Budget cap or budget farce ?
Posted on May 16, 2008 by F1Wolf
The Formula 1 budget cap has been talked about for a while. Yesterday some details of the proposed cap were revealed. The budget cap is set to be introduced in Formula One from the start of 2009. Tony Purnell (FIA consultant) has written to all F1 teams with the figures the FIA would like to set. So here are the figures:
2009 – 175 million Euro (USD280 million)
2010 – 140 million Euro (USD224 million)
2011 – 110 million Euro (USD176 million)
At the first sight it looks like significant reduction in spending, especially when we think about Toyota’s current F1 budget in the area of USD500 – 600 million.
But … Force India wastly improved budget for 2008 season in “only” USD150 million or thereabouts. The budget cap proposed for 3 years from now is still way over this privateer team current budget and … now the fun part – the proposed budget cap is not about to cover:
- engine development
- marketing expenses
- driver salaries
- team principal salaries
- KERS development
Lot’s of areas to make sure sure that the spending does not go down at all. Lot’s of grey areas to make sure that the spending actually can keep rising as much as the teams want … Add to this the fact that different teams are registered in different countries with different accounting standards and tell me what sense this whole exercise is going to make ?
This is what Flavio Briatore has to say:
“I already pay 40 per cent less than the cap. If I want to keep to the limit then I need to spend more. It’s nonsense.”
I am not sure how accurate his “40%” figure is, but I do agree with the last words in the above quote – It’s nonsense.
As long as the Formula One rules motivate the teams to spend millions on developing dumbo ears, the teams will keep spending and will find a way how to spend legally… Do not forget that F1 teams alway push the limits of legality and bend the rules as much as possible even at a risk of breaking them. It would not be different with the budget cap. Budget cap may be nice idea, but I doubt it will ever work in Formula One…
Photos: Force India, ING Renault/LAT
Discussion: 7 Comments
7 Responses to “Budget cap or budget farce ?”
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Sriram
- 16th May, 08 01:05pm
F1 needs to maintain its position as the leader in technology and at the same time keep costs in check. For that, budget caps is the way to go.
F1Wolf
(author comment)
- 16th May, 08 01:05pm
if it works, yes, but I do not see how what has been proposed is going to keep the costs in check …
Stew
- 16th May, 08 08:05pm
The budget cap will be adhered to with whatever is implemented, but so much money will be spent on the other areas you mention. The bigger budget teams will still maintain their lead with more money to spend in those areas legally. I don’t see anything changing.
Any budget cap has to be blanket coverage without leaving such important areas untouched. In the end, I agree that the proposal is nonsense.
I wonder just how serious the FIA are in limiting spending.
Stew’s last blog post..Robert Kubica The Highest Commodity
zblkhwk
- 17th May, 08 10:05am
They can try all they want, short of supplying spec engines and chasis (similar to Indy), spending is going to continue to be huge, and the haves will dominate the have nots.
F1Wolf
(author comment)
- 18th May, 08 06:05pm
This is what Gerhard Berger thinks:
“That is absolute insanity,How can we save money like that? It doesn’t even include driver salaries nor contain the engine costs. In other words, the manufacturers don’t want to save anything at all. 175 million? A real private team could never afford a budget like that.”
zblkhwk
- 20th May, 08 10:05am
Ferrari would never want a cap, and their influence over F1 can not be discounted.