The "We can do Cost-Cutting better than the Fia" Thread

[RealRacingRoots]

One of the hottest topics in these days. We know that the Fia is cutting the mid-season test, and the debate has arisen again about how cost-cutting can be done.

So lets get crackin', F1Rejects; we can do cost-cutting better.

[Ferrarist]

First of all, the teams need to get more from the revenue they are generating. It's almost insane how much revenues FIA and FOM suck up from F1. But there is still some need for cost-cutting measure that are sustainable in a long-term. That's what the FIA could and, in my opinion, should do:

- Go for an overall cheaper set of regulations that doesn't require much expensive fine-tuning.
- Allow third-party manufacturers to sell customer chassis to the teams. The teams could still do some development work on their acquired chassis, but without the initial development costs to develop a brand-new chassis in the first place. Also, the FIA should allow teams to reproduce spare parts on their own (Like it used to be in IndyCar, before they implemented the new chassis).
- Stop the implementation of the 1.6l-V6 turbos right now! F1 should better go for 4l-V8s, like GP2. Such large engines are powerful, yet robust enough to make them cheap in the long term. Also, try to make the engine regulations simple enough to allow independent engine manufacturers to enter the grid (Judd, Cosworth, PURE).
- Continue to encourage fuel efficiency, as well as encourage teams and manufacturers to continue their research into more efficient hybrid systems.
- Allow for multiple tire manufacturers, because a monopoly surely won't save costs here.
- Travelling should also be done more efficiently. Why does Formula One travel to Bahrain in April, and to Abu Dhabi in October, when they are so close to each other? And if Formula One really needs a round in the Middle East, shouldn't one round be enough? The same goes for the rounds in North/South America as well as Asia.

[pasta_maldonado]

The travelling situation is a farce. Here's a revised calendar for next year:

1) Australia
2) Malaysia
3) Bahrain (if we HAVE to go there.)
4) Spain
5) Monaco
6) Britain
7) Belgium
8) Germany
9) Hungary
10) America 1
11) Canada
12) America 2
13) Brazil
14) Italy
15) Singapore
16) Abu Dhabi
17) India
18) Korea
19) China
20) Japan

[FullMetalJack]

The travelling situation is a farce. Here's a revised calendar for next year:

1) Australia
2) Malaysia
3) Bahrain (if we HAVE to go there.)
4) Spain
5) Monaco
6) Britain
7) Belgium
8) Germany
9) Hungary
10) America 1
11) Canada
12) America 2
13) Brazil
14) Italy
15) Singapore
16) Abu Dhabi
17) India
18) Korea
19) China
20) Japan

YES! Japan last!

[mario]

First of all, the teams need to get more from the revenue they are generating. It's almost insane how much revenues FIA and FOM suck up from F1. But there is still some need for cost-cutting measure that are sustainable in a long-term. That's what the FIA could and, in my opinion, should do:

- Go for an overall cheaper set of regulations that doesn't require much expensive fine-tuning.
- Allow third-party manufacturers to sell customer chassis to the teams. The teams could still do some development work on their acquired chassis, but without the initial development costs to develop a brand-new chassis in the first place. Also, the FIA should allow teams to reproduce spare parts on their own (Like it used to be in IndyCar, before they implemented the new chassis).
- Stop the implementation of the 1.6l-V6 turbos right now! F1 should better go for 4l-V8s, like GP2. Such large engines are powerful, yet robust enough to make them cheap in the long term. Also, try to make the engine regulations simple enough to allow independent engine manufacturers to enter the grid (Judd, Cosworth, PURE).
- Continue to encourage fuel efficiency, as well as encourage teams and manufacturers to continue their research into more efficient hybrid systems.
- Allow for multiple tire manufacturers, because a monopoly surely won't save costs here.
- Travelling should also be done more efficiently. Why does Formula One travel to Bahrain in April, and to Abu Dhabi in October, when they are so close to each other? And if Formula One really needs a round in the Middle East, shouldn't one round be enough? The same goes for the rounds in North/South America as well as Asia.

