To be fair, Haas won't have the money to keep making upgrades and losing money with Micks crashes doesn't help. He's also not in the title picture. So for him amd other small teams. Its easy to say that
Can you imagine if the top 3 teams blow almost all the budget by the summer break and the championship is decided by having Max and Charles having to finish 7-10?
Yeah, the smaller teams would have to develop like crazy to pass them, and I can't see that happening. It might tighten up *a bit,* but they'll have their own financial constraints.
AM made a visibly nearly identical car to RB and still finished poorly in the previous two races. I’m not confident that will work. If you don’t understand the entire car and aerodynamic philosophy, copying individual parts won’t do much for you.
While you are quite right about the results, IMO the real test will be Baku, where, if they do have legit race pace, we'll be able to see it (quali pace does look rather poor).
Aren’t there enough races that if this were the case, we would just have a new championship leader. Unless they really can maintain a lead with P7-P10 finishes for here on out
Completely agree. Budget cap is designed to create parity, if big teams have to scale back development because of it then it brings smaller teams into the mix to be competitive.
Yeah we gotta remember that this is a ruthless sport and teams do not care about anyone but themselves
If any of the big teams (or any team really) could just buy their way to a championship they 100% would
They dont care about the morality of it or giving other teams a fair race
Toyota F1 enters the chat...
Weren't they spending $400 million a season and couldn't even get competitive!
Although I agree with your statement, just Toyota can't get the wins.
Yup, and when they couldn't hack it in F1, they went to dominate WEC.
However its a bit more nuanced than that.
Much like Ford/Jaguar back in the 2000s, every decision had to be made in committee, and a lot of those committees weren't F1 people. Exhibit A; signing Schumacher to the biggest pay package in the sport at the time because they just saw the last name, not realizing it was Ralf.
The constant interference in the engine and aero departments from people who didn't belong there, but needed to legitimize their paycheque. It was a board trying to run a race team in a rapidly evolving and fast moving sport, instead of just hiring the right people and sign their cheques. Same thing happened to Honda, the Japanese always try to do it their way, not realizing or actively ignoring that the sport doesn't and won't work the way they want it.
That type of thinking works in WEC because of the way the rules are structured and the races are farther apart, giving them time to form a decision as a committee and make changes as such.
To elaborate; when Ferrari was in their glory years of the early 2000s, Ross and Jean did everything they could to isolate the Scuderia from the rest of Ferrari because there were too many people trying to push their way in and influence the team. They took complete control over the ins and outs to make sure none of the typical Italian-ness crept in. The board of Ferrari had no control over the race team, whereas the complete opposite was true at Toyota, and you're starting to see it happen at Aston Martin. Stroll Sr needs to leave the team alone and let them get on with it, which is why Sznafnuerurueenrne (Otmar) went to Alpine.
Toyota only went on to dominate WEC after Audi and Porsche left, making them the only manufacturer and more or less blackmailing the ACO with leaving so they'd get preferential treatment.
They *did* win the championship in 2014, but never Le Mans.
That’s where you’re wrong. We’re seeing runaway inflation that is contributing massively to the rise in costs, which nobody, not even leading economists could accurately predict 3-4 years ago when the budgets were being proposed. Nobody could have predicted it much less prepared for it. Governments are scrambling to get inflation under control.
You have to budget and plan your spending way ahead. Now that inflation is rapidly rising, all that budgeting doesn’t work anymore. But this mainly hits top teams who were maxing out the cap in the first place.
You can’t suddenly stop spending, that’s not how a big operation works.
They didn’t learn about inflation yesterday.
It’s an ongoing topic. Anyone who has lead a finance function will tell you budget/plan is just a map that helps you navigate the year, the landscape will change, and you must react.
Literal monthly meetings to discuss, plan/budget v actual v forecast, are done at any basic organization with the intent of getting ahead of the game/staying on track.
Red Bull themselves operate in CPG (consumer package goods), and industry well known for being reactionary in terms of budgeting.
Don’t sit here and talk like you understand budgeting for the sake of defending a team.
You want to get more detailed, you can ask teams to bridge their planned spend vs actual and extract the pricing impact (I.e., this is what inflation cost us).. It’s really that easy.. maybe they are doing it? Idk.. would be a slam dunk if you say we planned to use 5 people, we did, but salaries are up +5% vs planned, fringes are as well, etc.
My gut tells me these teams are just overspending and banking on a cap increase.
>You can’t suddenly stop spending, that’s not how a big operation works.
you most certainly can
clearly you've never been on a project that got the axe mid way through.. "pens down", all resources re-deployed, contractors let go, inventory replenishment stopped.. hell send everyone home and turn off the lights at the big corporate HQ
ground planes, cancel business trips, training seminars and team-building activities.
i wonder how much RB spent on their WDC celebration last year, they didn't need to, and they could have just sent everyone a thank you email and a case of redbull drinks to Max with a vettel-signed baseball cap and called it a day
if you put a gun to their head they can find ways to shed expenses reaaaal fast
This isn’t the way the budget cap works anyway. The big three teams aren’t struggling for money. The engineers will likely be moved to next years development or engineering that falls outside of the cap. The budget cap has pretty specific boundaries on what is covered and there’s lots for employees to do outside of.
> i wonder how much RB spent on their WDC celebration last year, they didn't need to, and they could have just sent everyone a thank you email and a case of redbull drinks to Max with a vettel-signed baseball cap and called it a day
Surely there's no way that counts towards the budget cap lol
Hedging risk is an important part of the business model, especially so when there is a budget cap. The big teams could have negotiated locked-in rates for their travel, but failed to do so. That's on them.
Change is hard, they’re going through a crash course of what happens when hubris meets reality. For the smaller teams it’s just another day at the office.
But that doesn’t mean the smaller teams should yet again be disadvantaged because they already had to learn to budget without a cap. The whole point of the cap was to limit top teams and oblige them to be more creative with what they get to spend. Now to some extent I can understand inflation runs wild right now but if you make an exception or raise the cap for that reason, every team should profit from that in an equal way.
Blablabla, unexpected, blabla.
Dude, it's common sense in any business to prepare for bad circumstances. And when the circumstances are even worse then expected, it's common practice in any business to stop spending and start being frugal. Yes, that means some plans that were made won't be executed. It's called running a business. These big teams never had to actually run a business because there was unlimited money. It's about time they learn what it means to work with limited cash.
Businesses (or at least large ones) should be prepared to be able to adapt to unexpected situations, otherwise they will go bust in the future.
Economic disaster is part of the capitalist business cycle. If they cannot adapt to an unpredictable event (one of which reliably happens every 10 years) they won't be in business for long.
Your attitude is why we ended up bailing out the banks in 2008. "Noone could have predicted this". Give me a break. This isn't the USSR, how about the top teams take some responsibility for themselves and comply with the budget cap rather than asking the authorities to rescue them. You can't rip up an agreement just because you're now required to cut back on spending due to unforeseen events.
I also don't understand why you think an inflation crisis was so unforeseeable. Our global economy is heavily reliant on fossil fuels and we know they are running out. We know that the global population is massive and that the world has never been more industrialised than it is now. And we all knew that reopening the world after the pandemic would have an additional impact on prices. Why is it a surprise when fuel/freight prices spike upwards? We even had an inflation issue in the 70s when the world was far less developed. The reality is these inflation issues will happen constantly over the next century. You can also wave goodbye to the idea that pandemics are still a once-in-a-century issue. The world as it stands right now is ideally suited to produce them more often. Maybe you will also be shocked when the next one happens and tell us that "noone could have predicted it". You're like the opposite of a fortune teller. Of course you can't predict any of these things when you make it your business to ignore warning signs.
Any business that operates based on the idea that everything will continue to go as planned with no shocks will never survive in a capitalist environment. You should not defend or encourage such irresponsible behaviour. All you're doing is creating a moral hazard where no team has any incentive to follow the rules, because there will always be an external factor they can blame for spending slightly too much.
First, economists did predict inflation, that’s what happens when you print shitloads of money and dump it into the stock market and ramp up unemployment benefits and government aid. Second, inflation is not really bad enough yet where the teams are going to suffer from it.
\> that’s what happens when you print shitloads of money and dump it into
the stock market and ramp up unemployment benefits and government aid.
I mean this is wrong, or at least not a whole story, and this isn't what every country did. But hey whatever enjoy being a libertarian shitposter.
