Sebastian Vettel, Ferrari, Circuit de Catalunya, 2020

Ferrari propose higher budget cap for manufacturer F1 teams than ‘customers’

2020 F1 season

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Ferrari team principal Mattia Binotto has suggested setting a lower budget cap for F1 teams who buy power units than manufacturers such as his team.

Representatives of the FIA, Formula 1 and the 10 teams yesterday discussed reducing the $175 million budget cap which is due to be introduced next year. Smaller teams are eager to see the level reduced further

However F1’s biggest-spending teams such as Ferrari are concerned this would involve making deeper cuts to their operations. Binotto, who proposed the plan for a multi-tier budget cap, explained the reasoning behind the idea in an interview for Sky.

“We are fully aware of the difficulties of some teams,” he said. “We are fully aware that we need to address costs for the future of F1. Reducing costs is the first driver of making every single team survive.

“We are obviously discussing with F1, FIA and all the teams a budget cap deduction. But we should not forget when doing that exercise that we’ve got different structures, we’ve got different assets.

Mattia Binotto, Albert Park, 2020
“Maybe the answer is not a single budget cap”
“There are teams which are constructors, as Ferrari and other top teams where we are designing, developing, homologating and producing each single component of our cars. Other teams are customers so buying some parts, so not having the same structure, obviously, because they are not designing, developing et cetera all those components.

“So I think when discussing a budget cap, we should not forget that we’ve got different situations and it’s important that we find a common ground somehow which is suited to the different situations. And maybe the answer is not a single budget cap equal for all the teams, finally.”

Formula 1 must think carefully about the level to set the budget cap, Binotto stressed.

“We had a meeting yesterday with all the teams, FIA and and the F1 and it has been a constructive and positive meeting. I think there are still analyses which are required to make the right decisions.

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“We should avoid really to be emotional at the moment. We know that we will face difficult situations, but we need us well to somehow maintain what’s the DNA, the essence of the F1, which is competition.

2021 F1 car rendering
Delaying the 2021 rules is “likely” to disadvantage Ferrari
“So I think it’s it’s important clearly to look, know the details, but make a rational decision which has been really based on the considerations and not emotions.”

Binotto said Ferrari is prepared to back changes which may put it at a disadvantage in the interests of the sport. He said the team’s support for the postponement of new technical regulations for 2021 to next year was an example of that.

“I think it was the right and good decision because, obviously, it has to be a responsible decision,” he said. “I think the situation and the emergency we are facing as first counts as a priority.

“We cannot only act in the interests of a single team, in the interest of Ferrari, but really looking at the wider picture, wider situation. Obviously we know teams were in difficulty and time would become very tight to develop new cars for 2021. So I think at the end that was the right choice.

“Is that somehow not be in favour of Ferrari? Very likely, yes it may be. But I think that we are challengers and we are as well people that wants to do each time better as compared to what we did in the past. And there will be times where eventually, even if they will be tight, we can recover and be stronger.”

Yesterday Canada became the ninth round of the season to be called off. Binotto said he hopes F1 will have an idea next month when the championship will be able to start.

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“F1 is certainly trying to organise the best championships they can do this season eventually starting early July if that would be possible. But we cannot not have any confirmation at the moment. I think by the end of May maybe we’ll have a clearer picture.

Start, Red Bull Ring, 2019
Analysis: Which F1 teams are at greatest risk from the financial shock
“It’s in the interest of everyone, really to start racing when we can results, when that will be possible, of as many races as we can. But I think it’s really too early now to have a clear picture of what would be the future.”

Binotto said Ferrari was will to be flexible and accommodate changes to the race weekend structure, such as reducing the amount of practice and running multiple races at the same venue, to fit in as much of the 2020 season as possible.

“We know that from the sporting regs as first to have a world championship you need at least eight races. But I think everyone is trying to look for more than that.

“What would be important for us is really to be flexible. I’m pretty sure that Chase [Carey, F1 chairman and CEO] and the teams will be capable of putting in place the best championship we can have.

“So I think from our side really whatever is needed: Short race weekend, double race, whenever we finish packing all the races together. I think whatever will be it’s important to be flexible, and making sure that we can have good races as well for the fans.”

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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...
Dieter Rencken
Dieter Rencken has held full FIA Formula 1 media accreditation since 2000, during which period he has reported from over 300 grands prix, plus...

