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According to Formula 1 boss Bernie Ecclestone, the teams have agreed to a $200 million budget cap for the 2015 and beyond. While budget caps have all been given lip service, the biggest concern is governance and control of those budgets as teams could be creative in how they record expenses and revenue.

To combat that possibility, Eccelstone says the new budget cap will also have a “whistleblower” provision in it that rewards anyone with knowledge of teams that may be cheating. Ecclestone told Christian Sylt:

“The plan under consideration is to give €1 million to any whistleblower whose knowledge is proved to be accurate. We will then say to the team that the following year you will lose three of the maximum points you have scored. Then let’s see if they want to cheat.”

Apparently this reward is for anyone, not just F1 personnel, who offers valid evidence that the teams are actually cheating. For the record, you can send the check to F1B, Mr. E, because I accuse all of the teams of creative write-off’s, accounting errors in expense reporting and interest deductions. Luca Pacioli would be a bit surprised by the creative Ecclestone said:

“We have approved the budget cap. It is going to happen. Everyone agreed to $200 million. What hasn’t been agreed is what is in the $200 million. Unless we include everything, I am sure people will find ways around it. It’s going to be difficult.”

It’s a tough call because unless you are plowing deep into the balance sheet of every team, it could be very difficult to know exactly how much they are spending. Not implying malfeasance but each team reports their income and expenses differently within certain guidelines.

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

    What hasn’t been said is what this $200 million (or whatever it happens to be in Euros) contains. Let’s start with the following premise: Anything that can be tied directly to Formula 1, regardless of where they put it. Is that sufficient? If or if not, why? What would this premise lead to?

    • MIE

      How much are Ferrari and Mecedes allowed to spend on Power Unit development?

      What about Renault or Honda?

      • Rapierman

        I’m not sure that the FIA would want to specify the limits of each individual item

  • Tom Firth

    This is genius , No I haven’t gone quite mad yet.

    Think about it if you lose your three highest scores by being caught. Those three double point races that Bernie wants will become completely irrelevant as those three will be the highest scores inevitably due to being worth more.

    Therefore it would actually be closer to a normal season – a singular race points as the top 3 teams would use the clause against each other because they would be the only ones that would likely spend north of the cap easily anyway.

    Course I still don’t actually think any kind of budget cap would work at all but will leave it at that.

  • KevinW

    If the top teams now spend between $700MM and $1B the budget of $200MM represents a cut of 60- 80% . That means slashed staffing, vendor purchases, supporting contracts, et al. The potential financial impact will be between $3 and 10 billion to the industry of F1. Since most operations are in the UK, that concentration of loss is going to be felt hardest there. I wonder whether the law of unintended consequences will come into play in this, resulting in the loss of suppliers, interest in F1 as a career for engineering talent, and loss of the sports luster as a whole. I’m not sure this has all been thought out well, from governance to economic impact.

    • Tom Firth

      Yes but “officially” Red Bull had a budget of $270 million in 2013. I say officially … The true cost is up for alot of debate however.

      I do agree about the law of unintended circumstances on the economic impact it will have on F1’s infrastructure. It’s worrying certainly.

  • gsprings

    It makes me think of a mafia movie when I think of some team getting caught,I imagine the team sitting around a big table, and the big cheese saying, I wonder who among us talked?

    • mini696

      The whistleblower is the guy with the new yacht.

      • MIE

        Mike Gascoyne?

        • Tom Firth

          nah can’t be Mike. He “is floating around an ocean in a rubber raft” ;-)

  • gsprings

    I can imagine the amount of people who know what a team spends, inside these teams will shrink,if this whistleblower things comes to pass

  • peterriva

    If they remove development of engines from that amount (which would be wise as there is a disproportionate amount on the developer as opposed to the 3rd party “buyer”), the issue becomes one of R&D budgets and implementation budgets. If they restrict the cap to implementation budgets (how many noses of Maldonado’s car do they make, etc.), I think this could work.
    R&D – How can Williams, for example, have a cap on R&D when 1/2 their corporate R&D is spin-off technology sold to Audi and others? And McLaren, and Cosworth, Microsoft, etc.
    But F1 car implementation (which includes testing and design other than engine) is quantifiable apart from R&D.

  • I am not too sure anyone would want to risk the the knowledge that they were the one’s who outed a team. Think of the witch hunt that would in sue when a team was caught. I would assume the bond between the team at Red Bull at red bull for example is a close-nit one. Think of the betrayal that one might have to deal with and the scarlet letter one would have to wear around their neck? Surly there must be a more proactive way to ensure no deviation on the budget cap than asking a team member to become a whistle blower?

    • Rapierman

      In the USA, such whistleblowers are afforded the protection of anonymity.

  • gsprings

    If you are employed by one of these teams, and make 200.000 dollars a year, would it even be worth it in the long run to snitch,than there is the prospect that your identity could be revealed,it might not be known by the press and us fans,but I am sure inside of f1 it would get around who talked, and no one likes a snitch,so the snitch might find it hard to get on with another f1 team with a reputation of turning against his team,or ratting on his team