Todt: Cost-cap isn’t enough; regulations are key

31
Photo by: www.kymillman.com/f1

If you listened to our most recent interview with McLaren boss Zak Brown, you’ll know that he mentioned cost-cap’s as a way forward for Formula 1. It’s been considered in the past and we didn’t have time to dive deeper into how that may be managed but FIA president Jean Todt believes it is just part of what needs to be done to achieve a more affordable series.

“We have been talking about cost control/cost cap for a while,” said Todt. “I believe it is a good move, but for me it has to be a combination.

“We need to make regulations which will have some impact on the actual costs.

“To simply say we are going make a cost cap, I don’t think it will work. So far, any attempt has not worked.

“We have to be able to agree something that will be more sophisticated in order to achieve that.”

Now I’m no engineer or on the FIA regulations team or inside an engineering division of a team but we have asked the question before about how feasible a cost-cap would be to police and Red Bull’s Christian Horner has asked this before as well. In the Autosport article linked, I’m not sure if this is a current quote or one Christian previously mentioned as I have read a very similar comment in the past:

“I’m not a huge fan of budget caps because I question how policeable it is – because everyone’s corporate structure is different,” Horner said.

“It absolutely has to go hand in hand with dealing with the cost drivers upstream, because the costs are generated through the regulations. That is what determines the amount we spend.

“So you have to deal with the root cause, and then it becomes far less sensitive to be imposing a cap.

“If you put all your reliance on a cap, there is too much pressure on the dam.”

The challenge is a company the size of Mercedes, Ferrari or Renault; one could bury significant costs in other divisions within the actual car manufacturer company that is actually benefitting the F1 program and that would be very difficult to track.

I said years ago that the only way to do this accurately would be to have an accounting firm audit the P&L’s of each team and I’m sure the FIA would be willing to have a peek inside these large companies but that’s never going to happen. This leaves the hope of constraining costs via the regulations.

The regulations can be written very tightly but fans soon become concerned about a “spec” series so I’ve considered the idea of trying to create regulations that are not prompting a spec series so much as creating a diminished returns format. Is that possible? Could there be a point of diminished returns within a set of regulations or is the desire to keep them open and non-spec always going to lead to rampant spending?

There is a more draconian way of doing this by reducing the payout that many teams rely on in prize money. If the current prize money payout covers the bulk of the teams’ spending then less prize money would prompt less spending or a need for other outside sponsor money/investment. The large teams could continue to spend outrageous amounts but the ROI for that becomes less attractive. You also run the risk of putting mid-field teams out of business and manufacturers leaving so this may not be a good road to follow.

What other ways are there to control costs? Spec parts? Less tech? NASCAR could be outrageously technical in its approach but they limit tech via the regulations to keep costs down. That’s often considered antithetical to F1’s mission of being the high-tech racing series it is so not an attractive thought for some fans.

What do you think Todt means by suggesting the regulations would be a way to limit costs? I suspect he may be thinking of sticking with the current engine formula and thus, not ushering in a brand-new wave of engine development. On the surface that sounds like a logical approach but it also is double-sided in that he likes the current hybrid power unit and move to a possible EV.

Want an easy way to immediately cut engine costs? Go back to the 2013 frozen-regulation V8 engine design and you’ll shave millions off the engine spending. Fans say they wouldn’t like that but it would cut costs and possibly improve the racing in the process…it certainly would improve the sound. The comments I’ve read from fans clearly state that they would not like the idea of going backwards in technology and I completely understand that but if we move forward with a newer path toward even more EV power unit specifications for 2020, spending will get even worse. Todt knows this and perhaps that’s why he would like the current power unit to simply be retained for 2020 onward. The problem is, most fans aren’t that happy with the current engines either so what could the regulations do and what does Todt mean?

Hat Tip: Autosport

0 0 vote
Article Rating
Subscribe
Notify of
guest

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

31 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments

sunny stivala

“What do you think Todt means by suggesting regulations would be a way to limit costs?”, forget about the new to F1 Zakk Brawn taking Liberty’s side, that is understandable. Very very simple, Jean Todt means that the new commercial rights holders does not own formula one, their mission/rights in formula one are not to impose technical rules/regulations and budget caps. the previous commercial rights holders have been there, done that, or better say tried that, it didn’t work, and will not work this time, unless the present commercial rights owners intends to turn and run F1 as an AMERICAN… Read more »

Rapierman

What can and should be done is have the big teams subsidize a portion of the smaller team’s expenses if they reach a certain point, no matter where it comes from, or at least have the bigger car companies that have a works team, subsidize for that part by contributing to a pot where the smaller teams can benefit. This isn’t a cost cap per se, but it’s definitely a way to create a “point of diminishing returns”.

subcritical71

I don’t see how you get costs under control unless you start to standardize parts. Wether that means specifying only certain components (ie. Similar to Ecu, tires, etc) or specifying a common bottom end, or only certain materials/weights/construction. I would leave it up to the owners of F1 and the direction they envision to figure that hornets nest out.

