F1’s new reason for cost cutting

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Why cut costs in Formula 1?

Is it to give the smaller teams a chance? To make sure it isn’t the team with the biggest wallet that always wins?

Or is it to stop the car manufacturers from leaving the sport? F1 is faced with complaints that it is a frivolous, environmentally-unfriendly waste, as the global economy teeters on the edge of a recession.

Cost cutting used to be about allowing the smaller teams to compete. But now the justification is different. Now it’s about reducing the financial burden on the major manufacturers that comprise the majority of the F1 grid and supply engines to all the teams.

This could be a sign of a subtle and potentially very damaging change in attitudes to Formula 1.

Car manufacturers were attracted to Formula 1 on the first place because it was desirable – glamorous, popular, a technological tour de force.

Now the sports’ governing body is trying to help them justify their place in the sport by making it defensible – not too expensive and not too damaging for the environment.

Last week the FIA and the manufacturers sat down and brokered compromises on various radical changes to the future of Formula 1.

Budget capping was mooted as one solution to escalating costs. I’ve always been very cynical about this simplistic idea because I can’t imagine how it could be enforced. I’ve read that new economic laws following various Enron-type financial scandals have made it a realistic option.

The proposed restriction on engine development has also been agreed, though reduced from 10 years to five so that more environmentally-friendly power plants can be introduced in 2013.

All of this is many years too late to spare the like of Arrows, Prost and Minardi from going to the wall. It can only be out of concern that the car manufacturers might leave that these new rules have been brought in.

Concerns are growing about the state of the global economy. The United States Congress slashed taxes by $145bn last week in a bid to stimulate growth but on Monday the value of the FTSE 100 index fell by 5.5% ($163bn).

FIA President Max Mosley has claimed that because he deals with the top directors of the car makers, rather than their racing divisions, he is better placed to judge if and when they might want to leave the sport.

But should there be a recession I’m not sure that car manufacturers will stay in Formula 1 because it’s costing them $150m instead of $300m.

This would not be so alarming if the teams had customer chassis and customer engine supplies to fall back on. But the FIA fumbled its attempt to legalise customer chassis in Formula 1. The Prodrive team, which might have been a model of how to run a competitive outfit on a fraction of a typical F1 budget, now may never see the light of day.

Customer engines are gone too. At the end of 2006 Cosworth, F1’s last independent engine builder, left the sport. Not because their engine was un-competitive, but because Williams, the only team using the V8 unit, needed the support of a manufacturer.

This may prove a serious problem if the car manufacturers start leaving the sport in large numbers.

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Author information

Keith Collantine
Lifelong motor sport fan Keith set up RaceFans in 2005 - when it was originally called F1 Fanatic. Having previously worked as a motoring...

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16 comments on “F1’s new reason for cost cutting”

  1. Cosworth as a company still exists as does their last V8 – and thanks to the engine freeze it may be easyly brought back to life

    The chassis situation is different but I believe it would not be impossible for the privateers to go to companies like LOLA and get the chassis designed

    If any of the manufacturers decide to jump the ship they would leave behind the facilities and chassis that potential buyers may use and build up the teams on. Ford’s escape and sale to Red Bull is an example. If any of the manufacturers decide to go, they would do it likely to cut the losses not to make profit from the sale of the team. If they face the options to give up the entry for zero cash or sell for price buyers can afford, they would likely choose the B option.

    Prodrive might have been an example how to run the F1 team on cheap, but a wrong example. Customer chassis would be fine, but customer chassis custom made for the team. Not simply running McLaren car painted in other colours … I am glad Frank Williams’ intervention helped to stop this …

    If I want to watch specs cars race, I can turn on GP2 or A1 …

    The budget gap – I am also sceptical about that. I also read somewhere that in the post-Enron era the cap shold be easy to police, but if Max believes that is the case, he needs to wake up… with 3 areas outside the gap there are already 3 grey areas to exploit. And I have no doubt teams and their accountants will find even more … Can anyone imagine McLaren being a second down on Ferrari waiting for next season with further development because they have no more budget ?

  2. no matter what they spend, more often than not, not much in the performance order changes during the yr anyway, they most progress evenly.
    there r some changes but very subtle

  3. But could an F1 team use the Cosworth V8 if it wanted to, now that engine specifications have supposedly been frozen?

  4. Budget caps won’t work.

    Until the idea of budget caps came up Max was on a green agenda. Now it is OK to run your wind tunnel as much as you like so long as you have the money in your budget. That doesn’t seem to me to be environmentally friendly. It seems more like the model you would expect the US government to come up with rather than the plan of an eco-warrior as Max would like to be seen as.

    It seems odd that the very people who used their massive budgets to drive out the real racers now want those budgets restricted.

    I read yesterday that Toyota plans to compete in sportscar racing with a hybrid car. Imagine they spend the next 4 or 5 years and billions of yen developing technology they can then drop into F1 at no cost to their F1 team. How does the budget cap cover that? Does every F1 team have to go and race in other championships which don’t have a budget cap so that they can generate ‘free’ technology? In the process of course they will drive out the teams that compete in those championships as well.

