this creates too big of a gap between team performance dynamics. You will have 2 classes of performing cars. There will be a lot of traffic. I don't know if I will like it.. too much fiddling for F1 this time.
 
Walsh_e said:
However the removed rev limiter could be interesting if Cosworth come back seeing as they have tested their engine up to 24,000RPM (possibly higher), will be interesting how high the manufacturers engines can go up if they are used by a budget team.
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Cosworth topped 20k just before their V10 got phased out.

[YOUTUBE]BPdm51QwZEw[/YOUTUBE]

What they've got for the new engine who knows!
 
I just read about twice as powerful KERS for next season. Together with higher engine rev cars might have over 1000hp. Isnt that too much for an f1 car?
 
A two tier system where one tier is artificially slowed down or sped up is retarded. It's going to punish teams for being quick and reward teams for being slow.

If you're quick and in the technical restrictions group, they're going to give the non-restricted teams a boost by easing the restrictions on them.

If you're quick and in the non-restricted group and are quick, they're going put more restrictions on you.

Artificially levelling the grid is going to completely ruin the competition. What's the point in hiring the best engineers to do the best job when the rules on what is restricted and by how much will just change to make sure you stay level?
 
GraemeH said:
A two tier system where one tier is artificially slowed down or sped up is retarded. It's going to punish teams for being quick and reward teams for being slow.

If you're quick and in the technical restrictions group, they're going to give the non-restricted teams a boost by easing the restrictions on them.

If you're quick and in the non-restricted group and are quick, they're going put more restrictions on you.

Artificially levelling the grid is going to completely ruin the competition. What's the point in hiring the best engineers to do the best job when the rules on what is restricted and by how much will just change to make sure you stay level?
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That is why Sir Frank Williams has said that he will raise the issue in the next FOTA meeting and will try to rally the teams into sticking to the budget cap in order to avoid the threat of a two-class championship.


After all, we wouldn't want another normally-aspirated vs. "turbos at their peak" battle now, would we?
 
If they do it, they should do it properly and that's the end of it.
 
I don't mind the ban on refuelling, it's been done before.

However, I am quite upset about the overall budget cut, especially with the engine development area.

Seeing a new F1 engines is just as exciting as seeing a new chassis being developed.

And I'm not so sure about tyre warmers. Yes, some series don't allow tyre warmers, but this is F1, drivers are going to work very hard trying to get temperature into the tyres during the warm up lap.
 
I was simply stunned when i read this. It's too bizarre to even believe it, let's recap:

1. Running with full tank. All teams need to do is redesign cars and watch how nobody races anybody either to save fule or because the car is too heavy to control properly.
2. Refueling. Hey Jerry i am sick of picking up this freaking pipe and holding it for 20 seconds, can we do something about that?
3. Engines. Go ahead, clock 24k RPM on that thing, i want to see you run 17 races (and all sessions) on 8 of those, the current 18k ones blow up, good luck with jacking them up.
4. KERS Power. Very nice, twice the power, could someone develop that kind of thing...is this the phone number of the price...in USD?! Yeah, Robert, i am sorry but we'll have to chop off your left foot, with the full tank and new KERS, we need all the extra weight to balance the car.
5. Spending Control. FIA to Ferrari: You are 150 million over budget, and every night lights can be seen from your wind tunnel facility! Ferrari: Nah, it's just some guys from accounting playing poker, and the money, well let's just say we eat a lot of spagetti here...
6. Car Presentation for 2010. Here's our new fighter, developed and built to fit the budget...it's good but obviously we had to cut some corners. Here is our driver, he hasn't won anything for about 2 years, he never even smiles, but he is worth every penny of those $30 million. What about the black guy, what do you mean overpaid, a black guy cannot be overpaid, do you even know how much KFC bucket costs these days?
7. Thank god they do not control our hospitality bills. Johnson, order 2 tons of caviar, we'll need yacht cruises for everyone, and please don't rent anything shorter than 120 feet. Ok, so we have Queen and Deep Purple for music, Red arrows will do some stunts, Superman promised to fly by for another $5m, can we have clowns? NO? I am sad...

So where are they saving money again?

FOTA. Get your asses moving, create your own alternative championship, increase your income from the pity 47-50% of F1, to 75-80%, use the extra to credit racing circuits so good ones can afford to host a Race, ditch Monaco and Valencia, even vertical lift off won't help increase overtaking there. Bring back US and Canada, even better race on the original oval Indy, i wanna see you run at 250mph.
 
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MadCow809 said:
I don't mind the ban on refuelling, it's been done before.
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And most of those races were really boring because they cant' waste fuel racing each other..

MadCow809 said:
And I'm not so sure about tyre warmers. Yes, some series don't allow tyre warmers, but this is F1, drivers are going to work very hard trying to get temperature into the tyres during the warm up lap.
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I think this guy has something to say about that:
68.jpg
 
^

What does Zanardi have to say about tyre warmers?
 
^That they are a good thing? And if they were used in Cart he would probably still have legs?
 
Karoug said:
^That they are a good thing? And if they were used in Cart he would probably still have legs?
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I think the accident was a combination of factors, not just cold tires. He could have dropped a wheel onto the grass, for example, causing the car to snap, and an over-correction would have sent him on the track towards the scene of the accident.


P.S. There is almost always a wall between a pitlane exit and the track in F1. And the cars have more predictable engine curves, not the turbocharged engines that CART had back then.
 
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