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The 2014 regulation changes may or may not be your cup of tea but one thing for sure is…they have been darned expensive. The new power unit regulations saw manufacturers and teams spend small fortunes on the systems and while any change in regulations prompts a raft of expenses, this year’s changes were massive.

This all came at a time when Formula 1 was very concerned about the cost to participate in the series and many smaller teams on the ropes an in the red which led to some to the demise of HRT and USF1. The 2008 financial crunch also led to the departure of Toyota, Honda and BMW.

To these ends, F1 has been kicking around the idea of a cost cap for the teams but they’ve been unclear on how best to institute this cap with minimal intrusion into a teams balance sheets. After many discussions over many months, FIA president Jean Todt has revealed that there will no longer be a cost cap. The BBC’s Andrew Benson has the call:

“if the commercial rights holder [Bernie Ecclestone] and six teams are against it”.

“It’s mathematics. In this case, no more cost cap.”

Under F1’s new governance structure, the six teams in the strategy group – Ferrari, Red Bull, Mercedes, McLaren, Williams and Lotus – have one vote each, while Ecclestone and Todt have six each. Votes pass by a simple majority.

“In a way, I am disappointed because it may be more difficult to achieve the reduction which I feel is needed,” said Todt.

“But everyone says we are all in favour of reducing the cost, and through sporting regulations.”

Benson rightfully points out that the new Strategy Group is a creation to prevent gridlock in F1 under a unanimous vote format. To be honest, F1 has really pinned a lot of power on this group and deferred several major decisions to this working body. Cost caps, which was previously the main cause of the now-defunct Formula One Teams Association (FOTA).

Benson goes on to discuss FOTA and their Resource Restriction Agreement but in short, the group did well until it was time to talk team money and that’s when the wheels fell off. Makes one wonder if the Strategy Group will find it easy to simply make rule changes that will curtail costs because the 2014 regulations certainly were no model of cost reduction efficiency.

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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.
  • Mike Steck

    Don’t get me wrong, i love the technological advances. With Mark’s wife being able to quickly park her diesel paddle-shifting suv, we all are for that, who wouldn’t be? In fact, perhaps unfettered F1 costs will spill over into advances of us all, and the black hole of F1 costs will begin to spill back into the world economy? Parking obviously faster, consumer purchasing will increase. Paddle-shifting will break more women’s nails and cause men to finally succumb to manicure appointments to have callus reduction procedures. All money back into the economy. And what about the advanced electrical systems to operate all this technology? I can well imagine that consumer cars will begin to come with lightening bolt decals and dire warnings of quick death if you touch the car anywhere…so into the dealer where a well trained, silver rubber suited phalanx of engineers descend to repair your ERS at $787 per hour. All money going back into the economy. Ultimately a cost-benefit to be had by lifting the cost cap and spending those newly minted bills with Ben Franklin printed….wait…not Ben…round glasses, but more hair? Oh, I see.
    In Bernie we Trust.

  • An ideal compromise solution for the F1 world might be for FOM to institute a working group with an eye to reducing the amount of money used to produce a cost cap document.