    Max has been his usual smug, superior self on this matter. Some people will lose their jobs he says but that is good for them and good for the car companies. Losing their job is not good for anyone except maybe Max and people who have committed their life to racing deserve better than to be packed off to work in a car factory with little say in the matter.

  5. The most annoying thing about this is that a few years ago we weren’t dependent on manufacturers and now we are, but I can’t remember exactly when it happened. The problem is that F1 has to keep the manufacturers happy because otherwise we have no sport at all. I say bring back the proper racers – I would much rather see a Minardi or a Jordan trundling round at the back of the field than a Toyota winning races.

  6. Clipped from the article: “F1 is faced with complaints that it is a frivolous, environmentally-unfriendly waste, as the global economy teeters on the edge of a recession.”

    Why doesn’t this statement apply to NASCAR who are STILL growing while F1 whithers on the vine.

    Another clipping: “Car manufacturers were attracted to Formula 1 in the first place because it was desirable – glamorous, popular, a technological tour de force.”

    I agree with that but MadMax has removed technology and compounded the situation further with regressive ideas like bio-fuels and the engine freeze. Popularity? Revenues may be up but attendence is not, the races are essentially parades determined the day before in qualifying.
    Along these lines the constant turn-over in drivers has a negative effect. Villeneuve had a fan following, Vettel has none. Schumacher had a fan following, Nagajima….. Naga-who? Everyone has to be a rookie once but we seem to have TOO MANY rookies each year. And let me ask, how is Hamilton’s mega-million dollar contract worked into “cost cutting”.

    I read this forum because my electronic friends offer one-liners that make me smile:

    Milos: “If I want to watch specs cars race, I can turn on GP2 or A1 …” Milos my friend, F1 is spec car racing.

    Vertigo: ” I would much rather see a Minardi or a Jordan trundling round at the back of the field than a Toyota winning races.” Yes, me too but I’d also like to see a Toyota win a race, that would be different. !!! 55 days and counting………

  7. I think it has gotten to the point where Max and Bernie because of senility just don’t listen to anyone; whether it is the fans, teams, manufactures…

    The engine manufactures debate is a perfect example. When the manufactures gave recommendations on the new rules they said a lot things that make sense… energy recapture devices, switching to biofuels, and other “green” technologies in addition to free engine development. So what does the FIA do… slap a 10 year ban of the engines development. Isn’t F1 supposed to be the height of technology? There is an old saying that you cannot regulate innovation. How are teams supposed to make the sport greener and push the technology when development is frozen?

  8. The really stupid thing about energy recovery devices is that a few years ago McLaren developed one and it was banned before it raced. If they had let it race then everyone would have them now and we would be a long way to developing something that was relevant to road cars.

  9. An overall budget cap seems to be the way to go, at least for me. Granted loopholes need to be closed, but at least the team will have some say in how it allocates it’s budget; aero testing, engine enhancements, transmissions, hydraulics, etc.

    The key is setting a fair budget number and include a separate cap on driver’s salaries and a maximum cost for customer engines. And make customer teams pay for their customer engines, that may allow Cosworth back into the game.

  10. F1 being at the fore front of technology – more like being strangled by regulations and the bean counters – bypassing the actual racing arm of the manufacturers – more like speaking to people who like corporate hospitality more than what speed the cars can run/lap/brake etc
    As for teams using other sports – mentioned that ages ago when ferrari take over A1 – they can get all the computer/hardware info they can handle with no opposition at all – ferrari wet dream(sorry not) – mad max and his little pal – need to go – but they wont go and the present bunch of teams dont have any mavericks spirit left in them after max made an example of mclaren – be good boys and you can play with your toys – pompous man makes me sick

  11. Nagajima….. Naga-who?

    Funny you should say that… Video: Kazuki Nakajima interview

  12. In terms of the budget cap… I trust the FIA’s accountants a lot more then their technical regulatory people. You only need to look as far as Interlagos last year (faulty fuel temperature devices), Spygate (enough said), Fuji last year (couldn’t figure out that it was too wet to race), and all the pointless regulations (see previous engine related posts.)

    Personally I am neutral on the subject. There are distinct advantages and disadvantages. One thing is for certain, at least we know that Max, Bernie, and the rest of FIA leadership knows how to count money and have a better grasp of it then the technology, history and fans of their own sport.

  13. AmericanTifosi
    24th January 2008, 2:55

    If “green racing” gets in the way of real racing I will fid another sport, and I do not say that lightly.

  14. I think F1 team could use the last Cosworth V8s. The engines were frozen at the development stage as per Suzuka 2006 if I remember correctly, and by then Cossie V8 still mumbled at the back of Williams F1 car.

  15. Budget caps are unenforceable for those who need them most, as it would be incredibly easy for the manufacturers to hide their R&D costs in their road division (well, Max is encouraging them to be more road-relevant…). The corporates can hide a few (but not many) costs, while the independents can’t hide much of anything. So budget caps will increase the skewed nature of F1 funding rather than decrease it.

  16. I have to agree with Keith’s original point that the caps are there to give the manufacturer’s an asy ride with their shareholders. The interesting thing is Toyota has spoken out against them this week which is contrary to previous FIA rhetoric. Not surprising really. If you have more money than anyone else and you can’t put a decent car together you are hardly going to want to compete on (pseudo)equal terms.

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