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47 comments on “Ferrari propose higher budget cap for manufacturer F1 teams than ‘customers’”

  1. Seems ridiculous, as the price they get for their parts should cover the extra cost. Otoh, with cost caps, teams sharing the cost for R&D will have a huge advantage over teams who don’t, so you’re going to strengthen the already existing dynamic towards conglomerations of teams. I think the only way to control that is to limit the parts that can be bought as much as possible.

    1. Not sure how that plays out – by selling the parts they increase the revenue, but that doesn’t affect the cost cap. Unless it somehow does, but that would be even more unfair, since Ferrari could then could trade the profits of selling the parts into more room under the cap.

      He has a good point that as a full constructor their costs are naturally higher, but that can be addressed in a different way. Or they should accept the fact they have a competitive advantage because of that.

      What we don’t want is more teams turning into Alfa Tauris or Haas, where buing parts makes more sense than making them.

      On another note, what Ferrari is proposing might encourage more teams to become proper constructors.

      1. On another note, what Ferrari is proposing might encourage more teams to become proper constructors.

        This!!! No doubts the current PU is highly complex and extremely difficult to develop but an extra incentive could attract the so much sought after engine manufacturers

    2. @krommenaas as Matthias[Wlkp] states, if there is a fixed cap on what the team can spend in total, then the revenue coming in cannot be spent on your own team because the initial R&D spending is what counts against the cap, not the net balance.

    3. According to this article:

      Mercedes AMG High Performance Powertrains Limited, the Daimler Benz subsidiary responsible for Formula 1 hybrid engine supply to the parent company’s serial championship-winning ‘works’ team plus customers Force India and Williams, recorded total sales of £192m in 2017

      The company reported pre-tax profits of £8.5m

      Arguably, £8.5m is not much in F1 context and considering the number of clients. And I’d argue Ferrari’s numbers are as good, considering Alfa Romeo deal involves sponsorship.

      Teams should be rewarded if they are a full-works team. One of the major criticisms to current F1 is how teams look like they are “lego assemblers” buying as much parts as possible. Whether the incentive is through the cost cap or other mechanism, that’s something they need to discuss.

    4. Ferrari is pure evil. If you look from above their cars look like inverted crosses as they pass away.

      1. …pass by

  2. Let’s make all teams equal! But some more than others…

  3. Not only you’re covering the costs by selling the part, you’re also getting twice the info on how it works, how reliable it is… it’s beneficial for the manufacturer to have more cars running their parts.

    Plus you got control on that part, from design to development, to fit your needs.

    Can’t see where he’s going with this, other than move the compass Ferrari’s way.

    1. @fer-no65 budget cap not revenue cap. Do you know what is going to happen? Top 3 get free PU’s. Financial fair play all over again.

    2. @fer-no65 agreed. Building your own parts specific for your car will always be an advantage.

  4. The first reaction after reading the title was a bit like “This must be some kind of a crazy joke,” but after reading it, FIA has a lot to ponder about…teams are getting still more and more divided into two categories and Binotto’s thoughts only reflect it. Of course his suggestion is not an option, but there is far greater and more urgent question, and that is the character of an F1 team as such. The model of Toro Rosso, Haas and the likes is not contributing to F1, it’s detrimental, and while we cannot expect a quick improvement due to the worldwide situation, this is definitely a big task of this decade. We cannot have only 3 or four manufacturers in F1 with a bunch of dependent satellites, plus couple of independent teams. Some of those manufacturers leaves and suddenly the whole sport is in danger, not even mentioning the unfair competitive advantage we have seen since the introduction of hybrid engines. F1 might be facing bigger revolution then they were planning to do.

  5. Other teams are customers so buying some parts

    Yes and that’s exactly what should end. With a properly set budget cap there would be no need for this practice anymore.

    1. Agree. I have to admit that I understand some teams not willing to test 150,000 designs of a single component to gain a fraction-by-fraction advantage. Witha properly set budget cap, more teams would be willing to actually behave like constructors.

      1. Yeah, I’m with you guys. There’s limited value added by padding the grid with clones.

        Spiraling costs have got us here, hopefully we find a way to stick to the plan, drive them down, and getting everybody real constructor status again.

  6. Binotto’s clearly a stand up guy.
    I recognise the headline is about budget caps for next year but the backend of the article is on challenges for resuming this season. I’m sure there are keener minds at work on this but for a start they should look at capping the mobilised team size (the challenges are the same for all teams), if there aren’t issues at the first race then expand a little at a time. With a smaller travelling show 100% testing would be a good place to start.
    People are already and will be more urgently hungry for anything new and diverting by the time they could kick anything off.

