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As we head into this weekend’s Chinese Grand Prix, the behind-the-scene issues of Formula One’s future aspirations and viability are always a point of order for team owners and bosses. AUTOSPORT rightfully takes time to ask the pointed questions about these issues even though they are typically not the big traffic-generating stories fans click on. I appreciate that about the magazine because the financial viability is a great importance even if the fans are not aware of it in any tangible way.

You’ll recall that cost-cutting is a topic on the table and many teams feel Red Bull have gone too far with their expenditure in F1. There was a Resource Restriction Agreement (RRA) that the teams signed back when all of them belonged to the Formula One Teams Association (FOTA) and it seems that Red Bull’s Christian Horner feels this isn’t the way forward. When asked, he said:

“We have been talking about a budget cap for about five years now. The hardest thing in the world is to police what a company spends,” Horner told the press in Malaysia.

“A resource restriction is an agreement that is fundamentally flawed because of the structures of different companies: Ferrari operates in a completely different way to McLaren or Mercedes or Red Bull.

“The best way to control costs is through stable regulations.

“For example the biggest impact on Sauber’s costs next year will be a change of regulations with the drive train, so really the most sensible way to contain costs are stable, clear and concise regulations – both sporting and technical.”

I believe he is correct in that stable regulations are important to understand the expenses of an F1 team and future potential expenses. If a business can reliably predict its expense levels over a period of time, such as 3-5 years, it can make more meaningful cuts and savings in certain key areas. It’s always easier to save money than make money through sales and sponsor engagements etc. If the regulations are apt to change at a moments notice, this impacts the anticipated operating capital a team needs to have at the ready as well as the continued R&D for development cash for new kit every year.

If, for the sake of argument, you could freeze the regulation for chunks of time such as 3 years, then my question to Christian would be this:

With all the money saved due to consistent regulations in the form of mangeable innovation periods (such as 3-year allotments) would you pocket that cash or spend it on something else? I suspect most teams would spend it on…say…multi-million dollar simulators or other things like advanced aerodynamic modeling systems.

The argument has always been that teams will spend what they spend until they don’t want to spend any more. If economic impacts force them to tighten (BMW, Honda, Toyota), then they will stop. Ferrari, McLaren and Williams are an exception to that rule.  Will Red Bull be an exception as well?

Christian would know far better than I what needs to be done and what would be better for F1 but perhaps a RRA would be meaningful to determine what can be spent on particular types of technologies such as windtunnels or CFD systems or personnel? It’s a long-winding rabbit trail for sure but I’m not quite as optimistic that it will be ironed out so much as noodled around until the economy recovers and renders it a moot point.

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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.
  • Steven

    As much as Im looking forward to see what engineers come up with for next year, I have to agree with Horner(frist and only time LOL). Changing the regulations was a mistake IMO, the new engines are going to be the biggest cost to the teams. Not only that but racing has been so close the last couple of seasons is because stable regulations. WHen the regulations stay the same the smaller teams catchup. In the past we could blame the FIA with messing with the regs, but this time it ws driven by the teams. That puzzles me, why would the teams want to spend MORE?

  • JasonI

    The cost savings of stable rules comes from smaller engineering and testing staffs. Very few team members want that.

  • KPL

    How about allowing teams to sell bare chassis, just the tub, to other teams. This could potentially reduce costs on the sell side as well as the purchaser. The purchaser could still be a constructor as they would need to design their own body work, suspension, find a engine supplier, buy or build their own transmission, etc.