Effects of the Budget Cap

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Ruslan
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#16

Post by Ruslan »

Bottom post of the previous page:

Everso Biggyballies wrote: 2 years ago I have found this figure in the diagram as to what each team spent, but it is 2019 season info. It is from an article dated May last year.

This is the article it comes from explaining F1 budgets and what the cap means, or meant at the time of writing.
https://the-race.com/formula-1/what-f1s ... -spending/

Image
Well, the current budget cap in $145 million not including drivers, team principals, marketing and engines....so from these figures, it would appear that everyone is maxed out on the budget cap. I don't really believe that.

I still suspect Haas, Williams and Alfa Romeo are below the budget cap, and not sure about Alpha Tauri. Abiteboul of Renault was saying last year that they were indeed spending below the old $175 million budget cap.
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#17

Post by jimclark »

DoubleFart wrote: 2 years agoSo as expected, you just want to complain. Great input. No need to do it again.
What complaint?
I stated my opinion, my observation. Because it differs from yours, doesn't make it a "complaint". ;)

I thank you for your input though. I'll surely take it under consideration.
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#18

Post by DoubleFart »

Why would I grimace at your posts?

I eye roll at somebody who is stuck in the past, just like how most of the board has given Andy a nudge to stop posting about F1 in the same vein you do. He's moved on to motorbikes. Maybe you might want to do the same if F1 is so terrible.
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#19

Post by White six »

Ruslan wrote: 2 years ago
Everso Biggyballies wrote: 2 years ago I have found this figure in the diagram as to what each team spent, but it is 2019 season info. It is from an article dated May last year.

This is the article it comes from explaining F1 budgets and what the cap means, or meant at the time of writing.
https://the-race.com/formula-1/what-f1s ... -spending/

Image
Well, the current budget cap in $145 million not including drivers, team principals, marketing and engines....so from these figures, it would appear that everyone is maxed out on the budget cap. I don't really believe that.

I still suspect Haas, Williams and Alfa Romeo are below the budget cap, and not sure about Alpha Tauri. Abiteboul of Renault was saying last year that they were indeed spending below the old $175 million budget cap.
No wonder he couldn't afford a haircut for DTS 2020
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#20

Post by jimclark »

DoubleFart wrote: 2 years ago Why would I grimace at your posts?

I eye roll at somebody who is stuck in the past, just like how most of the board has given Andy a nudge to stop posting about F1 in the same vein you do. He's moved on to motorbikes. Maybe you might want to do the same if F1 is so terrible.
Again, 'appreciate the suggestion, but, no thanks.
I'm neither afraid nor ashamed to have a different opinion than others. Just like I'm not at all upset that yours differs from mine.

I enjoy variety of opinion; unlike, apparently, you. :)
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#21

Post by Aty »

DoubleFart wrote: 2 years ago I eye roll at somebody who is stuck in the past...
Not everything in the past was bad, just as not everything current is good or better. I assure you...
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#22

Post by DoubleFart »

Aty wrote: 2 years ago
DoubleFart wrote: 2 years ago I eye roll at somebody who is stuck in the past...
Not everything in the past was bad, just as not everything current is good or better. I assure you...
Of that I'm well aware.
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#23

Post by Michael Ferner »

Aty wrote: 2 years ago
DoubleFart wrote: 2 years ago I eye roll at somebody who is stuck in the past...
Not everything in the past was bad, just as not everything current is good or better. I assure you...
That's a nice twist... :haha:
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#24

Post by MonteCristo »

https://www.formula1.com/en/latest/arti ... ySLlI.html

Meanwhile...

Stroll says he's increasing the Aston Martin staff size from 500 to 800.

How the hell does that fit into the budget cap?
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#25

Post by Everso Biggyballies »

MonteCristo wrote: 2 years ago https://www.formula1.com/en/latest/arti ... ySLlI.html

Meanwhile...

Stroll says he's increasing the Aston Martin staff size from 500 to 800.

How the hell does that fit into the budget cap?
I wonder if they will actually become employees of Aston Martin (Autos) as opposed to Aston Martin F1 / Racing point :dunno:

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#26

Post by White six »

Everso Biggyballies wrote: 2 years ago
MonteCristo wrote: 2 years ago https://www.formula1.com/en/latest/arti ... ySLlI.html

Meanwhile...

Stroll says he's increasing the Aston Martin staff size from 500 to 800.

How the hell does that fit into the budget cap?
I wonder if they will actually become employees of Aston Martin (Autos) as opposed to Aston Martin F1 / Racing point :dunno:
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#27

Post by Ruslan »

MonteCristo wrote: 2 years ago Stroll says he's increasing the Aston Martin staff size from 500 to 800.