  7. “We are fully aware of the difficulties of some teams,” he said. “We are fully aware that we need to address costs for the future of F1. Reducing costs is the first driver of making every single team survive.

    That’s exactly why I think it’s a dead end: no matter how you reduce costs at F1, the smaller teams are always gonna try to reduce its operational costs, because that’s how it is and always has been. Ergo, situation won’t change much, I’m afraid.

    On the other hand, the apportionment of the money is the real game changer which should be first priority.

    1. @niefer

      On the other hand, the apportionment of the money is the real game changer which should be first priority.

      I really don’t understand how people can keep believing this. It’s been shown over and over that this will at best move the budgets by a couple of tens of millions. While there is a budget chasm of hundreds of millions.

      Giving the smaller teams 30 to 50 million extra does not make one iota of difference if the bigger teams have budgets that are 300million (and more) higher.

      1. It won’t necessarily mean that much in terms of smaller teams catching up, but 30 to 50 million extra makes sure that the smaller teams chance of survival is much higher.

        Considering that Ferrari just receives 100m for turning just up, there’s a reason why there is a budget chasm of hundreds of millions.

        1. Considering that Ferrari just receives 100m for turning just up, there’s a reason why there is a budget chasm of hundreds of millions.

          This.

          1. @niefer Yes that one is not going away. So

          2. @f1osaurus IMO, that one is a necessity to go away, or at least get properly revised.

      2. @f1osaurus
        I don’t have to go far to bring a pertinent example: Force India. Always struggling financially, they always had a solid project that could only evolve along the season, yet usually culminating in great campaigns, defeating bigger teams. Who knows how far they could’ve gone with those 50 million extra?

        The success of good projects like these goes against historical jokes like Ferrari: the most wealthy racing team but the most incompetent one, managing to lose from Brawn GP to Brabham, to McLaren, to Benneton, to whatever smaller team back then, you name it. The glorified Williams? Not even Martini’s big money and good Mercedes engines prevented their sinking on a sea of incompetence.

        Meanwhile, I don’t recall a capped series in which the bigger teams aren’t ahead.

        Competence and fair revenue, all what teams should strive for.

        1. @niefer OK at least you are trying to think rather than parotting the bs from dieter.

          So say Force India gets 50 million extra. That would put them on 170 million. So that would be enough to be beating teams with up to $500 million budgets? Of course they will not.

          1. @f1osaurus – Remember that the fair revenue wouldn’t only raise small teams earnings but, because of that, it would lower the chunk of the bigger ones.

            Another thing: it’s not a matter of trying to nivelate things, that’s impossible regardless of what rule you may come up with. It’s a matter of providing teams proper conditions, namely the money in this case, to carry on the activity healthfully. That means a fair shot of achieving thriveness, if the team make it right.

            As I stated above, a good project defeats a bad one, regardless of how much money was put into the bad (go figure the revenue of defeated McLaren, Williams and Renault compared to victor Force India at 2016/2017 seasons). With proper money it’s a process; without it, it’s matter of time till it’s over.

          2. @niefer None of that is bringing the gap down substantially. It will always be in the tens of millions.

            The big teams can also easily slap on a few more stickers and make whatever they lose on bonusses back another way. The smaller teams are already stuck or otherwise they wouldn;t be small.

            Whereas the budget gap has the ability to lower the gap by hundreds of millions.

            Try to look further than the incessant droning of Dieter on his pet subject of bonusses.

          3. The big teams can also easily slap on a few more stickers and make whatever they lose on bonusses back another way.

            @f1osaurus So as the smaller ones, with more money turning them into a better prospect.

            I don’t get it. There is no series in which budget cap prevents the bigger teams to dominate. What makes you believe it so confident?

          4. @niefer No the smaller teams can not. They already filled their cars up with stickers.

            I dont get it we see a $350 million budget chasm and you think that moving $50 million is going to make a significant difference. Or even that it would make any noticeable difference at all.

            Yet when the budget cap narrows the gap in budgets by hundreds of millions, you pretend this will do nothing at all.

        2. @f1osaurus – Wlliams and McLaren came from the ground. They didn’t need no budget cap to prosper.
          Force India only needed a couple more bucks to properly release its car on time.
          Hispania would never ever run near the front pack under a budget cap.

