Counting the costs next year

cider_and_toast

Exulted Lord High Moderator of the Apex
Staff member
Premium Contributor
At the start of the year all the plans for the 2010 season were about cost cutting. It was the buzz word of the week and with the global financial meltdown fresh in everyone's minds there was even some general acceptance from the teams and the fans alike. Now that things have calmed down and we are all still here and the world hasn't stopped turning it's perhaps time to take stock of where these plans have gone and what, if anything, this means for next season.

Obviously the biggest fear the FIA had to face was that there would be no show to speak of by 2010. Honda had leapt clean out of the plane and were skydiving to safety somewhere over Japan and it looked like the rest of the teams would crash slap bang into Bernie Towers unless drastic financial measures were introduced. As we know the plan from Max was to introduce the "two level" championship, allowing those teams who signed up to a cap, unlimited developmental freedom and those who didn't tighter controls. Obviously this was never going to work and the FOTA teams ensured it didn't. One of the side effects of all of this was Max having to fall on his sword which is perhaps something that even the FOTA teams didn't dare hope for.

So with the budget cap system having crashed and burned there was now no viable alternative on the table. It's interesting to note that none of the proposed modifications to the championship by FOTA, have been or are likely to be introduced either. At least one of these proposals didn't go down well with fans and that was to run shorter races. The white elephant that is KERs has also seen the teams spend a fortune on a system that is now proving its worth but is intended to be dropped next season. I wonder if KERs had been a FOTA idea and not one from Max if this would still be the case and I still can't quite believe that the teams are so ready to give it up just yet.

Now here's the new problem. With at least 4 new teams joining the grid there will be less money to go around. At present the bottom 3 teams in the championship (I believe this is still the case but could be wrong) pool the prize money due to 8th, 9th and 10th spots and then distribute it equally between themselves. This came about during the final years of Jordan and Minardi and saw the teams at the bottom end of the grid receive a cash boost without a net increase in the amount of money paid out. With 13 teams on the grid from next season will this practice end? Will CVC/Bernie return to the old days of paying travel and bonus money down to the 10th placed team in the championship or will this now be extended to include the new teams. Given that Manor, Campos, USF1 and Lotus are going to be quite far behind the curve anyway and with the difficulty of being start up outfits and attracting sponsors to an unknown brand, they are more likely to need a cash boost in their first few years of operation.

The next problem is that the grid is now at a record 19 races. We have already seen problems with teams and logistics next year, getting to Monaco after the Turkish GP and McLaren in particular have been very vocal about the additional costs in freight and transport. With yet another fly away race added to the calender in the shape of South Korea these costs are set to rise again. Which links us back to the original problem of how to fund the teams in the first place. It's clear that the teams are going to need more money not less in order to compete in the championship.

So after 9 months of argument and political fallout the result is that we have potentially a more expensive championship without any form of viable cost cutting measure left over from the host of suggestions at the start of the year. With sponsorship deals hard to find at least until there is some clear signs of a global economic recovery and with at least 1 maybe 2 manufacturers on the verge of pulling the plug and leaving F1 we could find ourselves back to square one by 2012. Now that's progress.
 

bogaTYR

Points Scorer
call me cynical but indeed back to square 1. and with ferrari and macca on the front of the grid.

my opinion is still the same. max was right, F1 needs budget cuts. all FOTA did was to prevent this at all costs and now, after 1 season that had interesting moments, it looks like we are heading straight back to where we came from. 6-7 championships in a row for nando. now that is what f1 is really needs...

there will be a moment, and that might be closer then lots of people think, when the plans max had for F1 will be seen as the only way forward. and as a missed opportunity.
 

rufus_mcdufus

Champion Elect
My hunch has always been that the FIA/CVC desire for teams to cut costs was always with the intention of stretching the teams commitments more - more races, more teams, more money for CVC and whoever - but allocating less money for the teams. The cynic in me things that the investors in F1 want to make more money, and are using cost-cutting as an excuse to water down F1 and pay each team much less.
 

Brogan

🦶 Leg end
Staff member
First of all, great post c_a_t.

I think the whole cost cutting thing was a bit of a knee jerk reaction to the global events but mostly it was Max's private agenda.

Just a few problems with it though;
If it's all about costs, why is 1 race run at night under thousands of high powered lights?
If it's all about costs, why are there so many races in the middle east which cost a lot more to stage than races in Europe?
If it's all about costs, why are races being run on brand new purpose built tracks costing hundreds of millions, instead of existing tracks?

All Max wanted to do was leave some kind of legacy and his way to do that was to turn F1 into a single make series.
If he had been successful, F1 would have ended up with a single tyre supplier, a single engine supplier and design rules so strict that they might as well have used a single chassis and body supplier.

His original budget cap would have had teams spending less money than some football teams do on a single player.
Now that is just crazy.