How the hell does that fit into the budget cap?
I don't know. How many people can you fit into a budget capped team... keeping in mind marketing and engines are not part of the cap?
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#28

Post by Everso Biggyballies »

Probably a good time to resurrect this thread seeing as the words Budget Cap are being bandied around again, and various TP's are concerned about the effects of "World Developments" and the effect on the Cap.

The Red Bull Rent a Gob has perhaps been the most outspoken, although to be fair others have spoken out on the matter.

Horner: F1 teams might have to skip races to meet budget cap

Red Bull boss Christian Horner claims that Formula 1 teams risk breaching the budget cap unless it is adjusted, even suggesting that some won’t be able to complete the season.


Well, I think we all know thats a load of bollocks in terms of reality. Common fact #1 is that the teams are contractually obliged to enter two cars at every race. OK there have been exceptions in years gone when the likes of Super Aguri, Arrows before them, Caterham missed races in 2014 all through financial collapse, but most, even HRT Marrusua Hispania always turned up and quit at the end of the season. What I am saying is that none of todays teams are going to become insolvent over this. They are either manufacturer, billionnaire owned or investment company owned, and thus are of value as an ongoing concern. They are not struggling as such. Even Haas, likely the most financially fragile, were able to dust themselves down and continue when they dismissed the Mazepin Millions,

In addition the teams are all contractually bound to sponsors to turn up to every race of the year.

So sorry Mr Horner I dont buy that any team will miss races for fear of breaking the budget cap. I think Horner's problem is more like he has spent way over what he planned to this year already to put his car at the front of the field, major updates at every race until Spain. Other teams have been way more circumspect and respectful of the cap. Hell, even Ferrari held back on updates because of the restraints of the cap.

What Horner is saying that some TPs agree with, is that the cap has to be adjusted for inflation. Others like Steiner of Haas, Williams, Snafnauer (Alpine) have said Bullshit, pull back on what you spend on development to meet the other areas such as freight that have blown out, for whatever reason.

Its not a new argument, it has been going on all season. Ross Brawn has previously indicated that the matter would be addressed. However, several teams have continued to dig their heels in and oppose any change to the current cap ($140m for the year, plus an extra $1.2m for a 22nd race.)

It is already starting a bit of a bitch fight as teams look at the level of updates others are bringing and wonder if all teams are playing by the same rule book.

Horners Rant
“I think we need the FIA to address the inflationary issue,” said Horner.

“Probably about seven of the teams probably need to miss the last four races to come within the cap this year, from the consensus that there has been up and down the paddock.

“It’s not just about the big teams now, it's teams in the middle of the field that are really struggling with the inflationary rate that we're seeing that could even get worse in the second half of the year.

“I think the FIA have a duty of care in a situation like this. I know they're taking it very seriously because as I say, you'd almost be at the point where I think for certain teams, from numbers that were presented earlier in the [Spanish GP] week, that they would have to miss a few grands prix to even get anywhere near the numbers.”

Teams don’t want to risk edging over the cap and facing penalties.

“Nobody wants to be in that position, which is why I think the second six months of the year, the FIA need to address the issue,” he said.

“Things like energy bills, just cost of living, we see that the costs are growing exponentially and Formula 1's not exempt from that.

“We see it in freight, that’s quadrupled. And that's not something we can control.”


On the other side Alpine boss Otmar Szafnauer confirmed that his team will continue to oppose any boost to the cap.

He puts his points across very well.
"We're not in favour of that,” (raising the cap) he said.

“We've set our budgets out early, we kind of anticipated a little bit of the inflation, inflation just didn't creep up on us.

“If you look back in December, the RPI [retail price index] was already at 7%. And most teams do their budgets between November and December for the following year.

“For us, it wasn't a surprise. So therefore, we planned for it
, we're still under the cap, even though we didn't plan for as high a freight cost as we are now experiencing.

“But we're still under, and if we can do it, for sure others can do it too. So I'm not for just increasing the cap.”

In response to Horner's claim that teams would miss races, Szafnauer insisted that they will simply have to scale back their development budgets to stay within the limit.

“I know what our budget is, and I know budgets that I've experienced in the past, there's a significant amount of money in the development budget for a year,” he said.

“Especially in a year where the regulations are all new, you put in a lot of money for development, because ultimately this year is a development race.

“So when freight costs go up by $2.5-3.5m, but your development budget is $20m, can you not make your development budget $17m and still be under the cap?

“You can. But what that then does is it limits your development, and you're in a development race.

