Is F1 currently working under a budget cap?

This story is either a major story or a major misunderstanding…you be the judge and tell us what you think.

Lawrence Butcher at Racecar Engineering says that’s exactly what is going on. According to his sources, the Formula One Teams Association’s (FOTA) Resource Restriction Agreement (RRA) mandated a 50 million Euro budget with no more than 250 employees. Mr. Butcher’s source said:

‘ A major motorsport publication was saying how Peter Sauber has saved Sauber with his brilliant business plan and reducing staff to 250 people, but everyone has to do it!’

I have no idea who their ‘source’ is but this is major news if the teams are working within a RRA budget for 2010 and 2011. You will recall the consternation that the proposed 40 million Pound budget cap created when former FIA president Max Mosley suggested it. The RRA was a component of FOTA’s attempt at compromising with the FIA over yearly expenditures.

This could be filed in the ‘interesting’ category but the first potential debunking question I have is, “has McLaren or Ferrari laid anyone off or restructured their organization”? Perhaps they could creatively move some people around in different divisions to effectively reduce the number to 250 in their F1 divisions but I have not read anything of that sort. If their official F1 divisions have been 250 or less then I stand corrected but it was my understanding that the total employees, on F1 alone, in these companies eclipsed 250.

With all respect for Mr. Butcher, I am wondering if this is a reality. I am sure he is confident in his source and the source is confident of his statement but it seems odd that no one from FOTA would mention it. On the other side of the coin, the new teams joining F1 seemed relatively quiet regarding the defeat of the Mosley team budget concept. If memory serves correctly, FOTA worked with Mosley in the waning hours of the FIA/FOTA war to deliver action plans for reducing budgets and the outcome was to reduce the teams to a level commensurate with 1990’s spending levels.

At the time the story broke, many of us wondered just how much 1990’s level spending really was. Perhaps 50 million Euros is the magic number? In the end I can’t imagine FOTA not trumpeting this if they were actually working on a budget and cost-reduction system. Perhaps the key statement in this story is:

The restrictions will cover everything excluding salaries, marketing and engine costs because these are considered beyond control. For example to expect Mecedes Benz, as an engine manufacturer, to spend the same as Force India would not be feasible.

A lot of the teams expenses would fall in to these categories so perhaps this is making a mountain out of a mole hill. The article seemed odd to me but did remind me of the story we ran about Williams F1’s Adam Parr and their review of the FOTA cost reduction action plans on behalf of the FIA. If you recall, Williams F1 had signed the FIA application for the 2010 season and were then asked to review FOTA’s recommendations. Parr said:

“We recognise that FOTA is committed to its own approach,” Parr said. “This is not a moment to say ‘It’s my way or the highway’. But what we did [at Silverstone] was look at FOTA’s Resource Restriction Agreement and put forward some changes. Not change the substance, just tidy it up.

“The agreement between the teams to restrict costs must be legally enforceable. There is a clear precedent on this with aerodynamic restrictions, factory shutdown restrictions, testing restrictions, gearbox restrictions… we must now work out how the Resource Restriction Agreement would look.

“It needs to be done reasonably quickly – especially for the sake of the new teams but also for a company like Williams. But it looks promising.”

The RRA was set to be phased in over a two-year period and perhaps some of those are occurring for 2010. It remains to be seen if the budget cap of 50 million Euro’s or an employee limit is either of those elements initiated for 2010 but according to Mr. Butcher, they are.

At the risk of sounding terse, I think I will wait for FOTA’s announcement or the FIA’s confirmation that this is indeed happening. The RRA is certainly real and was to be phased in over the next two years but it is strange that FOTA or the individual teams would not mention anything about it for 2010.

It’s all conjecture on my part and I must confess that it may just be the same on Racecar Engineering’s part as well.

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