As far as I am aware, the FIA actually gets a quite small cut of the TV revenues that FOM generates - I've heard figures suggesting that their cut is around 5%, so they aren't exactly bleeding the sport dry. FOM, on the other hand, with more than $2 billion in leveraged debt, is a very different manner though, especially since CVC Partners are using the revenue from Formula 1 to cover losses in their media division.

As for your proposals, the issue of transportation had already been raised by FOTA in the past, and to be fair to FOM they are actually trying to respond to those requests. For example, they are reported to be planning to pair the new race in Austin with Interlagos since most of the teams pass through Dallas on the way to Interlagos (it is one of the largest air freight hubs in the region), whilst we have seen the Australian, Malaysian and Chinese GP's linked together for convenience too. The teams were complaining that the cost of going to the Canadian GP partway through the European leg outweighed the benefit; however, they have now got their wish to parter it with another US race, as it will be a back to back race with the street circuit in New Jersey.
Now, part of the reason why there are still some peculiar gaps is down to the teams - given that their personnel would have to be on the road for an extended period of time, there are only so many long haul events they are willing to go to (for those with young children, for example, it would be somewhat tough to be away from home for several months at a time). Part of the reason for the mid season break was, after all, simply to give the mechanics time to rest and recover after several months on the road - it is another reason why the teams do not want the calendar to be any longer, otherwise they will have to double up on teams of mechanics.
Similarly, some of the circuits have conflicting requirements that clash with other circuits - Bahrain's insistence on holding their race at the beginning of the season clashes with Abu Dhabi's desire for a late season slot - whilst the Japanese GP is towards the end of the year for climatic reasons (the wettest and stormiest part of the year is May to September, so the Japanese GP can't easily be added to the chain of Australia-Malaysia-China at the beginning of the season). Once factors like the time taken to ship parts from one place to another are taken into consideration, I think that FOM has done an OK job of organising the calendar, all things considered.

As for some of your other points, unfortunately some of those points are conflicting. For example, encouraging greater fuel efficiency and increased energy recovery - both of which are the main reason for the turbo engines coming in (they are talking about a long term cut in fuel consumption of 35% over the current engines) cannot come without some sort of cost, because somebody is going to have to pay for research and development work.
Similarly, cutting the 2014 turbo engines would not necessarily save that much money because the manufacturers have already had to pay for the preliminary research - Renault has indicated that it has already spent €50 million on engine development, money that would have to be written off if a new engine was specified instead. Equally, as far as I am aware, the planned service life of the turbo engines is much longer than the current service life of the engines used in GP2.

As for the tyre supplies, your first problem could simply be in persuading other manufacturers to join the series - Michelin only wanted to join if there were major changes to the tyres (an increase from 13 inches to 18 inches, later dropped to 16 inches - they cited "road relevancy", although most cynically suspected it was because Michelin didn't want to spend money on additional re-tooling, since those tyre sizes matched the size of tyres they delivered to the Le Mans series very closely). Most of the current major tyre manufacturers don't want to join right now because of the cost of development (Bridgestone and Michelin were spending a fortune during the last tyre war), and few teams want a tyre war because it ended up favouring the larger teams (Bridgestone choosing to develop their tyres in accordance with that Ferrari wished for, whilst Michelin based their designs on the data they were obtaining from Renault, to the detriment of most other teams).

[Ferrarist]

YES! Japan last!

I'd rather keep Brazil as the season finale, because it's nice to have the title decider on prime time in Europe.

[IceG]

Perhaps not cost-cutting but cost-efficiency. How about allowing two/three days of testing after the last race before the summer break at the same circuit (but not the Hungaroring obviously!)? Teams and much support (tyres, engines, etc.) are already there, it keeps the fans interest up and potentially resets everything for the second half of the season. And while they are testing they aren't at the factory. Police it by only allowing engines that have been used in a race plus one new one but with no overall increase in engine allowance.

[QuickYoda41]

This may be unpopular, but F1 should have less races a year. None of us complained, I think, when we had 16 races in a year. Cost-cutting would be even more efficient, if half of the races were held on the same track, let's say Spa.

