Cost caps are tricky but Carey has tricks

Photo by:

I was reading and article over at Autosport regarding the 2021 cost cap and was intrigued, as I’ve been since the entire notion of a resource limitation strategy was mentioned, about how they would achieve this within private companies.

It’s one thing to agree in theory that a cost cap is a good idea but how you enforce that cap is another entirely. These are privately held companies and some of them are a part of larger road car manufacturers with very large divisions and technology resources. Teams such as Mercedes, Renault and Ferrari are all large entities in which to reallocate technology and resources within.

According to F1 boss Chase Carey, there are tricks you can use to police the resource spend and therefore enforce the cost cap.

“It took us a year to discuss this process through,” said Carey in an interview with Servus TV.

“Not only to get a suitable limit, but also a process with which we can review it accordingly. Everyone can be sure that the cost structure is reliable.

“Our sport is complicated, but these tricks can be found in every business worldwide.

“The rules are clear. You need access to the information to make sure that this is done reliably.

“But I am confident that this can also be checked properly and reliably.”

To ensure a smooth transition from an unlimited cost structure to a tightly controlled cost cap world, Carey says they will test the system in 2020.

“The plan is to carry out a test run by 2020. That won’t affect the budget limit yet, but at least the process of how we check information,” said Carey.

“Everyone should get a year to understand how it works. We want to see what the results are like.

“It will be a learning process, I am sure. We have no illusions.

“My guess is that we will refine the cost structure even further. We and the teams have to live with it.

“But we needed a starting point now and that is the beginning of a process that continues.

“We are again trying to create a sport that makes the competition better than it is today. It must be a healthier business for everyone involved.”

Even after reading this, there is a part of me that thinks it will be difficult without the full transparency of the team and the allowance of the FIA to have yearly audits of the team’s balance sheet. That just seemed like something most teams wouldn’t be keen to do. Regardless, I blissfully moved on from the article giving Chase the benefit of the doubt. After all, he’s in the driver’s seat, I’m not.

The very next article I read was a story about Honda bringing upgraded engines to the French Grand Prix this weekend. In fact, they are bringing three to upgrade everyone but Alex Albon so they avoid Toro Rosso receiving grid penalties to both their cars.

As part of this story, there was a quote from Honda’s boss regarding the upgrades in this segment of the BBC’s Andrew Benson’s story:

“Honda boss Toyoharu Tanabe said the engine was more powerful but had not yet reached the level of Mercedes and Ferrari.

He said the improvements had been developed in conjunction with Honda’s aeroplane jet engine department in the area of aerodynamic design.”

This simple concept of the aeroplane division working on technology for the F1 engine is exactly what I have discussed in the past as being incredibly difficult to control from a cost cap standpoint.

As I have said many times before, if Mercedes had their road car division working on new technology and spending millions on the R&D, they can easily take that technology design to the F1 program and it wouldn’t show up on the F1 team’s R&D budget.

I’m not sure what “tricks” Chase has but I think there are a thousand different way teams could bury their costs and I can see this becoming a battle of accountants and auditors quickly. Especially due to the FIA’s comment about the penalties being very steep if a team breaches the cost cap rules.

Hat Tip: Autosport and BBC

0 0 votes
Article Rating
Notify of

This site uses Akismet to reduce spam. Learn how your comment data is processed.

1 Comment
Newest Most Voted
Inline Feedbacks
View all comments

Heath Newland

Its just a guarantee that the the privateers will never be able to challenge the factory teams.