JakobusVdL

Check out this article SubC, Sunny, and others who enjoy data-based assessment to test a theory. I found it fascinating.There is a huge amount of information in there, so it deserves more than just one read, BUT!!!!, I believe it indicates that spec parts is far from the only way to cap costs in F1. The budgets of the Top Teams in 1980’s to 2000’s, when the cars were at the bleeding edge of technology with ground effects, turbo engines, active suspension, traction control etc, etc, were well under $300m (in 2014 dollars). Between 2006 and 2010, the Top Teams… Read more »

sunny stivala

Excellent statistical article a must read, that is one of the few sites I had bookmarked for some time now.

JakobusVdL

So you were watching Todd, but not very open to alternative viewpoints.
The article provides lots of the information used to evaluate the cost vs success hypothesis. When you look at the spread of team budgets across the 1990 to 2014, the lower team budgets don’t take a $30m step in 2014 when the hybrids were introduced. In fact the budgets were similar or higher in the mid 2000’s when the teams were running n/a engines (and using lots of them).
Climate change next ;-)

sunny stivala

Racing engines were always a major cost of the race car budget and that will not change, being a manufacturer or a customer makes no difference. Like all part of the race car the more money spend on engine R&D the better the engine gets. When reading “numbers” of money spends on engines of yesteryear the numbers seems small compered the “numbers” quoted for today’s spend, but the value of money back then was as big as that of today. The spending was always there by those that could afford it, and will always be there. Just two examples comes… Read more »

JakobusVdL

Too true Sunny, if money is available, the teams will spend it.
I remember listening to an interview with Pat Symonds where he was saying at in the first turbo era when they were going through multiple engines per race weekend (plus the test team) the engine budgets were far higher than the hybrid era.

sunny stivala

Good morning from this end JAKO. So in your opinion, which is a right of yours, and a right that is something that gets us together on this forum enjoying bantering about the thing we follow “If money is available, the teams will spend it”. I am giving you notice, which is also a right of mine, that “if you” happen to have more money available than I do, I will push by all means to stop you spending it. as otherwise it will not be fair with me. Now, how do you like my progress in English? as I… Read more »

JakobusVdL

Excellent English Sunny, and always excellent posts. I’m jealous of people who take the time and effort to learn another language. It seems to give a better appreciation of the culture of the learned language, and also the native language. The history of all types motor sport, not just F1, supports the view that if money is available it will be used for competitive advantage. That F1metrics article certainly shows it has been the case in F1. I can’t think of any examples of series which have been successful in stopping the wealthy buying success, but I am hopeful that… Read more »

sunny stivala

Once again thanks for the compliment. Now for something new. This is out of topic on here, it is because it concerns “Kvyat back to F1 at FERRARI” page, and that page is to far back now for people to re-visit. And it might be of interest to you and others to read. The “Kvyat/FERRARI” news has caused some hot discussions in the Italian F1 websites some of which are as hot-headed if not more than the tifosi, but with some being among the top notch sites as regards the technical as well as the political side of F1 matters.… Read more »

JakobusVdL

That makes sense, and gives a hint about the direction Ferrari are taking with their car development.
However I expect RBR’s Horner to be as outraged by this move as he was about the Budkowski to Renault move.

sunny stivala

The 2017 Mercedes WO8 and the red bull RB13 had similar “high mounting point top arm” front suspension design and also similar front nose design. The FERRARI 2017 SF70H followed a totally different front suspension mounting point and nose design. All three were the best in the field in that followed front end philosophy, with their respective drivers at the wheel. The most consistent performer of the three in on track performance as regards their front end design philosophy seems to have been the SF70H. But one thing that the three teams cannot tell was, how good, better or worse,… Read more »

JakobusVdL

I wonder of Kyvat comes with a few flash drives of RBR and STR data traces, so that Ferrari can get more than a subjective comparison to their car?

sunny stivala

Allan Prost was saying that when he ran his team the NA engines he was using were more expensive then the hybrids of today.