[sswishbone]

Make the young driver test happen like it did this year for williams/marussia/hrt. Where at one circuit they test on a monday. And to avoid needing testing teams, they are allowed one day after the GP weekend and only one young driver. You could do that for a race in the flyaways, europe 1, europe2 and final flyyaways. Giving young drivers more time to get experience outside of almost irrlevant straight-line testing, and give the teams more chance to test developed parts for their cars, plus circuits can charge a very cheap amount for the public to come and watch it all go down.

[Phoenix]

You want a solution? Just enforce the damn RRA with fist of iron and you're set.

[mario]

You want a solution? Just enforce the damn RRA with fist of iron and you're set.

In the shorter term, at least, that is the most sensible strategy whilst longer term plans are made for the financial stability of the sport. Who would enforce the RRA though?
FOTA set the RRA up with the main intention of keeping the FIA out of their internal affairs, and whilst some of the teams seem to be open to the possibility of allowing the FIA to police the RRA, others are dead set against the idea. The problem for the FIA is that any major rule changes to allow them to enforce the RRA would require the majority of the teams to vote in favour of a rule change, and there are enough hostile teams to potentially block any rule changes.

Added to that, part of the problem is that the current RRA leaves a few major gaps - the biggest problem being post 2014 engine development, which is currently not subject to any spending limits. Part of the problem is that only Ferrari has its engine team directly integrated into its team - Renault Sport is now a separate entity from the team now known as Lotus, whilst Mercedes HPE is still technically independent from the Mercedes team.
With Renault Sport and Mercedes HPE being independent suppliers, policing their activities would be somewhat difficult - particularly since the former is engaged in a number of other areas of motor sport. It also raises a few questions about what might happen if a new engine supplier wished to join the sport - at what point would they be subject to the strictures of the RRA?

As things stand, I guess that we can say that the RRA is perhaps the least worst alternative given the other solutions that have been proposed and fallen to the wayside - that isn't to say that the RRA is OK as things stand, because it needs some work yet.

[Klon]

I say the only thing we need is an iron-fist enforcement on a reasonable budget cap (I am thinking somewhere around €80,000,000) - then we could cut all of that cost-saving nonsense. But noooooo, let's hunt the person suggesting just that out of town. Admittedly though, that was one of the few sensible things by that person.

[TomWazzleshaw]

I say the only thing we need is an iron-fist enforcement on a reasonable budget cap (I am thinking somewhere around €80,000,000) - then we could cut all of that cost-saving nonsense. But noooooo, let's hunt the person suggesting just that out of town. Admittedly though, that was one of the few sensible things by that person.

The idea itself was solid enough. The details that Mad Max had go with it however were absolute rubbish.

[Salamander]

I say the only thing we need is an iron-fist enforcement on a reasonable budget cap (I am thinking somewhere around €80,000,000) - then we could cut all of that cost-saving nonsense. But noooooo, let's hunt the person suggesting just that out of town. Admittedly though, that was one of the few sensible things by that person.

The idea itself was solid enough. The details that Mad Max had go with it however were absolute rubbish.

I agree, the two-tier system was just utter shite. He should've kept it simple, just went, "Right, here's the budget cap, you don't like it? Bathplug off."

[sswishbone]

The only problem with the budget cap is that teams would just hire outsourced accountants who find stuff that is exempt. It's like taxing big companies, they always find ways to do stuff like spend the profit to pay less tax, pay staff through second companies so they pay standard tax rate, pay staff with assets as well as cash... You'd just have teams doing that with things like 'filming day crews' being a third party company and other stuff like that, freeing up cash that they shouldn't have under the budget cap.

[David AGS]

YES! Japan last!

I'd rather keep Brazil as the season finale, because it's nice to have the title decider on prime time in Europe.

Ditto. I work most Sundays, so rather get up at 2am on Monday morning rather than missing out!!!