The problem for new teams is FOM/CVC take too much of the money that is pumped into F1.
As far as I am aware they take 50% and the other 50% is for the teams.
However, Ferrari receive a disproportionate share of that due to their "status" and the "special arrangement" they have with the FIA/FOM/CVC.
I can't see this being accepted (or even legal) in any other sport or business but for some reason it is allowed to continue in F1.

FOTA should have gone ahead with their split then they could have taken a much larger share of the monies for the teams and ensured it was distributed far more fairly with no special deals.
Unfortunately they didn't and the money issue isn't going to change soon as CVC have a huge debt to service and paying off that debt is more important to CVC for their business plans than paying money to the teams is.

Whilst we're on the subject of money, teams which spend more aren't necessarily guaranteed to be more successful.
Just look at Toyota. They have had the biggest spend of any team in recent history and yet they've got nothing to show for it, or very little anyway.

F1 is about being the best.
The best engineers, the best designers, the best strategists and the best drivers.
No amount of money will change that.

It's also about innovation, engineering, excellence and vision.
Not a severely compromised, restricted design based on a rigid set of rules ensuring everyone comes up with the same result.

If teams can’t compete in F1, tough!
Don’t hobble the rest of the teams to allow them to artificially catch up.

In doesn’t happen in other forms of sport so it shouldn’t happen here.
 

fat jez

Race Winner
Valued Member
Good posts guys. The thing I've never understood is why the tracks pay CVC a small fortune to host a grand prix and yet see none of the advertising revenue from each event. Can you imagine a situation where FIFA or the FA get all the advertising revenue from a football stadium? Neither wonder grand prix have near empty stands when the cost of buying a ticket prices it out of most people's pockets - Over £200 in tickets for me and a friend to go to the British Grand Prix, plus transport and accommodation? I don't think so and that's in a country that's comparatively well off compared to somewhere like China.

I think it's a shame that FOTA didn't stick to their guns and form their own series that might have been more accessible to most, instead of sticking with Bernie and hosting races in countries that will pay more to host a race that nobody goes to see. Of course, had a similar situation not happened in the past, Bernie would never have risen to the position of power he is in now!
 

teabagyokel

#dejavu
Valued Member
fat_jez said:
Can you imagine a situation where FIFA or the FA get all the advertising revenue from a football stadium?
How about UEFA? Or is it just a coincidence that all Champions' League games are sponsored by MasterCard, Heineken, Ford etc.?
 
The FIA talk about budget caps, but how much does every rule change they bring in cost the team?

How much has Mclaren, Ferrari, Renault and BMW spent on developing KERS?

How much has refueling cost each team per year?

Changing aero regulations each year must force teams to return back to the drawing board/wind tunnel, how much does this all cost?

I think a realistic budget cap, is probably a good idea but the miniscule amount decided upon by Mad Max & Co would do more damage then good.
 

GeoffP

Thank you and good night
Contributor
I have to be repetitive, great post, are you trying to get into Brogan little black book of classics?

It is true that the tightening of regulations would lead to a reduction in costs if AND ONLY IF the regulations were in a consistent direction. Since the FIA approach to consistency can easily be compared to brownian motion this constant random control is simply forcing costs up.

I am with Bro, and a growing list of others, to relax regulations and let the teams develop in diverse directions in the pursuit of excellence. If you have a retrospective collaboration between the teams on an annual or bi-annual basis, this could ultimately provide a cost cut whilst not leaving certain teams out in the cold. You never know, skirts my come back in.

It seems there is a major disconnect between what the FIA/CVC say and what they do. I agree that Max Headroom is simply trying to set up a legacy to associate with his name when he goes, let's face it, it has to be better than the one he came with. But then you also get Brnie where he transferred his shares in CVC to his then wife, there were no further settlements in the divorce, so was CVC purely a divorce mechanism desing to maintain his billionaire status.

I have to say, I was taught that the art of weak managment is "BBB" - Bullshit Baffles Brains. I am seriously starting to belive that it is merely an attempt to keep competitors and fans focusing on the small issues, like a magician's slight of hand trick. Watch us randomly apply this penalty with this hand whilst we make off with $100M in the other....

Thinking of which, the $100M fine to McLaren, where did that go, was there support to developing teams giving them an opportunity to join the series, did Max further sponsor fallen women, or did it go to a donkey sanctuary?
 

cider_and_toast

Exulted Lord High Moderator of the Apex
Staff member
Premium Contributor
[quote:1s5nyyd7]or did it go to a donkey sanctuary?


the donkey sanctuary split away and made a rival series ![/quote:1s5nyyd7]

Yeah and as a result of that the traditional Donkey rides on Blackpool Beach have been dropped from the calander due to the lack of funding and the whole thing moved to a beach in Goa where the local Indian Government are prepared to back the Donkey Ride with a huge injection of cash. It's always us fans who suffer !!