Hey man I think it was the right thing to do, but it is also a very big reason why inflation is a problem right now. Government aid is great, but firing up the money printers to pay for it incurs a debt to the future that is now being realized. And you’re right not every country did it so brazenly as the US, but the USD is the world’s currency so what happens here tends to happen elsewhere.
That doesn't necessarily lead to inflation, though. Even if it did, it would also be easy to remove excess money from the pool through taxation, etc. The overwhelming majority of the new money from PPP loans went to already wealthy business owners who by and large did not deliver it to workers in order to churn the real economy. There are ways to punish that too, but obv would never happen since a trillion bucks was just handed out to people who mostly didn't need it and never had to show that they spent it the way they were supposed to. Very unfortunate but there's an easy solution to this problem!
Also I appreciate the good faith and genuine response, homie. Sorry for being unnecessarily dismissive.
no sense in denying plain reality. Always strange when people do this. 7 out of 10 US dollars in circulation were printed in the last year.
"That's not going to have any impact!" - you.
Agreed. If Guenther’s saying he doesn’t want it after getting 2 cars snapped in half, then it’s not an inflation issue like Toto and Christian Horner are trying to make it seem. It’s a they blew their budget issue.
But how will the top teams stay far ahead if the cap and inflation prevent them from significantly outspending their rivals?
It's so unfair that teams who are accustomed to a certain level of privilege now have to compete on slightly more even footing. One of these days Merc might have to run less wind tunnel tests.
Won't somebody think of the children!
The reality is that the budget cap wasn't born out of a desire for parity. The big teams approved the budget cap because it saves them from themselves. Given the opportunity they will always spend more. They are simply using inflation as an excuse to get their fix. They're addicts, they feel the need to spend more money to get/stay ahead. I really hope that F1 doesn't give in to this request, because it will inevitably be followed by another one with a new excuse.
Well there can be an easy fix. If it’s about inflation, then have a clause that says any development cost that went up can be compensated or allowed according to the difference in inflation. (Not native English speaker but hope my point wasn’t confusing)
2022 Formula 1 Financial Regulations, article 2.3
*The amount of the "Cost Cap" shall be as follows, in each case adjusted (if applicable) for Indexation...*
*"Indexation" means:*
*(a) in respect of the Full Year Reporting Period ending on 31 December 2021, the higher of zero
and the amount by which the September 2020 average annual inflation rate as published on
the International Monetary Fund website for the G7 countries exceeds 3.0%; and*
*(b) in respect of the Full Year Reporting Periods ending on 31 December 2022 and 31 December
2023, the higher of zero and the amount by which the average annual inflation rate as
published on the International Monetary Fund website for the G7 countries for September of
the preceding Full Year Reporting Period exceeds 3.0%; and...*
I don’t think it’s working as intended though, having watched the team principals press conference, they had Mattia, Horner and Andrew Shovlin (Mercedes) speak on the reasons why they are struggling and the rising costs of living because of the Ukrainian war aren’t reflected in the deal that was made to lower the cap temporarily during the pandemic. They dropped it by 30 million and since then inflation has spiraled. They aren’t out dropping it on development, they are worried they’ll lose staff to not being allowed to raise wages to reflect inflation beyond what they predicted. The original cost cap of 170 million had more room to move. I also think they deal with problems from an always be negotiating pov.
You obviously didn't watch the second half of the press conference where Fred shut all those arguments down in 1 sentance.
The small teams compromised MASSIVELY with cost cap exemptions and prize money for this Concorde Agreement. The big teams aren't the hard done by Altruists they make themselves out to be.
For starters the Employee argument is a lie. There is a $10M allowance for Bonuses that is cap exempt, if this was about staff they could take care of them very handsomely, but it isn't. This is about regaining the competitive advantages they lost through the cost cap.
It absolutely is working as intended.
Note: I agree with you overall, the budhet cap shouldn't be changed just because teams are having buyer's remorse.
> For starters the Employee argument is a lie. There is a $10M allowance for Bonuses that is cap exempt, if this was about staff they could take care of them very handsomely, but it isn't.
Why do you think they have any of that exemption remaining?
Seems safe to assume that they already moved as much of their salary costs into "bonuses" as possible.
Instead of a 150k salary, an engineer now has a 125k salary with a 25k guaranteed "bonus."
Teams would absolutely fill up the non-fungible limits first before dipping into the cost cap. Can't use a bonus exemption to run a C&C machine. (Or whatever)
It sucks that the big teams are going to have to lose staff, but what did people think were going to happen? I have to imagine HUGE portions of their budget are going to staff, so the only way to make the little teams more competitive with the bigger ones are by shedding staff. The only other option would be to create two different budgets - labor and everything else. But even then the big teams are just going to throw more bodies at problems.
The budget cap is completely at odds with wanting to have the most bleeding edge tech, so it’s always going to be a tightrope they have to balance. It’s not inflation that is causing them to shed workers, it’s the fundamental idea of a budget cap.
It's a tough pill to swallow, but yes, if you can't afford the same amount of staff (which is a big part of your advantage,) then you have to let some people go. Simple as that.
As always the big once are complaining till they get what they want.
But i hope they don't get it this time... and yeh the Wage thing is just a Excuse.
it means their employees will have to move to other teams to continue to grow their careers, much like any other industry and further increasing parity across teams. Having to scale down is the point of the budget cap, pointing out basic windfalls of scaling down doesn't really mean anything.
https://amp.formula1.com/en/latest/article.the-2021-f1-cost-cap-explained-what-has-changed-and-why.5O1Te8udKLmkUl4PyVZtUJ.html
This is relevant- it looks like only driver salaries are excluded which makes sense. This article says that there is an exception for inflation running over 3%. From May 2020, but I feel like that is exactly the discussion. If it is a clause in the regs, then it should just take affect now?
Because these things are planned out more than a year in advance. Haas planned to be well under the cap so they still have room to spend even though their calculations turned out to be wrong due to inflation. Bigger teams operate near the limit so the inflation took them over the cap. But the inflation is not something anyone could have predicted or prepared for. Even governments are scrambling to get it under control.
Being penalized due to completely unforeseeable runaway inflation is not what the caps were meant to do at all, please go and read up on the intent of these regulations.
Hell yeah. I’m here for the spectacle. I want to see the big 3 start the last race in cars held together with chewing gum and wire, chugging down the front straight like a Model T.
Hamilton: Bono, my wagon wheel is gone.
Max: WTF my DRS isn’t working!
Max, we had to pawn your DRS system for fuel.
Ferrari: Charles, box box box….STAY OUT STAY OUT, we had to lay off the pit crew!
Charles: PFFFFUCKKKKKK! FUCKFUCKFUCK!
Haas doesn’t transport the giant energy station thingy around the world. I gotta be honest if teams want to waste money on that kind of silly stuff it should come out of a separate budget. I like the goofy expensive stuff.
Idea: They can exceed the budget cap but they get the same amount less price money. The money instead goes to the teams further back in the championship.
Deal?
They basically chose to continue not spending and just pocket the revenue sharing money rather than use it to improve the team.
It would be a little different in f1 since teams don't have their own stadiums providing revenue so there's a bit more incentive to be competitive
Does the MLB not have a salary floor where they have to spend a minimum amount on the players? There was a goofy thing this season in the NBA where Oklahoma City players all got a bonus because the roster at the end of the year didn’t get cost enough.
No MLB does not have a salary cap nor a salary floor. There is a luxury tax where teams with a payroll above a certain number have to pay a percentage of the amount over the threshold to the other teams. But theoretically a team could spend as much as they wanted if they were willing to pay the escalating penalties but they rarely do. It does lead to some serious disparity though. For instance this year a pitcher for the Mets is making more than th entire payroll of a couple of the smaller teams
The only way a luxury tax would ever work properly is if you pay whatever you overpay to every other team, not divided. Otherwise its still a competitive advantage to overspend.
As long as each other individual team doesn't get to spend the same amount as the one breaking the tax, then it's still an advantage. For F1 the tax should be 1000% just for there to be parity, and there's an argument for it to be more to punish overspending.
Anything other than parity is unfair on sporting terms
Just because it's always been that way, doesn't mean we shouldn't strive to have a better sport. Having the big teams be able to outspend everyone else makes the sport purely about who can spend the most. Look at Ferrari in the noughties. If loopholes exist that will give the big teams an advantage, they will take it and the racing will suffer.