[Salamander]

The only problem with the budget cap is that teams would just hire outsourced accountants who find stuff that is exempt. It's like taxing big companies, they always find ways to do stuff like spend the profit to pay less tax, pay staff through second companies so they pay standard tax rate, pay staff with assets as well as cash... You'd just have teams doing that with things like 'filming day crews' being a third party company and other stuff like that, freeing up cash that they shouldn't have under the budget cap.

It's still an attempt at lowering the costs, which is better than nothing at all.

[RonDenisDeletraz]

The only problem with the budget cap is that teams would just hire outsourced accountants who find stuff that is exempt. It's like taxing big companies, they always find ways to do stuff like spend the profit to pay less tax, pay staff through second companies so they pay standard tax rate, pay staff with assets as well as cash... You'd just have teams doing that with things like 'filming day crews' being a third party company and other stuff like that, freeing up cash that they shouldn't have under the budget cap.

It's still an attempt at lowering the costs, which is better than nothing at all.

Yes, but teams could go to levels to make it absolutely pointless.

[Salamander]

The only problem with the budget cap is that teams would just hire outsourced accountants who find stuff that is exempt. It's like taxing big companies, they always find ways to do stuff like spend the profit to pay less tax, pay staff through second companies so they pay standard tax rate, pay staff with assets as well as cash... You'd just have teams doing that with things like 'filming day crews' being a third party company and other stuff like that, freeing up cash that they shouldn't have under the budget cap.

It's still an attempt at lowering the costs, which is better than nothing at all.

Yes, but teams could go to levels to make it absolutely pointless.

I still think something is better than nothing. When you have bloody Ferrari mentioning that the costs are becoming a concern, you know something has got to be done to get costs down. I think most teams would be agreeable to a sit-down to at least try to work a comprimise - and if anyone tries to pull any crap, make it clear that they'll be suspended them from the Constructors' Championship. I think that should be deterrence enough.

[RonDenisDeletraz]

It's still an attempt at lowering the costs, which is better than nothing at all.

Yes, but teams could go to levels to make it absolutely pointless.

I still think something is better than nothing. When you have bloody Ferrari mentioning that the costs are becoming a concern, you know something has got to be done to get costs down. I think most teams would be agreeable to a sit-down to at least try to work a comprimise - and if anyone tries to pull any crap, make it clear that they'll be suspended them from the Constructors' Championship. I think that should be deterrence enough.

I agree, it might have worked.

[pasta_maldonado]

One thing I do fear is that F1 will become stone age again if a budget cap is introduced.

[Faustus]

One thing I do fear is that F1 will become stone age again if a budget cap is introduced.

This is highly unlikely. Aerodynamics development will still carry on, trying to exploit every possible loophole in the regulations. No one is going to unlearn the methods, techniques and findings that have been learned. Also, manufacturing costs are likely to reduce slightly, as some of the more exotic materials become more widespread.
What do you mean by stone age? If you mean in terms of emergent and cutting-edge technology, I'm sorry to have to tell you this, but it already is stone age, compared to other forms of motorsport.

[pasta_maldonado]

One thing I do fear is that F1 will become stone age again if a budget cap is introduced.

This is highly unlikely. Aerodynamics development will still carry on, trying to exploit every possible loophole in the regulations. No one is going to unlearn the methods, techniques and findings that have been learned. Also, manufacturing costs are likely to reduce slightly, as some of the more exotic materials become more widespread.
What do you mean by stone age? If you mean in terms of emergent and cutting-edge technology, I'm sorry to have to tell you this, but it already is stone age, compared to other forms of motorsport.

Maybe stone age wasn't the right term to use. Is the budget cap large enough to allow aerodynamic research?

[Faustus]

One thing I do fear is that F1 will become stone age again if a budget cap is introduced.

This is highly unlikely. Aerodynamics development will still carry on, trying to exploit every possible loophole in the regulations. No one is going to unlearn the methods, techniques and findings that have been learned. Also, manufacturing costs are likely to reduce slightly, as some of the more exotic materials become more widespread.
What do you mean by stone age? If you mean in terms of emergent and cutting-edge technology, I'm sorry to have to tell you this, but it already is stone age, compared to other forms of motorsport.

Maybe stone age wasn't the right term to use. Is the budget cap large enough to allow aerodynamic research?