LOL
 

rufus_mcdufus

Champion Elect
GeoffP said:
Thinking of which, the $100M fine to McLaren, where did that go, was there support to developing teams giving them an opportunity to join the series, did Max further sponsor fallen women, or did it go to a donkey sanctuary?
Max had a vote of confidence to survive. The money went to some of the many smaller motoring associations (whose vote counts just as much as the bigs ones) who probably wouldn't have voted for Max. Max survived the vote, and the Rwandan Caravan Association's new facilities have to be seen to be believed.
 

GeoffP

Thank you and good night
Contributor
rufus_mcdufus said:
GeoffP said:
Thinking of which, the $100M fine to McLaren, where did that go, was there support to developing teams giving them an opportunity to join the series, did Max further sponsor fallen women, or did it go to a donkey sanctuary?
Max had a vote of confidence to survive. The money went to some of the many smaller motoring associations (whose vote counts just as much as the bigs ones) who probably wouldn't have voted for Max. Max survived the vote, and the Rwandan Caravan Association's new facilities have to be seen to be believed.
Seriously? Apart from the Rwandan Caravan Association bit of course.
 

Brogan

🦶 Leg end
Staff member
Yes, rufus_mcdufus is correct.
The $100 million fine was used for various local motoring organisations and clubs, etc.

Now a cynic would probably say that Max bought their votes, which is of course illegal in most walks of life.
I wouldn't possibly say that though as it's libel...
 

GeoffP

Thank you and good night
Contributor
Well, a potentially admirable action, however the chances of the donations being totally without motive somehow remind me of that snowball fight with Lucifer.

Downside of their apparent generosity is that most of these smaller clubs could do with an annual incentive, such a shame they found it necessary to splurge all at once. I'm a bit like that, always speding the loose change I have in my pocket without a second thought.
 

GeoffP

Thank you and good night
Contributor
Since I'm feeling somewhat guilty for interrupting the topic, does anyone actually think that the teams' budgets would increase if the FIA just loosened their stranglehold on the regulations and allowed the teams some intiative in development.

I personally believe you would always find the big spenders in the top few, but the inspired specialists would have their moments of inspiration, the sort of thing that used to make Lotus and Williams such great teams.

Also if the likes of Renault, Honda, BMW, Mercedes and Toyota were attracted to develop engines for teams with an inspirational engineering team, maybe we could go back to the specialist F1 teams with car manufacturers names emblazoned on their cars in recognition of their input.

As a result you could increase the number of participants for expensive components such as engines and tyres, but have them all run on the track by professional specialists. This should make racing more exciting, and, because of the diversity of involvement, make the individual budgets less, and eventually level the playing field somewhat.

The support for the circuits etc. Well, I personally believe that that should be more where the focus of the likes of FOTA should be. The FIA can work with the drivers association on the rules of the game, and the teams can agree with the circuit pool and CVC (if we must include them) where it's played.

Also, as it is a global sport for which the fans are basically the owners of the future, I think there should be published P&L accounts and cashflow statements to demonstrate how the sport is coping. Oh, and what the hell, while we're at it, let's treat them like the BBC, let's have a list of the top earners and visibility of their expenses!
 
F1 was the developing ground for new tech that eventually ended up in everyday road cars.

Colin Chapman - disc brakes way back in the midst of time.

More recently traction control, paddle gearboxes etc etc.

If the teams, privateer or manufacturer, where allowed more freedom, new technologies could be developed and showcased in F1.

The technologies could then be sold on, finally appearing in road cars.

Give the teams more freedom, in the late 80s early 90s with prost, senna, mansell & co there was plenty of new tech and plenty of close racing (and a bit more overtaking).
 
Sorry, missed the main point ~doing three things at once !!!!

The new tech might cost more but this can be recouped by licensing unto road cars.

With strict rules new tech has gone a bit stagnant. IMHO.
 

rufus_mcdufus

Champion Elect
I've often though they should relax the rules regarding power plants. Introduce a number of parameters including emissions, efficiency etc. but give the teams free rein as to what kind of power plant to use. Basically encourage green tech in addition to the quest for more power. F1 might get more sympathy with the sceptical public if they did something like that.
 
Basically encourage green tech in addition to the quest for more power. F1 might get more sympathy with the sceptical public if they did something like that.
:thumbsup:

Rather than cap costs, keep the costs the same, but encourage :-

Introduce a number of parameters including emissions, efficiency etc.
F1 sceptics would probably find it hard to critise the budgets if more was going towards 'green' projects.

I can remember reading a magazine article (in a doctors surgery) where a company was developing bio-fuels and where testing them in an old F1 car.
 

teabagyokel

#dejavu
Valued Member
fedupwithuserids said:
I can remember reading a magazine article (in a doctors surgery) where a company was developing bio-fuels and where testing them in an old F1 car.
Knowing bio-fuellers, it was probably a Life W12 thing!
 
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