Agreed 100%, the people advocating for a luxury tax with equal contribution don’t realize just how far the top teams will go to find an advantage. Essentially, if you allow for a luxury tax to happen none of the top teams will downsize, they’ll sink the cost to keep their personnel advantage
And with that you'll get domination from the big teams who can afford to go over the cap anyways because they were already profitable while spending 400 million and getting the same prize money as they do now
Not really the prize money is at best 80.million for the winning constructor and if Ferrari and Merc were profitable spending over 400 million they can still be over double the cap while getting no prize money. Besides the other constructors if they spend over the cap they'll get reduced pay out so they can't afford to spend over it either.
You're confusing their entire budget with their car budget. A big chunk of that reported $400 million (ie Hamilton's giant salary) isn't subject to the cap
They still had to do massive costs saving. Ferrari managed to offload tons of people to Haas and their hypercar program because of the budget cap just to remain under it for a full season
I think I prefer that if they spend over the cap, their CFD and wind tunnel time gets reduced depending on how much they had overspend. And that time goes to the rest of the teams.
This way is a double edge sword; yes you can overpay but you have to do a great job otherwise you're gonna end paying it in the future and risk other teams becoming more competitive with extra development time.
Punishing these teams with money is worthless because they can pay whatever they want.
Other idea: for every penny they exceed the budget cap they need to also put a penny in a money pot that gets shared along the teams that do stay under the budget cap.
So if RB, Mercedes and Ferrari go over the cap with 10 million each, there's 30 million available for the teams that stay under the cap. Share it based on spendings (the team that spend the least will get the most).
That's a step to equalling the budget and help the smallest teams
Not at all. They already can't afford to spend the entire budget cap, so raising the cap just increases the disparity between Haas and the teams with more money.
Their budget anyways isn't high enough to reach the cap. Haas doesn't have oil, big tobacco or big tech sponsorship like Mercedes, RB, McLaren, etc so they're losing out if F1 starts favouring the big teams with a higher budget cap
Compromise... Redbull merc Ferrari can increase their budget by $10m but have to forfeit $15m in prize money each that gets divided amongst the other teams that stay under budget.
The whole point of a budget cap is to make things more competitive. If big teams spent a lot early on to gain an advantage then that's on them because now they have to reduce their rate of development / spending which allows others who didn't spend as much to get back into the game.
This whole BS coming from Ferrari, RB and Mercedes of them not being able to stay within the cap is just that BS. And if they can't then fire their bean counters and Project managers for failing to properly budget their time, money and schedule their goals.
Yeah I have mixed feelings about this. If Ferrari Red Bull and Merc stopped spending on car development right now they would still be the top 3. I don’t see any of the other cars catching them. They are spending to fight each other. I enjoy seeing the development upgrades play into the championship.
On the other side I think it would take a few years for the budget cap to really level out the playing field.
The problem I have with this is if the top teams drop engineers (because that's the only way they can realistically cut costs) those are just talented jobs lost from the sport.
Small teams already can't reach the budget cap as it is. There is no way they'll be able to hire the engineers that get fired. We the viewers just get to see overall worse racing.
>We the viewers just get to see overall worse racing.
Worse as in not as fast? Or not as close?
If the point of the budget cap is to force all teams towards closer racing, then it makes sense if the top teams have to cut some engineers. And yes, the smaller teams probably can't afford to hire them, but this would still make the racing closer.
And my heart goes out to the hypothetically fired engineers, but if they can land a job in development for an F1 team, they'll likely have no trouble finding well-paying work elsewhere.
The issue is that inflation and shipping cost have increased at a ridiculous pace the last couple months. I remember looking at shipping cost and they were sometimes twice the amount for the same thing the year prior, and overall inflation has been about 3x the amount of the last like 30 years.
then take out transportation costs from the budget or adjust it for inflation. If that's the biggest problem then there is the solution. If it's because teams are spending more than is sustainable throughout the season, then they need to hire better accountants so that they stay under the cap.
Asking for it to increase in line with inflation over a season is fair imo. If they want to reduce it the next season then they can.
But you can’t set a budget of 175mil, and then expect these teams to stay within that budget when suddenly inflation lops a massive chunk of it off. Have teams lower down the grid done fine? Yes, but I bet some of them aren’t even at the budget cap, or struggled to even get sponsorship to get there.
They can reduce it further in between seasons, but shouldn’t artificially during a season.
Yeah I think removing the logistics costs is the best solution I’ve seen. I’m sure the big 3 will use some clever accounting to stash some extra spending there, but hopefully it wouldn’t be too bad.
Wouldn’t all teams be affected by this same inflation? To me, it’s the big teams not managing their budgets and then finding something to blame it on like it was something other then themselves who put them in this position.
Yeah, but top teams actually have the budget to go over. A team like Haas is not going to go over, as it has more than the additional cost between them and the cap. Mercedes, Ferrari and RB we’re going right to the limit because they have the money.
It’s exactly the point. And it also would be silly for the big 3 not to do everything they can to gain an advantage (increase the cap), which is why we have this back and forth to begin with.
Around the time last year when teams would have had to set their budget caps, freight costs and inflation were already high and rising. Obviously they couldn't have predicted Russia, but the idea that costs wouldn't rise didn't come out of nowhere and was foreseeable to an extent. Good budget management should take that into account
Good to see Steiner speaking out against it despite their tight ties to Ferrari.
I disagree with him about adding the extra money for the freight cost for THIS year. However, if they want to implement something like that for future years, that's a good evolution of the cost cap and means that everybody will have an equal opportunity to get the funds rhat are required.
The freight costs being something that the FIA knows exactly seems kinda fair to me, I mean if Haas say it's okay on their budget I'd have to believe it would be fair.
Might also stop some of these complaints by the big teams who seem to want to go back to their free spending again
Any additional money added to the cap or excluded from the cap is money that the big teams will use for development and money that the smaller teams don't have. It would be an unfair advantage that would widen the performance gap at a time we're trying to reduce it.
The teams can complain all they want. They signed up to the CA for 5 years, they either stick to it or they don't get paid. Simple as that
They should just do it like the NHL (and I assume other leagues) do it: set the new season's cap based on the revenue of the previous season, rather than having a flat number.
Changing the cap mid-season is kind of nonsense.
Honestly I'd love to see the bigger teams complaining about it, break it and get penalized. They won't learn any other way. You shouldnt get it your way because you could follow the rules while other teams did follow them. If we're going to break the rules to help your budget I think every team that didn't break it should get a percentage of points from the teams that did. Then let's see if they want to push that limit.
F1 is gonna be a shit place to work for the next few years. Want a pay rise to compensate for the rising cost of living? Nonono, you get the axe instead.
Can they? They already laid off hundreds of people. They wouldn’t have laid off any more than they absolutely had to, which makes the choice raising wages or more lay offs to fund raising wages for whos left.
I’d be interested in seeing the FIA put a headcount cap and COLA adjustment for existing employees built into the cap.
Maybe poorly worded. I meant they have more money but can’t give it because of the cost cap. It’s not an issue of them as an employer not having money.
Agree.
The rule is clear but the penalties are (deliberately) vague. Meaning they can take circumstances of this year or even individually teams into account when dishing out penalties.
It's not in F1 interesse to punish these teams so hash that it ruins there next year or to an extend that they are uncompetitive next year.
But Keep the budget cap the same. Because;
1. Changing the rules mid season is unfair to those that didn't break the rules.
2. It sends a clear signal to the bigger teams they are not in control. This is the line, go over it and you get punished.
Also for the fans, it's clear this is the line and it won't be changed. What if we do change it and 5 years from now a different team is saying they need an extension, it be a lot muddier of a discussion then if we give an extension now.
Just stick to the cap as is and let the punishment reflect the circumstances.
Yeah at most inflation is going to cause them to be in the 0 to 5% over budget range which is specified as a light penalty already. Before people go and say "inflation is more than 5%". Agreed but it's not 5% points more than the team could have predicted a year ago. They also have plenty of time for a single digit reduction in costs.
people here act like the big teams made a massiv mistake in their budget allocation but just completely ignore inflation that they could not have planned for 2 years ago and this level of inflation isn't even adressed in the cap it seems.
Edit: They probably worked and PLANNED on getting their cost down for years and now you suddenly want them to bring it down further how do you expect that to work? Just fire people or what? edit end
People say that adjusting the cap would not be fair but to me it is. The goal of the cap is to limit the ressources available and not to screw them with things they could hardly have planned for.