Depends on the value of the budget cap, I suppose. Max Max's budget cap was enough to allow plenty of aerodynamic research, but at the cost of personnel numbers.

[inchworm]

If - and that's a massive, probably insurmountable "if" - you can make the budget cap work, then you can free up the design rules a lot. The reason they're so locked down is the fear of teams spending vast amounts to explore every possible way of doing something. With a working budget cap this disappears, and teams have to choose wisely where they develop/have the courage of their convictions what they're doing will work. On the plus side we'd get cars that looked different to each other and lots of interesting (probably cheap) innovations. On the minus the fields were much more spread out in those more liberal days so we'd be unlikely to see the knife-edge races and championships of recent years.

[Wallio]

One thing I do fear is that F1 will become stone age again if a budget cap is introduced.

Stone age is a realitive term. I would argue the current cars are stone age compared to the pre-1994 techno beasts, yet current cars are still faster. I'd be happy with a budget capped car so long as it finally dethroned the F2004 from all its lap records.

[pasta_maldonado]

One thing I do fear is that F1 will become stone age again if a budget cap is introduced.

Stone age is a realitive term. I would argue the current cars are stone age compared to the pre-1994 techno beasts, yet current cars are still faster. I'd be happy with a budget capped car so long as it finally dethroned the F2004 from all its lap records.

That would be a good thing. If a budget cap results in races with attrition then I'm all for it, as it will probably result in an emotional first point for HRT.

[Alianora La Canta]

Cost-cutting is a difficult one. There's no way a mandatory budget cap would work in a FIA-sanctioned sport for legal and technical reasons. So cost-cutting would have to come from some other method.

Keeping regulations stable would help (e.g. not changing the engine). Giving teams a year's notice before changing a regulation would help. Stopping restrictions of technologies would help. Making F1 more attractive to sponsors would help (including, but by no means limited to, getting more F1 on free-to-air and less on pay-per-view).

Some of these are more viable than others, and to different degrees.

[Phoenix]

But wouldn't stopping technology restrictions favour the bigger teams? They would have more resources to pursue new innovations and that would inevitably mean smaller teams would fall behind. Take a look at 1992-1993, when Williams was obliterating the opposition by means of having the resources to develop their pioneering electronic devices, while teams like Jordan, Tyrrell, Larrousse, Minardi and Scuderia Italia were left struggling badly to try and match as much as possible upper midfield teams like Lotus, Ligier and Ferrari. Only McLaren and Benetton, also well funded teams, could occasionally compete with Williams.

[Aerospeed]

Can somebody explain the "two-tier" budget cap? I know the teams didn't want the budget caps but I never fully understood them..

Also,
I have had a flash of brilliance:
Put back the gravel traps.
Why?
Although there is more money used to make the said gravel, there are more retirements, hence:
Less fuel used
Less tyres used (potentially)
Less chances of there being a mechanical failure since the car retired on the gravel
Less chances of there being write-off crashes (since the cars aren't travelling on grass or pavement, they just get stuck on the gravel)
Added bonus is that we don't get people like Vettel taking the outside of the track to overtake and have everyone go ballistic on all F1 forums. (Admit it... you were pissed!)
Also more exciting races as potentially frontrunners could all go into the gravel trap and retire from the race, getting a better chance for backmarkers to score points (not that the racing is bad, but we can always shoot for improvements...)

If this is a bad idea then by all means burn it up into pieces before Bernie gets his hands on this. I just thought I'd get everyone's opinion before I go around advertising this everywhere.

[TomWazzleshaw]

Can somebody explain the "two-tier" budget cap? I know the teams didn't want the budget caps but I never fully understood them..