          There ain’t no such thing as egalité in motorsport or any competitive sport. Hence, the best way is to ensure conditions are the same for all competitors to prosper: fair money not innocuous and counterproductive limitations.

          You start this capping crusade, next step is financial fairplay over personnel. And it keeps frivolously escalating on and on without addressing the real problem: unjustifiable benefits for some, low money for others.

          1. @niefer Williams and Mercedes came from the ground. They didn’t need additional bonus money.

            See how that argument works?

            You start this prize money distribution crusade bla bla bla

            See how that argument works?

            In every sport the winner gets the prize and the losers get much less or nothing. I’m fine with that. In every sport there are rulses to keep the players more competitive.

            Apparently people want to see the teams bve more competitive. So instead of you high horse nonsense, try to work with reality. The reality is that “they” want the teams to have more competitive budgets. In fact they do that by limiting the extra benefits that the winners get, but mostly by capping down the huge budgets that only a few big spenders can afford.

            Cost capping is so that people cannot basically buy the competition. Like you see in le Mans and indeed with what Williams and McLaren did. They found a huge sponsor, outbudgeted everybody and killed it.

            Sure I don’t like those bonusses. Like when FIA/FOM actually helped Ferrari them outbudget everybody else. So yes I dont like those bonusses, but’you have to be completely blind to think that those bonusses will have any impact on mid field teams and lower being competitve with the top teams.

            ps Maybe you didn’t realize this but 100 million is more than 10 million.

          2. In every sport the winner gets the prize and the losers get much less or nothing. I’m fine with that.

            @f1osaurus – No, you’re not. Your argument wants every small team to be prevented of growing into a big one because you can’t accept the greatness of an already big team regardless how they may have got there.

            There ain’t no such a thing as competitive budgets. You can’t be competitive being capped. Or do you really believe sponsors will stop paying the big teams because there is a magical budget cap? That Ferrari, Mercedes and else will stop having the best personnel? C’mon, it’s so puerile that’s ludicrous. Imagine Philip Morris paying Haas not to display their brand, lol. Get real, man.

            Getting the bonuses right are probably the only way of turning this into a fair fight, or sustainable if you will, as this is the preferred vernaculum nowdays.

            you have to be completely blind to think that those bonusses will have any impact on mid field teams and lower being competitve with the top teams.

            You may not see it but they do.

          3. @niefer OK I give up. You just cannot be taught to understand simple math.

            It really shouldnt be that hard to understand that 100 million is more than 10 million.

          4. @f1osaurus – What a lame reply. Denying any reasoning by parroting that shallow sentence won’t make you right. Being wealthier doesn’t equal being winner. Otherwise Ferrari wouldn’t ever lose a contend and Williams would never get behind Force India: you see, I’m not denying there would be richer teams, I’m rejecting the fairytale of forced equality, nothing more.

            Next time you mention “high horse”, dare to speak it before a mirror first. It’s not a surprise you can’t grasp a different view.

          5. @niefer Well you keep on harping about “fair”, which if rectified is proven to have no effect on racing. So I try to explain that if FIA/FOM actuyally want to improve the show the few tens of millions is NOT the issue at all.

            A budget gap around of $350 is where the F1.5 gap comes from. If you don’t get that then there is nothing I can do for you anymore. You don;t want to understand and instead just twist and wiggle avoiding the actual reason for the changes. Just so you can pretend you have a point somwhere. It’s all utterly irrelevant.

            If your suggestions do not achieve the goals that the FIA/FOM set out to achieve then you are just wasting my time.

            Being wealthier doesn’t equal being winner.

            I never said that. However having 3 or 4 times the budget of a smaller team DOES make the bigger team the winner.

            Again, try to understand the difference between a few tens of millions in budget difference (ie whgy Ferrari doesn’t beat Mercedes and Red Bull) is different to a $350 million budget difference (why F1.5 does not win races or even barely end up on the podium)

            Besides, you constantly keep contradicting yourself. Proving that you are just trolling.

            Being wealthier doesn’t equal being winner

            So why bother about who gets a bonus and who doesn’t?

            etc etc etc

          6. A budget gap around of $350 is where the F1.5 gap comes from.

            @f1osaurus – Tell me about it, Renault being there burning more cash than Mercedes.

            IMO, there is a gap because there isn’t sufficient revenue for the middle and latter field. Say you cap the costs, and keep the bonuses as they are: there’d still be a F1.5, because they’d still lack money to improve the operations the cost cap wouldn’t reach: that is why, it’s not trolling, it’s reasoning. You disagree, fair enough, we can call it quits until next time. But I’ll leave you with this: the drivers market wouldn’t be capped. Would you have the guts to say it doesn’t have any effect on racing?