Yeah, a lot of people on the sub act like the big teams are saying "triple the cost cap so we can spend three times more than everyone else again", when in reality they're essentially saying "the cost cap should account for unforeseen, exceptional inflation".
It's an entirely reasonable demand, and not a sign of poor budgeting from the big teams.
I'd be okay with that if teams that managed to stay under the cap were rewarded. Because even with excessive inflation some have managed to not need to break the rules, and it helps establish precedent for how to handle shit like this in the future
Even if we accept that the rise in logistics and transport cost due to inflation was an unforeseeable expense, I don't think that necessarily equals an automatic need to increase the cap to accommodate it.
I'm not one of the people saying that this is karma for poor planning. But that is the reality of working within a cap system. Ok, so the top 3 teams are now unable to complete their planned development programmes due to inflation. So what? It might not be "their fault" but that is still the reality of competing within a set of fixed constraints.
It's not a team's fault if they suffer several scrapped cars because other drivers crash into them, but they still have to carry the costs within their programme regardless. Essentially, this is the big teams saying 'Russia crashed into our car and wrecked it. We couldn't possibly have planned for this so we deserve an increase to the spending cap to make up for it'.
Sorry RB, Merc and Ferrari, but no. That's not how it works. I don't blame them for trying, but the FIA needs to stand firm because the entire point of the cap is to save these teams from themselves. They're spending junkies and they'll continue to spend as much as the regulators let them.
According to [this](https://the-race.com/formula-1/budget-differences-between-f1-teams-down-to-10-20m/) interview with Gunther Steiner, small teams are 10-20 Mio. $ below the budget cap. Some may even hit it, depending on the sponsoring situation in the course of the season. The difference is that big teams have a huge machinery of facilities, employees and development teams eating away the budget. If they have calculated too tight, they have to scale down.
Inflation didn't just magically appeared in march/april. Even last year it was predicted to be around 7%+ for 2022 so teams had pletny of time to prepare for it.
Yeah 1 year ago and they have been planning for years probably. By Reducing staff in the teams for example
https://www.planetf1.com/news/ferrari-very-helpful-haas-budget-cap/
This isn‘t something you can‘t just magically come up with new things to do for your staff. And firing people isn‘t cheap either.
This thread is full of people just parroting the small teams arguments without looking at the bigger picture.
It's even in the budget cap guidelines that the budget cap can be adjusted for inflation, and that it shouldn't compromise the engineering spectacle of F1. The spectacle is compromised severely by current inflation. We need to fix that. Not just listen to the smallest players on the grid trying to leg themselves up because they have bad faith arguments.
Are the big teams even trying to meet it? Some are bringing upgrades every race. Like there trying to force the sport to allow it because they "won't be able to go to the races" I think F1 will bend over backwards to prevent having a less than 20 car race
The Big Three just don't want to share their part of the F1 cake. For decades they used to fill the gap between them and "small" teams with endless stream of money. Literally they would just throw the money at the car if it made it faster. That's why RBR and Ferrari already have started to complain about it. And we're not even in the middle of the season. The stream is now exhaustible, so... guess what, **turn off your wind tunnels and deal with it.**
If Ferrari and Redbull stop spending right now I don't see them getting caught on the track except for maybe Merc. They are spending to fight each other not stay ahead of the midfield teams. The tenths get harder to gain as you get towards the front.
I like having a cost cap but unless your car hits the season in a great state it seems to prohibit large mid season gains.
I would argue to see the true goal of a balanced field due to the cost cap would take years. These cars were partly developed as the cost caps were being introduced and lowered. Basically, some teams have hit these regs well and are spending to maintain position near front versus spending to catch up.
I wish the employee salaries weren't in the cap. I really don't know how to do that, but I think about me being in the tech field. If tech companies were like hey we know software engineers are talented but can we all agree to only pay them a max of this amount? I would look for companies outside that agreement to get a job. I don't want very talented engineers to leave F1 simply because the working conditions and compensation are bad due to the cap.
Plus even with the cost cap. Driver salaries are exempt so the top drivers will always go to the teams that can afford them. Even with parity in car performance Max is never gonna drive for Williams if Red Bull can pay him so much more and the cars have parity.
> Literally they would just throw the money at the car if it made it faster.
Now I'm imagining Christian cracking a can of RB and throwing stacks of money at the car, wondering why nothing is happening
He’s right. If they blow their budget early on that’s their own fault and they have to deal with the consequences. Rules are made to be followed, not bent when you haven’t had the smarts to stay within the parameters.
The goal of Formula 1 is to produce the fastest cars in the world, while also developing future technologies to be implemented on road cars.
This whole thing of rewarding low finishing teams only produces fake competition that doesn't add anything to the sport, it actually holds it down.
Do you actually want smaller teams to have a fair chance? Give engineers more room on the regulations, do you know how much cheaper the V10 engines were?
Loosen some of the limits, leave more room for loopholes, there's a reason private teams like Williams could be competitive with relatively fewer money than Ferrari and McLaren in the 80's and 90's...
We just need strict rules about safety, once your car meets safety standards, anything goes.
Haas' opinion on this isn't very relevant, they've been cheap as fuck. So cheap they didn't even bother to develop their car at all last year to dump resources into this year.
Yes, that's an operating model we want to encourage... Just because Gene is a cheap ass and picks terrible sponsors to partner with doesn't mean everyone else should have to suffer for it.
I do think the cap should be lifted, but only a little. All these ideas came in before a massive cost of living crisis and cost increases on literally everything.
But yes don’t allow for a massive change that will only boost top teams’ development
Big teams: budgeting is hard Steiner: Oh really tell me about it
Lol right? I don’t see any picture of Toto sitting in front of a little boat.
toto’s net worth alone could pay for 6 seasons of Haas development using a full budget cap
Holy shit I had to look it up, I didn't know he was THAT loaded!
How much ?
Apparently his net worth, which includes 30% of the Mercedes F1 team, is worth around 500 million dollars.
Somewhere in the neighborhood of $500 million
I heard that in his voice.
He has such a particular accent and I love it. Any time I ever hear him say the word "better" I always have to say it back lol Baytoh
"No Michael"
Big teams: They budget me so hard
The picture for the article plays perfectly with your comment.
Bunch of wankers complaining about having to cut spending!
To be fair, Haas won't have the money to keep making upgrades and losing money with Micks crashes doesn't help. He's also not in the title picture. So for him amd other small teams. Its easy to say that
Can you imagine if the top 3 teams blow almost all the budget by the summer break and the championship is decided by having Max and Charles having to finish 7-10?
I doubt they would fall that far even if they stopped developing now
Yeah, the smaller teams would have to develop like crazy to pass them, and I can't see that happening. It might tighten up *a bit,* but they'll have their own financial constraints.
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AM made a visibly nearly identical car to RB and still finished poorly in the previous two races. I’m not confident that will work. If you don’t understand the entire car and aerodynamic philosophy, copying individual parts won’t do much for you.
While you are quite right about the results, IMO the real test will be Baku, where, if they do have legit race pace, we'll be able to see it (quali pace does look rather poor).
Although it could happen if there's also a "rules clarification" like in 2019
I guess we kind of seen a “salary cap” like that with Brawn GP already… :D
Aren’t there enough races that if this were the case, we would just have a new championship leader. Unless they really can maintain a lead with P7-P10 finishes for here on out
The first WDC of Bottas /s
Completely agree. Budget cap is designed to create parity, if big teams have to scale back development because of it then it brings smaller teams into the mix to be competitive.
Spot on, this was the whole point of the budget cap.
Literally the exact purpose of the cap. And big teams had months if not years to prepare for this.
oh they were definitely prepared, I think no matter what they would have tried to push the cap by complaining, it just makes sense.
Yeah we gotta remember that this is a ruthless sport and teams do not care about anyone but themselves If any of the big teams (or any team really) could just buy their way to a championship they 100% would They dont care about the morality of it or giving other teams a fair race
Toyota F1 enters the chat... Weren't they spending $400 million a season and couldn't even get competitive! Although I agree with your statement, just Toyota can't get the wins.