Basically, teams that participate with a budget cap would have far more technical freedom with the regulations what teams that had unlimited spending had a lot of technical restrictions. As you can probably tell, it went down REALLY well with the current teams at the time

[Alianora La Canta]

But wouldn't stopping technology restrictions favour the bigger teams? They would have more resources to pursue new innovations and that would inevitably mean smaller teams would fall behind. Take a look at 1992-1993, when Williams was obliterating the opposition by means of having the resources to develop their pioneering electronic devices, while teams like Jordan, Tyrrell, Larrousse, Minardi and Scuderia Italia were left struggling badly to try and match as much as possible upper midfield teams like Lotus, Ligier and Ferrari. Only McLaren and Benetton, also well funded teams, could occasionally compete with Williams.

Regulation change costs more than regulation stability. Not only does regulation change mean money has to be spent to stay legal, but it forces everyone to look at the changes, which means the teams with a low genuius quotient but lots of money have an easier time of blindly spending their way into the right improvements. Whereas teams that can see how to improve but struggle to fund it find they lose their advantage of being able to focus on the important areas because when the regulation changes act as a huge neon sign for the teams who have money but otherwise couldn't spot an improvement area if they tried. That is what happened with the regulation changes in the mid-2000s and the grooved tyre switch in 1998 (Jordan had just come into money, hence why it could fight back then). The three junior teams, USF1 and several of the other failed teams can attribute much of their current situations to rule-changing in 2009 when they'd depended upon stability to get their teams off the ground. In 1992-1993, F1 was in a recession, where the effect of rule stability was more than eliminated by the fact there wasn't enough money to keep more than half the teams at a decent level of functioning.

Can somebody explain the "two-tier" budget cap? I know the teams didn't want the budget caps but I never fully understood them..

Basically, teams that participate with a budget cap would have far more technical freedom with the regulations what teams that had unlimited spending had a lot of technical restrictions. As you can probably tell, it went down REALLY well with the current teams at the time

Worse, the amounts Max wanted meant that you could either have technical freedom and no money to pursue it, or lots of money and only fripperies to spend it on. So there would have been no point being involved in F1 if you valued the technical side at all, and no particular incentive to agree to the budget cap. At least the non-budget cap brigade could have spent colossal amounts of money to take the sponsor market using their vastly expanded "frippery" spending. Though this would have sucked all the money away from the budget-capped teams who wouldn't have been able to afford such facilities... ...probably as well two-tier never got going.

[Phoenix]

But wouldn't stopping technology restrictions favour the bigger teams? They would have more resources to pursue new innovations and that would inevitably mean smaller teams would fall behind. Take a look at 1992-1993, when Williams was obliterating the opposition by means of having the resources to develop their pioneering electronic devices, while teams like Jordan, Tyrrell, Larrousse, Minardi and Scuderia Italia were left struggling badly to try and match as much as possible upper midfield teams like Lotus, Ligier and Ferrari. Only McLaren and Benetton, also well funded teams, could occasionally compete with Williams.

Regulation change costs more than regulation stability. Not only does regulation change mean money has to be spent to stay legal, but it forces everyone to look at the changes, which means the teams with a low genuius quotient but lots of money have an easier time of blindly spending their way into the right improvements. Whereas teams that can see how to improve but struggle to fund it find they lose their advantage of being able to focus on the important areas because when the regulation changes act as a huge neon sign for the teams who have money but otherwise couldn't spot an improvement area if they tried. That is what happened with the regulation changes in the mid-2000s and the grooved tyre switch in 1998 (Jordan had just come into money, hence why it could fight back then). The three junior teams, USF1 and several of the other failed teams can attribute much of their current situations to rule-changing in 2009 when they'd depended upon stability to get their teams off the ground. In 1992-1993, F1 was in a recession, where the effect of rule stability was more than eliminated by the fact there wasn't enough money to keep more than half the teams at a decent level of functioning.

Of course, regulation stability is important when it comes to keep costs at a minimum, but I meant to say with technology restrictions the allowance of systems that could potentially cost a lot to develop, like what active suspension was back then. I'm not talking about things such as F-ducts or double deck diffusers, which can be developed at reasonable costs and whose pursuit should, if anything, be mildly encouraged. But I fear letting technological advancements break loose and without control could potentially create something similar to what happened eventually with Group C racing. Unless, that is, customer chassis were allowed, although I, for one, would prefer to see each team build their own chassis for variety's sake.