To budget cap or not to budget cap – THAT is the question.
The arguments on both side of this debate have raged for what seems like an eternity.
Those against this proposition believe that teams with associated automotive manufacturing operations can secretly conduct their R&D away from the Formula One team both physically and without financial impact on their officially stated expenditure.
However, proponents of this viewpoint argue that self-regulation together with sample auditing techniques will be sufficient to enforce budget caps to the extent that the costs of running a top Formula One team are significantly reduced.
TJ13 has previously revealed, when an engine manufacturer delivers a shiny new F1 engine into service, it is impossible for the FIA scrutinisers led by Joe Baur to know whether some illegal modifications have not been made.
When engine modification requests are made to the FIA under the safety/reliability mandate, the result is often that a peer review is conducted. The FIA canvas the other engine manufacturers who decide whether this application meets the criteria laid out.
When asked about the possibility of engines being illegally modified, TJ13 was informed by one of the manufacturers that the ‘fear factor’ of being discovered is a highly effective policeman in what is a self-regulating system based on honesty and trust.
So in a Formula One team, a budget would be set out for team’s total spend within a calendar year, and the final results assembled and then checked by an audit.
If team’s decide to cut expenditure in one area and increase it in another – it’s not a complex matter to adjust the numbers accordingly.
It would be pretty clear if a team had manufactured 45 new front wings in a season, that the spend for this item in the final accounts should be somewhere in the region of $4-5 million. If the final accounts state just $2 million, then ‘Houston – we have a problem’.
A team could lie about the number of wings they manufactured, but they can at present lie about the details of modifications made to an engine.
The point is that whilst there will always be grey areas – a budget cap of $150m would be almost impossible to balloon to $450m without some evidence being discovered.
If like Mercedes – a UK company claims to employ around 1600 people and declare their employment spend at under £24 million, then on average the numbers demonstrate that each person is paid just the minimum wage. This of course would be highly suspicious.
Vijay Mallya is currently learning that inter-company transfers of assets and costs are not so difficult to unearth – if enough effort is made. Equally the arguments that Mercedes could make tens of millions of expenditure invisible in Stuttgart – is mere scaremongering.
Max Moseley is suggesting that teams who are prepared to sign up for a budget cap be granted a greater degree of design and regulatory freedom in exchange for the voluntary budget cap. Those who refuse, face a different a more stringent and restrictive set of design and technical regulations.
“I could imagine that very soon all the teams would be within the budget cap camp,” the ex-FIA president tells AMuS.
“They would realise that for 100 million, you could have great motorsport and build technically advanced cars.”
100 million what – is the question? – Euro funny money, dollars or pounds? This makes a big difference.
Further even £100m would not be achievable immediately. However, a schedule of budget cap reduction – year on year – would also assist the teams who need to plan a reduction in the operations.
As doable as this seems – it fails to deal with the fundamental problems faced by the teams like Lotus, Force India, Sauber, Manor F1 and even Williams to a certain degree. The money they receive from FOM is below the survival line and the bigger teams cutting their ‘arms race’ like spending doesn’t help them one jot.
Conversely, if the teams refuse to agree this in the F1 strategy group, FOM and the FIA could agree to tighten regulations and restrictions enforcing for example just four new front wings allowed each season – and other similar constraints.
Love him or loathe him, Max Mosley knew Formulas One inside out – and still has a contribution to make in breaking this deadlock.
Mr Todt on the other hand….. [fill in the blank]