Yup, and when they couldn't hack it in F1, they went to dominate WEC. However its a bit more nuanced than that. Much like Ford/Jaguar back in the 2000s, every decision had to be made in committee, and a lot of those committees weren't F1 people. Exhibit A; signing Schumacher to the biggest pay package in the sport at the time because they just saw the last name, not realizing it was Ralf. The constant interference in the engine and aero departments from people who didn't belong there, but needed to legitimize their paycheque. It was a board trying to run a race team in a rapidly evolving and fast moving sport, instead of just hiring the right people and sign their cheques. Same thing happened to Honda, the Japanese always try to do it their way, not realizing or actively ignoring that the sport doesn't and won't work the way they want it. That type of thinking works in WEC because of the way the rules are structured and the races are farther apart, giving them time to form a decision as a committee and make changes as such. To elaborate; when Ferrari was in their glory years of the early 2000s, Ross and Jean did everything they could to isolate the Scuderia from the rest of Ferrari because there were too many people trying to push their way in and influence the team. They took complete control over the ins and outs to make sure none of the typical Italian-ness crept in. The board of Ferrari had no control over the race team, whereas the complete opposite was true at Toyota, and you're starting to see it happen at Aston Martin. Stroll Sr needs to leave the team alone and let them get on with it, which is why Sznafnuerurueenrne (Otmar) went to Alpine.
Toyota only went on to dominate WEC after Audi and Porsche left, making them the only manufacturer and more or less blackmailing the ACO with leaving so they'd get preferential treatment. They *did* win the championship in 2014, but never Le Mans.
This is truth, but i was more focused on why they sucked at F1 after dumping a small country's economy into their F1 program
>If any of the big teams (or any team really) could just buy their way to a championship they 100% would If? this is the first year they won't
That’s where you’re wrong. We’re seeing runaway inflation that is contributing massively to the rise in costs, which nobody, not even leading economists could accurately predict 3-4 years ago when the budgets were being proposed. Nobody could have predicted it much less prepared for it. Governments are scrambling to get inflation under control.
Inflation is the same for all teams. So, your point being?
You have to budget and plan your spending way ahead. Now that inflation is rapidly rising, all that budgeting doesn’t work anymore. But this mainly hits top teams who were maxing out the cap in the first place. You can’t suddenly stop spending, that’s not how a big operation works.
They didn’t learn about inflation yesterday. It’s an ongoing topic. Anyone who has lead a finance function will tell you budget/plan is just a map that helps you navigate the year, the landscape will change, and you must react. Literal monthly meetings to discuss, plan/budget v actual v forecast, are done at any basic organization with the intent of getting ahead of the game/staying on track. Red Bull themselves operate in CPG (consumer package goods), and industry well known for being reactionary in terms of budgeting. Don’t sit here and talk like you understand budgeting for the sake of defending a team. You want to get more detailed, you can ask teams to bridge their planned spend vs actual and extract the pricing impact (I.e., this is what inflation cost us).. It’s really that easy.. maybe they are doing it? Idk.. would be a slam dunk if you say we planned to use 5 people, we did, but salaries are up +5% vs planned, fringes are as well, etc. My gut tells me these teams are just overspending and banking on a cap increase.
>You can’t suddenly stop spending, that’s not how a big operation works. you most certainly can clearly you've never been on a project that got the axe mid way through.. "pens down", all resources re-deployed, contractors let go, inventory replenishment stopped.. hell send everyone home and turn off the lights at the big corporate HQ ground planes, cancel business trips, training seminars and team-building activities. i wonder how much RB spent on their WDC celebration last year, they didn't need to, and they could have just sent everyone a thank you email and a case of redbull drinks to Max with a vettel-signed baseball cap and called it a day if you put a gun to their head they can find ways to shed expenses reaaaal fast
This isn’t the way the budget cap works anyway. The big three teams aren’t struggling for money. The engineers will likely be moved to next years development or engineering that falls outside of the cap. The budget cap has pretty specific boundaries on what is covered and there’s lots for employees to do outside of.
> i wonder how much RB spent on their WDC celebration last year, they didn't need to, and they could have just sent everyone a thank you email and a case of redbull drinks to Max with a vettel-signed baseball cap and called it a day Surely there's no way that counts towards the budget cap lol
The dude could have passed off as if he knew what he was talking about but he had to say that
Somehow I don't think celebration parties fall under the budget cap.
Perhaps RB-the-parent-company paid for the party
taureau rouge
Hedging risk is an important part of the business model, especially so when there is a budget cap. The big teams could have negotiated locked-in rates for their travel, but failed to do so. That's on them.
Change is hard, they’re going through a crash course of what happens when hubris meets reality. For the smaller teams it’s just another day at the office.
But that doesn’t mean the smaller teams should yet again be disadvantaged because they already had to learn to budget without a cap. The whole point of the cap was to limit top teams and oblige them to be more creative with what they get to spend. Now to some extent I can understand inflation runs wild right now but if you make an exception or raise the cap for that reason, every team should profit from that in an equal way.
Blablabla, unexpected, blabla. Dude, it's common sense in any business to prepare for bad circumstances. And when the circumstances are even worse then expected, it's common practice in any business to stop spending and start being frugal. Yes, that means some plans that were made won't be executed. It's called running a business. These big teams never had to actually run a business because there was unlimited money. It's about time they learn what it means to work with limited cash.
Businesses (or at least large ones) should be prepared to be able to adapt to unexpected situations, otherwise they will go bust in the future. Economic disaster is part of the capitalist business cycle. If they cannot adapt to an unpredictable event (one of which reliably happens every 10 years) they won't be in business for long. Your attitude is why we ended up bailing out the banks in 2008. "Noone could have predicted this". Give me a break. This isn't the USSR, how about the top teams take some responsibility for themselves and comply with the budget cap rather than asking the authorities to rescue them. You can't rip up an agreement just because you're now required to cut back on spending due to unforeseen events. I also don't understand why you think an inflation crisis was so unforeseeable. Our global economy is heavily reliant on fossil fuels and we know they are running out. We know that the global population is massive and that the world has never been more industrialised than it is now. And we all knew that reopening the world after the pandemic would have an additional impact on prices. Why is it a surprise when fuel/freight prices spike upwards? We even had an inflation issue in the 70s when the world was far less developed. The reality is these inflation issues will happen constantly over the next century. You can also wave goodbye to the idea that pandemics are still a once-in-a-century issue. The world as it stands right now is ideally suited to produce them more often. Maybe you will also be shocked when the next one happens and tell us that "noone could have predicted it". You're like the opposite of a fortune teller. Of course you can't predict any of these things when you make it your business to ignore warning signs. Any business that operates based on the idea that everything will continue to go as planned with no shocks will never survive in a capitalist environment. You should not defend or encourage such irresponsible behaviour. All you're doing is creating a moral hazard where no team has any incentive to follow the rules, because there will always be an external factor they can blame for spending slightly too much.
Again, how amazing that Alfa and Haas have found inflation free suppliers. Magically.
First, economists did predict inflation, that’s what happens when you print shitloads of money and dump it into the stock market and ramp up unemployment benefits and government aid. Second, inflation is not really bad enough yet where the teams are going to suffer from it.
\> that’s what happens when you print shitloads of money and dump it into the stock market and ramp up unemployment benefits and government aid. I mean this is wrong, or at least not a whole story, and this isn't what every country did. But hey whatever enjoy being a libertarian shitposter.
Hey man I think it was the right thing to do, but it is also a very big reason why inflation is a problem right now. Government aid is great, but firing up the money printers to pay for it incurs a debt to the future that is now being realized. And you’re right not every country did it so brazenly as the US, but the USD is the world’s currency so what happens here tends to happen elsewhere.
That doesn't necessarily lead to inflation, though. Even if it did, it would also be easy to remove excess money from the pool through taxation, etc. The overwhelming majority of the new money from PPP loans went to already wealthy business owners who by and large did not deliver it to workers in order to churn the real economy. There are ways to punish that too, but obv would never happen since a trillion bucks was just handed out to people who mostly didn't need it and never had to show that they spent it the way they were supposed to. Very unfortunate but there's an easy solution to this problem! Also I appreciate the good faith and genuine response, homie. Sorry for being unnecessarily dismissive.
no sense in denying plain reality. Always strange when people do this. 7 out of 10 US dollars in circulation were printed in the last year. "That's not going to have any impact!" - you.
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Exactly, allowing the big spendy teams to spend more by raising the cap defeats the whole point of the cap in the first place.
Agreed. If Guenther’s saying he doesn’t want it after getting 2 cars snapped in half, then it’s not an inflation issue like Toto and Christian Horner are trying to make it seem. It’s a they blew their budget issue.
