As AUTOSPORT said and we discussed earlier this week, Formula 1 has tabled the notion of instituting a cost cap for teams participating in the series. This has been met with some concern from Force India and Sauber as the magazine revealed today.

The challenge for any cost cap was always going to be the policing or management of controlling those costs and having complete confidence that no team was gaming the system. Without comprehensive access to a team P&L, it would be difficult to manage for the FIA. AUTOSPORT quotes Sauber team boss Monisha Kaltenborn as saying:

“As a smaller team, I fail to understand why we are going this way when every sport has to be responsible with the way you handle and work your business,” Kaltenborn said.

“I think those times have long gone where you say, ‘if you don’t have the money, don’t do it.’

“The costs we are reaching here, nobody can understand. So we have to be responsible, because in the economic times we have it is important to show a responsible way of doing business.”

Color me reactionary here but I am getting a little dog-eared over this phrase, “important to show a responsible way of doing business”. I hear this refrain quite a lot lately. It is important to show that we are doing business more (insert current cause). It is important to show we are this or that.

The last time I checked, the only thing you really should be “showing” is a competitive car for your sponsors in order to keep their interests and the interests of fans engaged. These days it seems that simply saying that we are or will is as good as being or doing and to be honest, I find that line of thinking a bit strange.

Showing whom? I’ve never thought less of Sauber because they couldn’t spend the same as Ferrari or McLaren. I’ve never thought less of the sport because there are smaller teams with smaller budgets. Have you? Does this give Formula 1 a black mark for improper business acumen? Some companies have more resources than others, that happens. That has always happened.

What we do see is a technology level that has been ushered in by the bigger teams that the little teams cannot afford. Technology is very expensive and to compete on this level, one has to have the resources to afford the kinds of technology it takes to be competitive.

Having said that, regulations could be used to curtail costs and Force India’s Bob Fernley agrees but suggests that both regulations and cost caps would be optimum:

“I think that we have to continuously put pressure on for it to happen because as Force India has proved, you don’t have to keep spending to put on a good show,” said Fernley.

“You need both,” he explained. “I think you need regulation to help, but you also need cost control. And I don’t think we will change our opinion on that because we have to get the teams viable for the sustainability of the sport.”

So it is important to show a sustainable way of doing business? In the end, you can produce good racing at a lower cost. Karting would be an example of that but the struggle between privateers and manufacturers has always been present in F1. The Have’s and the Have Yachts.

The notion of a cost cap was always going to be difficult to control but perhaps the regulations could be used to keep costs lower. “It is important to show an entertaining way of running a series”. If companies and teams would spend less time trying to “show” some aspect they feel people will judge them by and more time making great race cars, maybe they would have more money to spend.

I am all for being good stewards of the resources you have and the sport balancing their economic model but Sauber isn’t inspiring me by showing me how responsible they are, they inspire me by punching above their weight and finding drivers who become great in the crucible of F1. I love Sauber and it’s eternal privateer character. There is such a history there to sell to potential sponsors and that should be the main initiative instead of limiting what Ferrari can spend. When Monisha says she wishes the teams who threaten to leave F1 over cost caps would do so, she does understand she’d lose her engine right? Does anyone have Craig Pollock’s number at P.U.R.E or Cosworth’s number?

Racing, by its very nature, is not about finding equality, parity justice or limits. It’s about winning. Finding ways for the sport to thrive is certainly something that should be paramount but as for “showing” the world how responsible you are or sustainable you are or thrifty you are is not really a component of racing. Getting your backside handed to you for making a less competitive car is…just ask Ferrari.

An F1 fan since 1972, NC has spent over 25 years in the technology industry focusing on technology integration, AV systems integration, digital media strategies, technology planning, consulting, speaking, presenting, sales, content strategy, marketing and brand building.
  • Rapierman

    Where’s Prince Machiavelli when you need him. Hitting a big boy or two into a concussion will straighten up the rest. ;-)

  • jiji the cat

    we all know it will be near impossible to cap costs. If you cant afford it go race gp2.

  • Tom Firth

    GP2 delayed its new car for a couple of seasons due to Costs spiralling and too little sponsors approaching the series besides those the driver themselves bring to the car.

    With F1 having constant talks over cost saving , no sponsor for mclaren still, got to admit i’m starting to wonder wether any of this talk would be occurring if tobacco advertising wasn’t banned. Not advocating its return, just wondering if that Is a major contributing factor.

    • jiji the cat

      well Force India just announced Gatorade as a partner. Looks like brands, partners,(whether technical or not) and the money is out there, just have to go find it.

  • Tom Firth

    If someone doesn’t mind. I’m quite curious about the whole idea of costs in f1 and have a couple of questions ?

    1) If the FIA’s intention which a cost cap did imply was to save money and make f1 more accessible to teams. Why does the teams entrant fee for the FIA formula one world championship cost (per point scored) increase year on year ? To me that’s sort of counterproductive.

    The second part i’m a little curious about.

    Much has being said about CVC’s position as f1 owner in f1 media and the idea of the company taking too much money out of the sport , the process being described as “asset stripping of f1”

    I understand that concept in say a technology company that a rival may acquire a company and stripped the core IP and other useful assets, perhaps geographic locations etc

    However How does that work in f1 ? Because I don’t understand besides the core product , video production and hospitality what exists to asset strip ?

    hope this doesn’t stray too far from the article. Apologies if it does

    • These are merely impressions, not definitives:

      -I don’t think FIA is trying to save the teams money, rather equalize the playing field for entertainment and thus viewing dollars. It doesn’t care about any one small team, as long as the field is full, while filling its coffers w/ a larger deal from CVC and higher entrant/points fees (2013 I think?)

      -CVC is not asset stripping the sport as I see it; the complaint I believe is revenue sharing. Like you, I don’t see F1 having assets and commodities that individually are worth more than the sum; it’s that the gross income from broadcast/venues is distributed unfairly, in many’s view. I believe a further sticking point, incongruously but logically, is that CVC neglects certain avenues for further profit i.e.; internet content which monetizes advertisement and promotes sponsorship, and a centralized merchandising platform.

  • Sadly for Sauber, it’s not the governing body’s responsibility to equalize the field, it’s the individual team’s. I can see Ms. Kaltenborn’s ultimate point, the sport’s economic health should be monitored by FIA, but as the owners seem to cashflow, her stance on responsible business is moot. Whether distribution could be more equitably handled is a different matter…

    It’s up to the teams to determine whether competing makes sense financially; whether through income or exposure, they garner benefit from F1. If a team performs commensurate/below it’s meager budget and deems that performance uanacceptable, then it either must find more resources, or contemplate moving out. Darwinistic capitalism and competition can be ugly, but it’s what drives sport IMO.

    Like you, I feel regulation and cost caps are mere token measures to advertise F1’s “responsible business practices,” an unnecessary kow-towing to a perceived public perception F1 want to promote. I agree, show the sport as competitive, yet-sporting, w/ teams taking responsibility for their staffs’ performance and behavior rather than blaming/expecting powers-at-be to improve their lot, and I feel perception and perhaps income will grow.

    I’d dearly miss Sauber, the closest to a favorite team for me. Like you, I appreciate the David’s beating up on the Goliath’s. I’d rather keep fond memories of Sauber in this vein, than watch its crappy drivers struggle around a track in a wheelbarrow, or see the field closed up because an arbitrary cost cap hampers the competitive frontrunners from exploiting the sporting/technical challenges given them. Might as well spec the series.