“So it's a lot easier if you have the money to go to the FIA and lobby to raise the cap and keep your development budget the same. So those are the questions you should be asking [teams pushing for an increase.”

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#29

Post by MonteCristo »

I mean, what is the penalty for exceeding the budget cap?

I assume a fine! (That maybe carries on into the following season's budget?)

But rampant, worldwide inflation does put a dampener on the budget cap.
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#30

Post by Everso Biggyballies »

MonteCristo wrote: 1 year ago I mean, what is the penalty for exceeding the budget cap?

I assume a fine! (That maybe carries on into the following season's budget?)

But rampant, worldwide inflation does put a dampener on the budget cap.
A fine through to a deduction of points to a DSQ depending on the level of breach.
Will the teams be penalised if they spend too much?

Put simply, yes. There are three categories of potential breaches. The first is a procedural breach, such as a team submitting their accounts late or inaccurately. The second is a minor overspend breach, when a team’s report shows they have exceeded the cost cap by less than 5 percent or the Cost Cap Administration finds they have exceeded that percentage. The third is a material overspend breach, where a team’s submission of their accounts or an investigation by the panel shows they have exceeded the cost cap by more than 5 percent.

Once a breach has been identified, three forms of penalty are possible. The first is a financial penalty. The value of the fine will be determined on a case-by-case basis. The second is a minor sporting penalty which could be a combination of a reprimand, deduction of constructors and/or drivers points, a ban for a certain number of races, limitations on testing – both CFD and on-track – and/or a reduction of their cost cap.

The third is the material sporting penalty, which is the most serious as it can involve all of the above plus exclusion from the World Championship.
https://www.formula1.com/en/latest/arti ... seCHO.html

* The article linked is a couple of years old but is a good source of info
as to what is/ isnt included in the cap, how its regulated (by the 'Cost Cap Administration) and how the teams have to file reports

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#31

Post by Everso Biggyballies »

The shit seems to be hitting the fan in terms of the smaller teams unwilling to agree with mainly Ferrari and Red Bull Bull, who are seeking adjustments related to increased inflation and increased costs resulting from the conflict in Ukraine, citing 'force majeure'.

In particular Alfa Haas and Alpine are digging in deep, suggesting that inflation was already high when they set their budgets at the end of last year. They all say the writing was on the wall and they knew habits of old would have to be reigned in to meet the objectives. They made sacrifices early knowing the difficulties ahead were not going to disappear.

I have to say I agree with the smaller teams on this one. Vasseur of Alfa summed it up well, saying his team, on seeing costs escalating faster than anticipated made early decisions to not bring updates to every race and not run their wind tunnel so much.
“For me, it’s absolutely not a case of force majeure, because inflation is not a case of force majeure,” reasoned Frederic Vasseur, Alfa Romeo Sauber team boss.

“We knew perfectly in November or October, when we did the budget, that we will have inflation.

“I think that at one stage that we have to agree on the fact that we won’t try to change the rule.”

Alfa Romeo Sauber is one of the teams which has not had to trim its operation in order to meet the budget cap, and is instead working up to the $140 million figure – which is set to become $135 million next year.

It gives Vasseur a different perspective to the likes of Christian Horner and Mattia Binotto at Red Bull and Ferrari respectively, who’ve both had to drastically reduce their costs since the introduction of the financial regulations last year.

“The difference is that we are not speaking about budget cap, we are speaking about budgets on our side,” Vasseur noted.

“It means that I won’t be able to overspend what I have.

“And I can understand their situation, but if we have some increase on the energy or freight, the best solution is to switch off the wind tunnel, to stop to bring updates every single weekend.

“We are in this situation, and sooner or later we will have to stop the development of the car because we will be at the limit of our budget.

“I think everybody can do the same.”
Alpine team principal Otmar Szafnauer is of a similar view.

With the way decisions have to be made I think 80% of the teams have to agree to any change. It seems that wont happen. Horner is bleating that teams might have to miss races to meet the budget cap. As I said previously that isnt going to happen. Are Red Bull going to sit at home while others race, watching there championship lead be eroded? Not a chance.

Interesting times ahead I feel. Something is going to have to give. The difference is I think that the smaller teams are not in effect having to change the way they have historically operated.... their meeting the cost cap is not in the same ballpark as the major teams who have had to cut costs by 50% or more. At the end of the day that is what the budget cap was always aimed at achieving, and the numbers arrived at were as a result of months of discussion and ultimate agreement of all the teams.

This is an article with no paywall or restrictions on views (can be read by all) which explains the current situation well.
https://www.speedcafe.com/2022/06/04/ri ... -increase/

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