            I never said that. However having 3 or 4 times the budget of a smaller team DOES make the bigger team the winner.

            Contradiction.

          7. @niefer

            I never said that. However having 3 or 4 times the budget of a smaller team DOES make the bigger team the winner.

            Contradiction.

            That’s trolling. No one can be that stupid that they really think a $150 million outfit will ever be competitive with a $500 million one. Even if you give th $150 million one $50 million extra.

          8. @f1osaurus – full disclosure? You are taking this role beautifully: current proposal will get far from close of reducing this chasm. Keep dreaming facilities, top personnel, line-up & sponsors will change hands any bit this way.

          9. @niefer What is that even supposed to mean? You’re just babbling now.

    2. Exactly @niefer. This is a non starter as much as Mosley proposing “budget capped teams” with greater technical freedoms was a non starter.

      Unless we want to institutionalize having 3 teams running for the championships with the rest creating a big of background fun for netfix to film, this should be a complete non startert.

      I get why Ferrari would say this. It shows negotiations are heading the right way and Ferrari sees their privilidge of getting money for just being there is under pressure so they bring up things like this to muddle the discussion.

      1. Unless we want to institutionalize having 3 teams running for the championships with the rest creating a big of background fun for netfix to film, this should be a complete non starter.

        @bascb To be frank, I suspect the posters calling the shots wouldn’t mind that outcome. After all, you know, it’s gUd fOr tHa sHoW!

        IMO, either Liberty solves the apportionment issue or they’ll prove they aren’t any better than Ecclestone.

        1. Let us hope they do “take the cow by the horns” and get the urgency there is with many to solve some of the issues at the core of F1s problems @niefer

  8. I still maintain my concern that F1 is going to end up been F1 only in name because all this talk of further restrictions, budget caps, spec components, limited development & equality simply isn’t F1, Never has been & never should be.

    The more like a budget spec GP1 it gets the less interesting it will become & I predict the less people will watch. Because the allure of F1 has never been the racing or equality of the competitors, It’s always been the speed, technology & thrill that provides. Those that want equality & all that are already watching the spec categories that produce that & the number of people watching indycar, f2 etc.. is a tiny fraction compared to those who watch f1 because its the technology, development & performance that is the allure of F1. You lose that & the audience will decline further.

    People want to watch F1 & not GP1 masquerading as F1.

  9. “There are teams which are constructors, as Ferrari and other top teams where we are designing, developing, homologating and producing each single component of our cars. Other teams are customers so buying some parts, so not having the same structure, obviously, because they are not designing, developing et cetera all those components.
    “So I think when discussing a budget cap, we should not forget that we’ve got different situations and it’s important that we find a common ground somehow which is suited to the different situations. And maybe the answer is not a single budget cap equal for all the teams, finally.”

    Mattia’s explanation is logical. They design and build a complete car, and then sell substantial bits and pieces to others.
    I’m sure there’s a logical reason why this can’t be done, but why doesn’t Ferrari split into two, with one part being the bit that does all the designing and building of “saleable items”, e.g. complete rear end of cars, engines, hybrid systems, gearboxes, steering systems, front wheels, etc, while the other bit does the stuff that falls under the budget cap, i.e. “Constructors Championship” stuff. So the second part, let’s call them Ferrari Racing, they do the designing and building the front of their car, the aerodynamics, going around the world racing that car and stuff like that, while the first part, let’s call them Ferrari Power Units, they do the bits and pieces that will be sold to the Haas, Alfa Romeo, and of course Ferrari Racing. To help with the costs of Ferrari Power Units they could ask their customers to pay regularly towards the cost of running that unit, e.g. once per month.
    There may also be a benefit in this sort of structure if one of the other power unit manufacturers decided to pull out, so that the teams they supplied could purchase the pieces they want from Ferrari Power Units with the idea they should be getting the same product as Ferrari Racing get.

    1. @drycrust Scuderia Ferrari La Ferrari, great name. Scuderia Oprah Winfree engines no budget needed, even better name.

  10. Please Remind Us When was the last time British engine drove British F1Team to the World Champion

    1. erm, 2019 I think you’ll find…

      1. I didn’t know “Deutschland, Deutschland über alles” is British anthem.

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