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