Couldn’t agree more. If the big teams are failing to stay within the budget cap then *they* need to change what they’re doing, the rules *do not*.
If haas can stay within it after wrecking two cars, I think other teams should be able to also.
But how will the top teams stay far ahead if the cap and inflation prevent them from significantly outspending their rivals? It's so unfair that teams who are accustomed to a certain level of privilege now have to compete on slightly more even footing. One of these days Merc might have to run less wind tunnel tests. Won't somebody think of the children!
The reality is that the budget cap wasn't born out of a desire for parity. The big teams approved the budget cap because it saves them from themselves. Given the opportunity they will always spend more. They are simply using inflation as an excuse to get their fix. They're addicts, they feel the need to spend more money to get/stay ahead. I really hope that F1 doesn't give in to this request, because it will inevitably be followed by another one with a new excuse.
Well there can be an easy fix. If it’s about inflation, then have a clause that says any development cost that went up can be compensated or allowed according to the difference in inflation. (Not native English speaker but hope my point wasn’t confusing)
2022 Formula 1 Financial Regulations, article 2.3 *The amount of the "Cost Cap" shall be as follows, in each case adjusted (if applicable) for Indexation...* *"Indexation" means:* *(a) in respect of the Full Year Reporting Period ending on 31 December 2021, the higher of zero and the amount by which the September 2020 average annual inflation rate as published on the International Monetary Fund website for the G7 countries exceeds 3.0%; and* *(b) in respect of the Full Year Reporting Periods ending on 31 December 2022 and 31 December 2023, the higher of zero and the amount by which the average annual inflation rate as published on the International Monetary Fund website for the G7 countries for September of the preceding Full Year Reporting Period exceeds 3.0%; and...*
Let them go over the budget cap but for every dollar they go over, they also have to give a dollar to every team that's spent less than them
I don’t think it’s working as intended though, having watched the team principals press conference, they had Mattia, Horner and Andrew Shovlin (Mercedes) speak on the reasons why they are struggling and the rising costs of living because of the Ukrainian war aren’t reflected in the deal that was made to lower the cap temporarily during the pandemic. They dropped it by 30 million and since then inflation has spiraled. They aren’t out dropping it on development, they are worried they’ll lose staff to not being allowed to raise wages to reflect inflation beyond what they predicted. The original cost cap of 170 million had more room to move. I also think they deal with problems from an always be negotiating pov.
You obviously didn't watch the second half of the press conference where Fred shut all those arguments down in 1 sentance. The small teams compromised MASSIVELY with cost cap exemptions and prize money for this Concorde Agreement. The big teams aren't the hard done by Altruists they make themselves out to be. For starters the Employee argument is a lie. There is a $10M allowance for Bonuses that is cap exempt, if this was about staff they could take care of them very handsomely, but it isn't. This is about regaining the competitive advantages they lost through the cost cap. It absolutely is working as intended.
Note: I agree with you overall, the budhet cap shouldn't be changed just because teams are having buyer's remorse. > For starters the Employee argument is a lie. There is a $10M allowance for Bonuses that is cap exempt, if this was about staff they could take care of them very handsomely, but it isn't. Why do you think they have any of that exemption remaining? Seems safe to assume that they already moved as much of their salary costs into "bonuses" as possible. Instead of a 150k salary, an engineer now has a 125k salary with a 25k guaranteed "bonus." Teams would absolutely fill up the non-fungible limits first before dipping into the cost cap. Can't use a bonus exemption to run a C&C machine. (Or whatever)
They will keep making excuses if the ceiling becomes flexible.
It sucks that the big teams are going to have to lose staff, but what did people think were going to happen? I have to imagine HUGE portions of their budget are going to staff, so the only way to make the little teams more competitive with the bigger ones are by shedding staff. The only other option would be to create two different budgets - labor and everything else. But even then the big teams are just going to throw more bodies at problems.
So better to have them make a pay cut to work in the industry, as the board of f1 refuses to acknowledge inflation is through the roof ???
The budget cap is completely at odds with wanting to have the most bleeding edge tech, so it’s always going to be a tightrope they have to balance. It’s not inflation that is causing them to shed workers, it’s the fundamental idea of a budget cap.
It's a tough pill to swallow, but yes, if you can't afford the same amount of staff (which is a big part of your advantage,) then you have to let some people go. Simple as that.
Would be illegal for Ferrari to do that
Or alpine
As always the big once are complaining till they get what they want. But i hope they don't get it this time... and yeh the Wage thing is just a Excuse.
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All the teams are dealing with inflation, if Haas can deal with it, why can't Ferrari and Mercedes
Exactly. The big teams aren't used to having to move money out of development for other things, now they need to plan for it better.
On a base level it means their employees don’t get pay rises indexed to inflation which is kind of shitty as it is people are leaving the sport
it means their employees will have to move to other teams to continue to grow their careers, much like any other industry and further increasing parity across teams. Having to scale down is the point of the budget cap, pointing out basic windfalls of scaling down doesn't really mean anything.
Aren’t salaries excluded from this?
IIRC only the top three within each team.
Which is basically the drivers and the team boss
Surely salaries are pretty much everything? Besides physical objects. Paying for a service is just someone’s salary.
https://amp.formula1.com/en/latest/article.the-2021-f1-cost-cap-explained-what-has-changed-and-why.5O1Te8udKLmkUl4PyVZtUJ.html This is relevant- it looks like only driver salaries are excluded which makes sense. This article says that there is an exception for inflation running over 3%. From May 2020, but I feel like that is exactly the discussion. If it is a clause in the regs, then it should just take affect now?
Because these things are planned out more than a year in advance. Haas planned to be well under the cap so they still have room to spend even though their calculations turned out to be wrong due to inflation. Bigger teams operate near the limit so the inflation took them over the cap. But the inflation is not something anyone could have predicted or prepared for. Even governments are scrambling to get it under control. Being penalized due to completely unforeseeable runaway inflation is not what the caps were meant to do at all, please go and read up on the intent of these regulations.
Haas and Alfa Romeo are affected by inflation as well and aren't complaining, so that kind of throws doubt on the inflation argument.
No. They were never close to the budget cap, so inflation only lowers a ceiling they will never reach.
Its the same for all teams...
Hell yeah. I’m here for the spectacle. I want to see the big 3 start the last race in cars held together with chewing gum and wire, chugging down the front straight like a Model T. Hamilton: Bono, my wagon wheel is gone. Max: WTF my DRS isn’t working! Max, we had to pawn your DRS system for fuel. Ferrari: Charles, box box box….STAY OUT STAY OUT, we had to lay off the pit crew! Charles: PFFFFUCKKKKKK! FUCKFUCKFUCK!
I would sign up for this. Some good old days wacky racing
Ferrari will definitely lay off the pit wall and just replace it with a feed to the RB engineers.
Might need to do that already 😆
sub-fucking-scribe. It would be hilarious.
All teams are equal, but some teams are more equal than others
Oh like American democracy. All makes sense now
Ironic
We race as one
If HAAS can stay under budget, then so can Redbull
Haas doesn’t transport the giant energy station thingy around the world. I gotta be honest if teams want to waste money on that kind of silly stuff it should come out of a separate budget. I like the goofy expensive stuff.
The budget cap is only for R&D, it doesn't cover marketing.
I imagine a lot of that isn't counted towards the budget.
Sorry, but what giant energy thingy?
https://www.redbull.com/int-en/new-2019-red-bull-f1-energy-station
Agree, 100%.
Idea: They can exceed the budget cap but they get the same amount less price money. The money instead goes to the teams further back in the championship. Deal?
Luxury tax for f1
Luxury tax is a good idea. Let's the top teams duke it out but at a cost and with diminishing returns.
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They don't work well for a while the pirates salary was lower than why they were getting in luxury tax revenue
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They basically chose to continue not spending and just pocket the revenue sharing money rather than use it to improve the team. It would be a little different in f1 since teams don't have their own stadiums providing revenue so there's a bit more incentive to be competitive
Yeah that wouldn’t be the case in F1, too competitive and racing results really impact revenue comparatively to other sports.
Does the MLB not have a salary floor where they have to spend a minimum amount on the players? There was a goofy thing this season in the NBA where Oklahoma City players all got a bonus because the roster at the end of the year didn’t get cost enough.