JakobusVdL

Prost would definitely know the details of the costs of individual units and how many a team goes through for both power unit types.

sunny stivala

While we wait and idle the time waiting for this year’s on track action to start, It is the perfect time to update ones general knowledge on the sports we follow, even so some numbers pushed out cannot be accurate and therefore thereabout, they still will give some general idea of things. Spend some time over the following. “TSM SPORTZ – ALL ABOUT SPORTS” as regards F1 matter scroll down the items on right side. All about the latest high profile meeting in London, and the outcome. “pitpass = race promoters to put further squeeze on F1 teams”. Another thing,… Read more »

JakobusVdL

Thanks Sunny,
I’ve had a look at those two links, the TSM articles are a bit light weight, though I did find out your local F1 coverage is GO! (are they any good?).
Pitpass has lots of good articles, this one is an interesting insight into where the LM technical group are heading with their thinking
https://www.pitpass.com/60970/Future-technical-changes-to-focus-on-three-specific-areas
Aero, power units and suspension, sounds like 2021 won’t be much of a change (the hybrids are safe!), though it probably means the high profile tyres and lots of wings will stay too.

sunny stivala

standardizing parts and or specifying parts falls under making rules and regulations and that gets us back to a square one because who have a right to impose such things/do such things?.

sunny stivala

There are dozens of levels/classes of motor racing all over the world, what is regarded as the panicle and most expensive of them all is formula one, some people that chose to compete in formula one cannot really afford the cost, one way to elevate this problem if not sort out this cost problem is for those that can afford such competition to subsidies those that cannot afford the high cost. A good suggestion that!.

JakobusVdL

You’re English is getting even better Sunny, you’re doing sarcasm now :-)

sunny stivala

Thanks for the complement JAKO.

GaryK

Seems to me that F1 regulations/politics have become a Gordian knot. 2018 looks to be a bit of a bellwether year, but I would place my bet on another spit and bailing wire “resolution” devised to placate Ferrari. Going forward, I think this series is fated to be more of this-not-this and that-not-that to the continuing and growing dissatisfaction of all. I lose a little more interest every year.

charlie

I like the idea of reducing the team payouts from constructor points. Then say hasta la vista to the works teams. Widespread spec parts, tech rules with little to no room for interpretation, full account auditing will never be accepted by the teams.

JakobusVdL

Doesn’t all that already exist, as GP2, Formula 3, or any of the other series below F1?
Those series don’t get a big fan following (despite offering better racing most of the time).
I think the ‘pinnacle of motorsport’ needs to keep a big prototype element if its going to keep fan interest.

JakobusVdL

I’d imagine if the costs for F1 teams are to be limited, its not just a case of restricting the finanicial resources, limiting the physical and personal resources available to the teams is also necessary. However, the teams seem to find more expensive ways of getting around the examples I can think of which were introduced as cost reducing regulations. The limitations on wind tunnel time, and computational processing, and on track testing time have lead to enormous engineering teams and complex simulators. Its going to take some very well thought out regulations which the well funded teams can’t spend… Read more »

sunny stivala

JAKO, Yes, exactly, cost reducing regulations, wind tunnel and on track testing and more although all were enforced “legally” by the FIA in agreement with the majority of all concerned has led to very complex and extremely expensive (as much as a small team budged) super simulators (virtual track dynamometers). And again, yes and exactly, it is going to take some very well thought out (as Jean Totd said) “regulations”, pushing and or enforcing budged gaps/cost limits didn’t work before and will not work now, more so if pushed by those that have no rights or say to push such… Read more »

JakobusVdL

On this topic, here’s a link to some comments from Paddy Lowe that align with the view I’ve developed, that the gap between the top three teams and the rest of the pack isn’t power unit related, it’s all the other money the top three spend. Paddy quote, “I don’t think [engines] are the biggest problem in the sport. If you go look at the race in Austin and the performance split between the top six — well top five in the end — and then the rest, it was two different races and that isn’t split on engine grounds.… Read more »

subcritical71

I would say its a mix regarding the gaps. Obviously it can’t be the PU if you are running a Ferrari or Mercedes lump. But for Honda (and to a lesser extent Renault) I believe the gap is due to the PU.. 2018 will tell how good/bad the McLaren is. But I agree whole heartedly that the spend of the top 3 cannot be matched by the others. In order to keep the sport healthy as a whole, not just for a few teams, there needs to be something done to diminish the lavish spending that gives the teams large… Read more »

JakobusVdL

Another useful article on the team expenditure, and the impact of the chassis and aero changes for 2017.
‘Formula One teams’ costs rocket after rules changes’
http://www.bbc.com/news/business-41610963
Again, costs not related to the power units.