The political overtones of the Formula One Teams Association (FOTA), Ferrari, Sauber, Red Bull, Formula One Management (FOM) and the FIA are really thick. It’s nearly impossible to understand all the nuances of what is happening behind closed doors with the new Concorde Agreement negotiations. Unless, that is, you’re Niki Lauda.
One of the biggest sticking points for the last few years—since the economic collapse—has been the cost cap or cost-cutting measures proposed by the FIA, then FOTA and now FOM. If you listened to the latest interview with Formulamoney.com’s Christian Sylt, you’ll know that FOM’s Bernie Ecclestone has proposed a cost ceiling of $250 million. Today, Sky Sports F1 has quotes McLaren’s Martin Whitmarsh as saying this isn’t the best idea.
“It (the $250m) sounds like quite a lot of money, so I don’t know how much it is going to help many teams.
“The philosophy on controlling costs in Formula One is important to our sport and we all agree on that, although there are different opinions as to how that is best achieved.
“Bernie wants one that controls driver salaries and all those kind of things.
“What we should be trying to do is ensuring we are spending money in the appropriate places and controlling excessive spend in development.
“Personally, I think it’s a little unrealistic to have a global budget cap because it becomes even more difficult to pin down and to know everyone is comfortably operating within it.”
Whitmarsh is very careful to not call out the details of where these costs should be reigned in but “appropriate places” and development costs are the two he names. He also doesn’t seem keen on the idea of placing driver salaries as a component of the cost cap.
“The budget cap from Bernie has the elegance that you can describe it quickly, but it is very difficult to find out where the money is and control it,” said Whitmarsh.
“The resource restriction agreement asks: How much money do you spend externally and how many people do you have? It’s difficult to hide either of those.
“They’re also the core elements of a budget cap, but then it goes on to wind tunnel hours, CFD (computational fluid dynamics) etcetera, and we should be free to pay drivers whatever we want to pay them.
“What we should be doing is finding the easy, clear, measurable, definable elements of spend and control those.
“They (the RRA and budget cap) are both trying to do the same thing. They’re not against each other. They’re just a different philosophy.”
In essence, Whitmarsh says the RRA actually is measurable if you are including costs that can be audited or determined easily without throwing open the books and taking a peek inside. External costs and number of employees is a far easier way, according to Whitmarsh, to track team spend and mitigate overspending or creating a spending war.
FOTA member and Lotus F1 boss, Eric Boullier, says he’s not sure if the new cost cap from Ecclestone is a better idea or if the RRA is still the route to go:
“I don’t know yet.
“We have been working for years on the RRA, and we have a better understanding of what we could achieve with that. It’s a complex system.
“The idea of a budget cap from Bernie is quite new and we just need to look at it a bit more.”
There was, at one point, some suggestion that the teams were keen to have the FIA oversee the cost cap and manage the RRA to ensure fair play but that notion has not been mentioned lately in press conferences or comments to the press.
Formula One has a certain amount of specification to it and there is no doubt about that fact but unless it becomes a much more regulated and specified sport, like NASCAR, it will be very difficult to avoid the development war which will escalate costs and separate the herd of have’s and have not’s.
The bespoke nature of formula 1 is the real appeal of the series and teams building their own chassis and managing their own engineering feats is a real jaw-dropping aspect for fans but it betrays any ability to reduce costs if a team is flush with resources and doesn’t mind spending $350 million on a racing program.
F1 is an expensive sport but the world is not generating revenues to sustain a massive racing series where costs are no object. Honda, Toyota and BMW all left the series as the investment was not recognizing the return on investment they were looking for—or at least that’s what they said.
In the end, it seems the notion of a cost cap/ceiling or restriction is still a main sticking point among the teams, FIA and FOM. Ratifying a new Concorde Agreement could only be weeks away, as some suggest, but which cost-cutting measure they choose is yet to be seen.