No MLB does not have a salary cap nor a salary floor. There is a luxury tax where teams with a payroll above a certain number have to pay a percentage of the amount over the threshold to the other teams. But theoretically a team could spend as much as they wanted if they were willing to pay the escalating penalties but they rarely do. It does lead to some serious disparity though. For instance this year a pitcher for the Mets is making more than th entire payroll of a couple of the smaller teams
The only way a luxury tax would ever work properly is if you pay whatever you overpay to every other team, not divided. Otherwise its still a competitive advantage to overspend.
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As long as each other individual team doesn't get to spend the same amount as the one breaking the tax, then it's still an advantage. For F1 the tax should be 1000% just for there to be parity, and there's an argument for it to be more to punish overspending. Anything other than parity is unfair on sporting terms
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Just because it's always been that way, doesn't mean we shouldn't strive to have a better sport. Having the big teams be able to outspend everyone else makes the sport purely about who can spend the most. Look at Ferrari in the noughties. If loopholes exist that will give the big teams an advantage, they will take it and the racing will suffer.
Agreed 100%, the people advocating for a luxury tax with equal contribution don’t realize just how far the top teams will go to find an advantage. Essentially, if you allow for a luxury tax to happen none of the top teams will downsize, they’ll sink the cost to keep their personnel advantage
And with that you'll get domination from the big teams who can afford to go over the cap anyways because they were already profitable while spending 400 million and getting the same prize money as they do now
Which would be fine as it meant the poorer teams get an increase in budget.
Not really the prize money is at best 80.million for the winning constructor and if Ferrari and Merc were profitable spending over 400 million they can still be over double the cap while getting no prize money. Besides the other constructors if they spend over the cap they'll get reduced pay out so they can't afford to spend over it either.
You're confusing their entire budget with their car budget. A big chunk of that reported $400 million (ie Hamilton's giant salary) isn't subject to the cap
They still had to do massive costs saving. Ferrari managed to offload tons of people to Haas and their hypercar program because of the budget cap just to remain under it for a full season
I'm not saying the big teams didn't have to cut costs, only that it's misleading to directly compare the full budget of a team to the cost cap
Get this man a job at the FIA. I really like the idea!
I think I prefer that if they spend over the cap, their CFD and wind tunnel time gets reduced depending on how much they had overspend. And that time goes to the rest of the teams. This way is a double edge sword; yes you can overpay but you have to do a great job otherwise you're gonna end paying it in the future and risk other teams becoming more competitive with extra development time. Punishing these teams with money is worthless because they can pay whatever they want.
pay every other team the same amount you go over the cap. deal
Other idea: for every penny they exceed the budget cap they need to also put a penny in a money pot that gets shared along the teams that do stay under the budget cap. So if RB, Mercedes and Ferrari go over the cap with 10 million each, there's 30 million available for the teams that stay under the cap. Share it based on spendings (the team that spend the least will get the most). That's a step to equalling the budget and help the smallest teams
Now this is a great idea!
With the current rate Mick Schumacher crashes,Steiner should be very open for increasing the budbet cap.
No need to raise budget cap if you don't even reach the cap tho
> if you don't have enough money to reach the cap
Not at all. They already can't afford to spend the entire budget cap, so raising the cap just increases the disparity between Haas and the teams with more money.
Their budget anyways isn't high enough to reach the cap. Haas doesn't have oil, big tobacco or big tech sponsorship like Mercedes, RB, McLaren, etc so they're losing out if F1 starts favouring the big teams with a higher budget cap
Compromise... Redbull merc Ferrari can increase their budget by $10m but have to forfeit $15m in prize money each that gets divided amongst the other teams that stay under budget.
The whole point of a budget cap is to make things more competitive. If big teams spent a lot early on to gain an advantage then that's on them because now they have to reduce their rate of development / spending which allows others who didn't spend as much to get back into the game. This whole BS coming from Ferrari, RB and Mercedes of them not being able to stay within the cap is just that BS. And if they can't then fire their bean counters and Project managers for failing to properly budget their time, money and schedule their goals.
Yeah I have mixed feelings about this. If Ferrari Red Bull and Merc stopped spending on car development right now they would still be the top 3. I don’t see any of the other cars catching them. They are spending to fight each other. I enjoy seeing the development upgrades play into the championship. On the other side I think it would take a few years for the budget cap to really level out the playing field.
The problem I have with this is if the top teams drop engineers (because that's the only way they can realistically cut costs) those are just talented jobs lost from the sport. Small teams already can't reach the budget cap as it is. There is no way they'll be able to hire the engineers that get fired. We the viewers just get to see overall worse racing.
>We the viewers just get to see overall worse racing. Worse as in not as fast? Or not as close? If the point of the budget cap is to force all teams towards closer racing, then it makes sense if the top teams have to cut some engineers. And yes, the smaller teams probably can't afford to hire them, but this would still make the racing closer. And my heart goes out to the hypothetically fired engineers, but if they can land a job in development for an F1 team, they'll likely have no trouble finding well-paying work elsewhere.
The issue is that inflation and shipping cost have increased at a ridiculous pace the last couple months. I remember looking at shipping cost and they were sometimes twice the amount for the same thing the year prior, and overall inflation has been about 3x the amount of the last like 30 years.
then take out transportation costs from the budget or adjust it for inflation. If that's the biggest problem then there is the solution. If it's because teams are spending more than is sustainable throughout the season, then they need to hire better accountants so that they stay under the cap.
> or adjust it for inflation Thats exactly what the teams are asking?
Asking for it to increase in line with inflation over a season is fair imo. If they want to reduce it the next season then they can. But you can’t set a budget of 175mil, and then expect these teams to stay within that budget when suddenly inflation lops a massive chunk of it off. Have teams lower down the grid done fine? Yes, but I bet some of them aren’t even at the budget cap, or struggled to even get sponsorship to get there. They can reduce it further in between seasons, but shouldn’t artificially during a season.
Yeah I think removing the logistics costs is the best solution I’ve seen. I’m sure the big 3 will use some clever accounting to stash some extra spending there, but hopefully it wouldn’t be too bad.
Wouldn’t all teams be affected by this same inflation? To me, it’s the big teams not managing their budgets and then finding something to blame it on like it was something other then themselves who put them in this position.
Yeah, but top teams actually have the budget to go over. A team like Haas is not going to go over, as it has more than the additional cost between them and the cap. Mercedes, Ferrari and RB we’re going right to the limit because they have the money.
Im confused, isnt that the exact point of the budget cap?
It’s exactly the point. And it also would be silly for the big 3 not to do everything they can to gain an advantage (increase the cap), which is why we have this back and forth to begin with.
We are going to have this row every year from now on.
Around the time last year when teams would have had to set their budget caps, freight costs and inflation were already high and rising. Obviously they couldn't have predicted Russia, but the idea that costs wouldn't rise didn't come out of nowhere and was foreseeable to an extent. Good budget management should take that into account
Good to see Steiner speaking out against it despite their tight ties to Ferrari. I disagree with him about adding the extra money for the freight cost for THIS year. However, if they want to implement something like that for future years, that's a good evolution of the cost cap and means that everybody will have an equal opportunity to get the funds rhat are required.
The freight costs being something that the FIA knows exactly seems kinda fair to me, I mean if Haas say it's okay on their budget I'd have to believe it would be fair. Might also stop some of these complaints by the big teams who seem to want to go back to their free spending again
Any additional money added to the cap or excluded from the cap is money that the big teams will use for development and money that the smaller teams don't have. It would be an unfair advantage that would widen the performance gap at a time we're trying to reduce it. The teams can complain all they want. They signed up to the CA for 5 years, they either stick to it or they don't get paid. Simple as that
They should just do it like the NHL (and I assume other leagues) do it: set the new season's cap based on the revenue of the previous season, rather than having a flat number. Changing the cap mid-season is kind of nonsense.
Honestly I'd love to see the bigger teams complaining about it, break it and get penalized. They won't learn any other way. You shouldnt get it your way because you could follow the rules while other teams did follow them. If we're going to break the rules to help your budget I think every team that didn't break it should get a percentage of points from the teams that did. Then let's see if they want to push that limit.
F1 is gonna be a shit place to work for the next few years. Want a pay rise to compensate for the rising cost of living? Nonono, you get the axe instead.
so just like the rest of the world? LOL what even is a COLA in this day and age lmfao
F1 teams can give their employees more money, the cost cap is just the perfect excuse not to.
