The FIA confirmed last week that a symbol(pound)40 million budget cap will be introduced into Formula One for the 2010 Grand Prix season. The decision has sparked controversy throughout the sport and some of the teams are very much against the idea.

The cap will be voluntary, but the teams who sign up for it will be given certain technical dispensations to ensure they are not disadvantaged in any way. If anything, they will actually have quicker machinery at their disposal.

Cost-capped teams will be allowed to run unlimited testing mileage over the winter break and will have no restrictions on their wind tunnel usage. They will also have the 18,000rpm limit removed from their engines and will be able to construct four wheel drive cars (although they are more likely to use this option to run a KERS generator on the front wheels).

The regulated teams can also fit moveable aerodynamics to both the front and rear of their cars, and these will be able to move an additional four degrees. These wings can also be adjusted an unlimited number of times per lap.

The symbol(pound)40 million cap will include everything except for driver salaries and marketing. The FIA have excluded these two items because they still want to attract the best drivers who simply follow the money, and also want the teams to continue promoting the sport through activities such as the Renault Roadshow.

For 2010 only, engine costs are also excluded from the cap, and that is designed to make the option more attractive to the manufactures right away.

As first glance the budget cap seems overly restrictive and goes against the high quality cutting edge nature of Grand Prix racing. Formula One is not a ‘budget’ championship and is rather about having the very best of everything.

In addition to that, a budget cap would seem very hard, if not impossible, to police. The FIA have announced there will be a Costs Commission armed with forensic accountants to monitor the field, but you can be assured that teams will have exactly the same services at their disposal and will work out ways of getting around the rules. Some of the manufactures in Formula One own many different companies across several different industries, so it would be easy to hide the expenses for an F1 program in another division of their business.

Even if the teams don’t cheat or they will forever be open to accusations that they are. Team costs will never be totally transparent so as soon as a budget-capped outfit starts winning races there are going to be people who suggest they’re cheating, and that’s not good for F1’s image. One of the reasons the FIA reintroduced traction control in 2001 was because the teams continually accused each other of using it illegally, so creating a rule with obvious grey areas is going to cause all sorts of unnecessary drama.

It’s already bad enough that a championship can be decided in the steward’s room, but it would be even worse to have it decided on a dodgy balance sheet.

The biggest issue with the budget cap is that it isn’t compulsory for all teams and therefore creates a two tiered championship. There will essentially be two different types of F1 team in 2010 running two different types of F1 car, and that is a disappointing outcome for the sport.

Ferrari has been particularly vocal about the budget cap, and Luca Di Montezemolo sent a strongly worded letter to Max Mosley expressing his concerns. Among them, he noted that a two tier series creates a situation where “one category will have an advantage over the other and that the championship will be fundamentally unfair and perhaps even biased.”

Ferrari is also against the idea because the team didn’t have a say in formulating the rules.

In 2005 Ferrari signed a deal with the FIA and FOM to ensure they would still be subjected to the existing Concorde Agreement until the end of 2010. This guaranteed the team certain financial rights, but also confirmed the F1 Commission (of which Ferrari is a part) must approve any new rules before the World Council can vote them through.

Luca Di Montezemolo feels the introduction of the budget cap without their approval goes against Ferrari’s legal rights.

It’s a moot point really considering that Ferrari has the choice whether to fall under the budget cap or not.

It’s perhaps not surprising that Ferrari has such a huge objection to the cost regulations given their monumental investment in Formula One. However, they actually stand to gain a lot from it. Ferrari has the best facilities of anyone in F1, including the Fiorano test track and an awesome wind tunnel, so the freedom to use these unrestricted at little cost to themselves would surely be an advantage.

It would also turn the Scuderia into an extremely profitable business.

With that in mind, it is quite possible that a two tier championship will not end up happening anyway because all of the teams will have their own motivations for signing up to the budget cap.

The smaller independent organisations like Williams, Brawn, Red Bull, Force India, and Toro Rosso will love the cap because they already have budgets around the symbol(pound)40 million mark. It brings the playing field down to their level.

The larger manufacturer backed teams might also find themselves in favour of the cap because their senior management is pushing for dramatic cost savings. All of the car companies are evaluating their presence in F1 during the global recession, and a move to severely reduce spending will all but secure their future. No sensible board of directors is going to allow an F1 team under their control to spend hundreds of millions of dollars when there are other teams doing better by spending less.

The F1 teams have to confirm their intentions to the FIA by May 29th so we will find out the state of play sooner rather than later. There is a FOTA meeting on Wednesday and that will give a very good indication of whether the teams are going to fight a budget cap, or if they will work with it and go through the pain of restructuring their business.

After all, the budget cap could actually be a very good thing for the sport.

Firstly, it is not going to change the fabric of Formula One. The colossal amount of money F1 right now is only a new phenomenon and just 15 years ago a budget of symbol(pound)40 million was fairly healthy. Even that seems unbelievably high compared to budgets back in the 1960’s when a successful Formula One team could run on just symbol(pound)100,000 per year. That’s not even 1% of the 2010 budget cap! The sport has changed a lot since then and the technology is now far more advanced, but it is still offering the same core product. The teams are simply running two cars in front of some fans once per fortnight. No other racing series in the world spends anywhere near as much to do the same thing, and the closest comparison is GP2 where an annual budget is usually around symbol(pound)1.5 million.

It is certainly possible to be very successful and competitive on symbol(pound)40 million per year, which is something that BrawnGP are proving to everyone right now!

The cost cap is actually beneficial for the sporting aspect of F1 because it releases other technical restrictions. A number of rules have been introduced over the past few years to reduce costs by limiting freedom in certain design areas, but those rules can be lifted under a budget cap.

It gives more incentive to the teams with smarter engineers and designers, and places a bigger emphasis on innovation rather than refinement.

It also invites new teams into the sport which is great for the fans as well as everyone else. More teams equal bigger grids and more action. Simple as that. A budget cap brings F1 into the realms of other manufacturers and private racing teams who have been unable to compete to date because of the high costs involved. Peter Winsor and his staff at USF1 must be laughing.

Prodrive have said they’re considering the option entering Formula One now with Aston Martin, whilst Lola and iSport have also expressed an interest in joining the championship.

Perhaps the most obvious benefit of a budget cap is that makes very good sense from a business perspective

Toyota has shown how much wasteful spending there is in Formula One. The Japanese manufacturer has gone through more money than several small countries over the past few years and has gained very little from it, so a budget cap instantly removes that financial inefficiency from the sport.

It also keeps the teams profitable, and does so to an extent where car companies could actually up making money from F1.

The budget cap might just save the sport and protect its future, and could be a very positive development in Grand Prix history,

That is of course depending on the larger FOTA teams agreeing to restructure and cut back on spending.

We’ll have a better indication of their intentions on Wednesday, and the F1 world will be hoping the sport’s future is not cast into doubt.

Post a comment