These ARE the views of Thejudge13
There’s nothing better after a hard session in court than reading a fat hippo rant. The gargantuan river horse has become a vital and much loved part of our community now we’ve tamed his tendencies to see all things through tinted energy drink glasses (most likely with a vodka or 2).
However, this time the giant amphibious beast has tried to bamboozle us with examples of complex inter-company accounting and economic structures which are not applicable to F1. In his second rant – which I have the privilege of reading prior to publication – we get more fabulous entertaining rhetoric and a convincing argument for Nihilism, though this has a number of positive suggestions with which I concur.
I will deal with rant 1 today and here is a summary of the points made.
1) No one really knows how much Red Bull is spending – they claim to have 55 employees which of course is a nonsense, so how can you control their spend if you don’t really know what it is?
2) Buffoons and fools like Toyota spent gazillions more than anyone else and won diddly squat, so the problem is not actually who spends what.
3) Teams make stuff for other teams, so its far too complex to understand what cost/revenue is associated with what.
4) Some teams are in countries where the government is not that bothered about collecting taxes (and are now broke) so their company accounting procedures are rubbish and/or too secretive
5) The FIA are rubbish at everything they do, so they have no chance of doing add ups and take aways in a vain attempt to understand what the teams are spending. (on that we are agreed).
Before I delve into the appropriate ripostes to No.s 1-4, there is still something about this announcement that fascinates me. I alluded to the fact last night that the phrase – a ‘Global cap’ – is from way out in left field. If we are to believe Todt and his minions, the first step on cost control will be to define a maximum spend for F1 as a whole.
It could just be that le presidente has not for the past years been doing nothing, but with the finest financial minds on planet earth and plotting a finely honed plan to deal with F1’s impending bankruptcy which will see his name go down in history as the man who saved F1.
More of that later.
Let’s start with the premise, ‘a fool and his money are easily parted’. This may indeed be true, but it is no reason to justify a system of unregulated spending beyond your means, which in effect was the modus operandi of the global banks pre the recent crash.
So, we agree Toyota in F1 proved Japanese efficiency was not genetic…. though in mitigation of Toyota’s reckless spending, this may have been something to do with the bar bill of the person they appointed as the best paid F1 boss at the time.
Toyota does not disprove that 1 decently managed team spending 5,6,7,8 times another will destroy competitiveness… It goes without saying.
Secondly, of course no one knows how much Red Bull is spending, or Mercedes, or Ferrari.. why? Because nobody is asking the question. The inference that to monitor a teams spending, the FIA (or their accounting experts) should have to trundle through a web of international group companies accounts is ridiculous.
Even HMRC only asks British companies to make a declaration of earnings and tax payable. This question is not even being asked in F1.
The conclusion of this rebuttal and that of points 3 and 4 is simple. Regulate that all F1 teams produced a specified standardised list of all their income and expenditure – including inter company transfers – for inspection by specialised professional auditors.
In effect, an F1 team has to record its financial dealings as a single entity just as a baseball team does in North America.
Having started life as someone who did a number of group company accounting consolidations – some groups numbering up to 80 odd companies – I can tell you this can be done pretty easily.
Of course, the small eared, enormous mouthed one raises the spectre that teams lie, hide things away and may just be generally dishonest.
On that note we are again agreed. I have repeatedly stated this year that teams are not interested in complying the design regulations per se., however they are desperately keen to comply with the tests performed by Jo Baur and his 4-5 helpers at the FIA scrutineering division. The two are vastly different.
After interacting with F1 and its people for over 25 years, I had a fascinating experience in 2013. During a conversation with a relatively senior manager (a known name) in one of the teams, I began to divulge and opinion about a piece of technology I understood from a contact another team to be using.
The technology I believed to be outside the design regulations, but met the FIA scrutineering tests. If I’d been holding a hand grenade and about to pull the pin, this ‘director of….’ could not have run for the hills faster.
“Who told you this”…”was it an employee of…”…”if so I can’t continue the conversation”…”if ever asked, you gave me this information unsolicited”….
Gobsmacked? You could have knocked me over with a swish of the Hippo’s rather whimpish and stumpy tail.
Yes and you guessed it, this person and just 3 others know who TJ13 is.
I learned from this encounter that the McLaren spygate saga and subsequent penalties awarded have put the fear of God into team bosses over receiving intellectual property from another team’s employees.
Simply put, teams respect the ability of the Jo Baur and FIA to ‘find them out’ if they are cheating. Though they can see the paucity of technology and resource at Jo’s disposal. If the standard of scrutineering was better, less cheating would occur.
Similarly, were the FIA to force the teams to declare in a standardised format their income and spend, and subject them to a bunch of forensic accountants with the threat of exclusion from a championship should they transgress – they will comply.
You can’t hide a $100m overspend, however complex the company structures.
So, in my Disney dream I petition… “Be bold Jean – gain our respect. Put a $150m cost cap on all teams and make them declare all their F1 income and expenditure”.
Worst case scenario, someone will try and get away with a few dollars more…..