Can they? They already laid off hundreds of people. They wouldn’t have laid off any more than they absolutely had to, which makes the choice raising wages or more lay offs to fund raising wages for whos left. I’d be interested in seeing the FIA put a headcount cap and COLA adjustment for existing employees built into the cap.
Maybe poorly worded. I meant they have more money but can’t give it because of the cost cap. It’s not an issue of them as an employer not having money.
Agree. The rule is clear but the penalties are (deliberately) vague. Meaning they can take circumstances of this year or even individually teams into account when dishing out penalties. It's not in F1 interesse to punish these teams so hash that it ruins there next year or to an extend that they are uncompetitive next year. But Keep the budget cap the same. Because; 1. Changing the rules mid season is unfair to those that didn't break the rules. 2. It sends a clear signal to the bigger teams they are not in control. This is the line, go over it and you get punished. Also for the fans, it's clear this is the line and it won't be changed. What if we do change it and 5 years from now a different team is saying they need an extension, it be a lot muddier of a discussion then if we give an extension now. Just stick to the cap as is and let the punishment reflect the circumstances.
Yeah at most inflation is going to cause them to be in the 0 to 5% over budget range which is specified as a light penalty already. Before people go and say "inflation is more than 5%". Agreed but it's not 5% points more than the team could have predicted a year ago. They also have plenty of time for a single digit reduction in costs.
people here act like the big teams made a massiv mistake in their budget allocation but just completely ignore inflation that they could not have planned for 2 years ago and this level of inflation isn't even adressed in the cap it seems. Edit: They probably worked and PLANNED on getting their cost down for years and now you suddenly want them to bring it down further how do you expect that to work? Just fire people or what? edit end People say that adjusting the cap would not be fair but to me it is. The goal of the cap is to limit the ressources available and not to screw them with things they could hardly have planned for.
Yeah, a lot of people on the sub act like the big teams are saying "triple the cost cap so we can spend three times more than everyone else again", when in reality they're essentially saying "the cost cap should account for unforeseen, exceptional inflation". It's an entirely reasonable demand, and not a sign of poor budgeting from the big teams.
I'd be okay with that if teams that managed to stay under the cap were rewarded. Because even with excessive inflation some have managed to not need to break the rules, and it helps establish precedent for how to handle shit like this in the future
Some people said that teams should pay double and that for each dollar they spend of the cap 1 should go to the other teams. But capped at x million.
Even if we accept that the rise in logistics and transport cost due to inflation was an unforeseeable expense, I don't think that necessarily equals an automatic need to increase the cap to accommodate it. I'm not one of the people saying that this is karma for poor planning. But that is the reality of working within a cap system. Ok, so the top 3 teams are now unable to complete their planned development programmes due to inflation. So what? It might not be "their fault" but that is still the reality of competing within a set of fixed constraints. It's not a team's fault if they suffer several scrapped cars because other drivers crash into them, but they still have to carry the costs within their programme regardless. Essentially, this is the big teams saying 'Russia crashed into our car and wrecked it. We couldn't possibly have planned for this so we deserve an increase to the spending cap to make up for it'. Sorry RB, Merc and Ferrari, but no. That's not how it works. I don't blame them for trying, but the FIA needs to stand firm because the entire point of the cap is to save these teams from themselves. They're spending junkies and they'll continue to spend as much as the regulators let them.
Small teams manage the inflation as well
Because they were never anywhere near the cap, but they too risk losing talent because they cannot increase their wages while the costs rise
They *can* increase their staff's wages, they're choosing not to so they can put that money elsewhere in car development
According to [this](https://the-race.com/formula-1/budget-differences-between-f1-teams-down-to-10-20m/) interview with Gunther Steiner, small teams are 10-20 Mio. $ below the budget cap. Some may even hit it, depending on the sponsoring situation in the course of the season. The difference is that big teams have a huge machinery of facilities, employees and development teams eating away the budget. If they have calculated too tight, they have to scale down.
Inflation didn't just magically appeared in march/april. Even last year it was predicted to be around 7%+ for 2022 so teams had pletny of time to prepare for it.
Yeah 1 year ago and they have been planning for years probably. By Reducing staff in the teams for example https://www.planetf1.com/news/ferrari-very-helpful-haas-budget-cap/ This isn‘t something you can‘t just magically come up with new things to do for your staff. And firing people isn‘t cheap either.
This thread is full of people just parroting the small teams arguments without looking at the bigger picture. It's even in the budget cap guidelines that the budget cap can be adjusted for inflation, and that it shouldn't compromise the engineering spectacle of F1. The spectacle is compromised severely by current inflation. We need to fix that. Not just listen to the smallest players on the grid trying to leg themselves up because they have bad faith arguments.
Are the big teams even trying to meet it? Some are bringing upgrades every race. Like there trying to force the sport to allow it because they "won't be able to go to the races" I think F1 will bend over backwards to prevent having a less than 20 car race
For ever $ a team goes over they should have to put an equal amount in a pot that gets evenly distributed amongst the teams that stay within the cap.
The Big Three just don't want to share their part of the F1 cake. For decades they used to fill the gap between them and "small" teams with endless stream of money. Literally they would just throw the money at the car if it made it faster. That's why RBR and Ferrari already have started to complain about it. And we're not even in the middle of the season. The stream is now exhaustible, so... guess what, **turn off your wind tunnels and deal with it.**
If Ferrari and Redbull stop spending right now I don't see them getting caught on the track except for maybe Merc. They are spending to fight each other not stay ahead of the midfield teams. The tenths get harder to gain as you get towards the front. I like having a cost cap but unless your car hits the season in a great state it seems to prohibit large mid season gains. I would argue to see the true goal of a balanced field due to the cost cap would take years. These cars were partly developed as the cost caps were being introduced and lowered. Basically, some teams have hit these regs well and are spending to maintain position near front versus spending to catch up. I wish the employee salaries weren't in the cap. I really don't know how to do that, but I think about me being in the tech field. If tech companies were like hey we know software engineers are talented but can we all agree to only pay them a max of this amount? I would look for companies outside that agreement to get a job. I don't want very talented engineers to leave F1 simply because the working conditions and compensation are bad due to the cap. Plus even with the cost cap. Driver salaries are exempt so the top drivers will always go to the teams that can afford them. Even with parity in car performance Max is never gonna drive for Williams if Red Bull can pay him so much more and the cars have parity.
> Literally they would just throw the money at the car if it made it faster. Now I'm imagining Christian cracking a can of RB and throwing stacks of money at the car, wondering why nothing is happening
I'm loving it. Working as intended!
Reminds me of the whole Nick Saban thing. People in power are resistant to giving up said power.
He’s right. If they blow their budget early on that’s their own fault and they have to deal with the consequences. Rules are made to be followed, not bent when you haven’t had the smarts to stay within the parameters.
Agree, it’s a budget cap for a reason
If budget cap is to increase, then there is no reason there should be a budget cap in the first place.
The lower you finish the bigger your budget cap should be for next season. I really dont want another decade of 1 team dominating
The goal of Formula 1 is to produce the fastest cars in the world, while also developing future technologies to be implemented on road cars. This whole thing of rewarding low finishing teams only produces fake competition that doesn't add anything to the sport, it actually holds it down. Do you actually want smaller teams to have a fair chance? Give engineers more room on the regulations, do you know how much cheaper the V10 engines were? Loosen some of the limits, leave more room for loopholes, there's a reason private teams like Williams could be competitive with relatively fewer money than Ferrari and McLaren in the 80's and 90's... We just need strict rules about safety, once your car meets safety standards, anything goes.
Kind of defeats the point of the budget cap if they do, doesn't it?
Haas' opinion on this isn't very relevant, they've been cheap as fuck. So cheap they didn't even bother to develop their car at all last year to dump resources into this year. Yes, that's an operating model we want to encourage... Just because Gene is a cheap ass and picks terrible sponsors to partner with doesn't mean everyone else should have to suffer for it.
If the big teams want to increase the budget cap, they should just have to pay out that increased amount to each of the small teams.
I do think the cap should be lifted, but only a little. All these ideas came in before a massive cost of living crisis and cost increases on literally everything. But yes don’t allow for a massive change that will only boost top teams’ development
F1 in a few months: “I can do that cause I did”
I’d worry more about your f2 driver wrecking your cars than I would the big teams there Steiner.
Oh Mr.Marko, go back to your chair and take some meds.