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Liberty proposes $150m budget cap

NEWS STORY
06/04/2018

Following days, weeks, months of speculation, this morning F1's owners, Liberty Media, laid out its blueprint for the future of the sport.

Rather than being a meeting, representatives of all ten teams were present as Liberty offered its proposals, the presentation lasting around 75 minutes. At the end of the presentation, the team representatives were each handed a sheet of document which contained further details of the proposals.

According to Auto Motor und Sport, Liberty is intending a $150m budget cap but this would not include driver salaries or key executives or marketing budget.

The cap would be introduced in two stages for the benefit of the bigger teams which would clearly have to lay-off staff.

Liberty claims the redistribution of the prize pot will leave the teams that much better off that even the smallest will only need to raise around $30m in sponsorship in order to reach the $150m limit.

Ferrari would continue to receive a special historic bonus but this would be reduced from $100m to $50m, while all the engine manufacturers would receive a bonus understood to be in the region of $10m.

While the teams, most notably Ferrari and Mercedes, have yet to react, it is understood that the proposals, which have the full support of the FIA, are not up for discussion but rather 'take it or leave (it)'.

Interestingly, in the moments following the presentation, Toto Wolff and Niki Lauda were seen in earnest discussion with Maurizio Arrivabene in the Mercedes hospitality unit. Oh to be a fly...

In terms of the engine formula, with the manufacturers offering no alternatives it would appear that Liberty will stick to its initial proposal which saw the standardisation of more parts, an increased rev limit, a relaxation of the fuel limit rules, a stronger MGU-K and the dropping of the MGU-H.

"Formula 1 is a sport with a rich history," said F1 boss Chase Carey in a subsequent statement. "We want to preserve, protect and enhance that history by unleashing F1's potential, by putting our fans at the heart of a more competitive and more exciting sport.

"We are driven by one desire: to create the world's leading sporting brand. Fan- centred, commercially successful, profitable for our teams, and with technological innovation at its heart.”

The proposals break down as follows:

Power units

The PU must be cheaper, simpler, louder, have more power and reduce the necessity of grid penalties.

It must remain road relevant, hybrid and allow manufacturers to build unique and original PU.

New PU rules must be attractive for new entrants and Customer teams must have access to equivalent performance.

Costs

We believe how you spend the money must be more decisive and important than how much money you spend.

While there will be some standardised elements, car differentiation must remain a core value

Implement a cost cap that maintains Formula 1 position as the pinnacle of motorsport with a state-of-the-art technology.

Revenues

The new revenue distribution criteria must be more balanced, based on meritocracy of the current performance and reward success for the teams and the Commercial Rights Holder.

F1s unique, historical franchise and value must and will still be recognised.

Revenue support to both cars and engine suppliers.

Sporting and technical rules & regulations

We must make cars more raceable to increase overtaking opportunities.

Engineering technology must remain a cornerstone but driver's skill must be the predominant factor in the performance of the car.

The cars must and will remain different from each other and maintain performance differentiators like aerodynamics, suspensions and PU performance. However, we believe areas not relevant to fans need to be standardised.

Governance

A simple and streamline structure between the teams, the FIA and Formula 1.

Check out our Friday gallery from Bahrain, here.

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READERS COMMENTS

 

1. Posted by Uffen, 10/04/2018 23:16

"Interestedparty, the FIA are letting Liberty do the heavy lifting so they can sit back and avoid blame when the excrement hits the fan. You're right, the rules are the FIA's responsibility. Liberty will attempt to make 2021 and subsequent years nice and rosy for everyone (almost everyone) and the FIA will rubber stamp whatever they negotiate. "

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2. Posted by Interestedparty, 09/04/2018 8:39

"How does this strategy from Liberty work in relation to the legal segregation of the roles and interests of the FIA as regulator and Liberty as the commercial rights holder?? Surely the future Technical regulations should be fixed by the FIA in consultation with he teams without the involvement of Liberty? !!!!
Remuneration for teams is an discussion between them and Liberty - but I din't see the FIA involved at all in this - correctly. So is it correct that Liberty has any right to intervene in the regulatory side of the sport ?

"

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3. Posted by jaydub, 07/04/2018 1:41

"I enjoyed the comment from Mom's best Friend - most informative -
However - lets start with the easy stuff - like being ble to watch this high end sport - practice, qualifying and racing. I see for this weekend we have one practice session prerecorded - these sessions must be broadcast live otherwise its meaningless - all these sessions are part of the race - I see we have qualifying live - remarkable - so where is the pre-race grid 30 minutes to start - essential to discover who and where everyone is. ah and then the race - Liberty Media don't understand that this is a sporting event not entertainment. It cannot be viewed cut up into multiple bits with irrelevant advertising - or voiewd split screen with no sound - For which there is a simple solution - PLEASE - set up a PAY TO WATCH STREAMING for the millions of real sporting fans - Frankly ESPN is useless - NBC was remarkably good with excellent coverage, well informed and well-spoken commentary even though this capable team was rarely at the venue. They did however have all the info feeds possible and stayed right on top of every action. LIBERTY MEDIA take note - you are missing a very large and reliable source of income so that we can watch advert free. Comments please - am I right?
And notice I havent got started with the Liberty Media proposals - I suggest waiting till the end of this year when they have closely observed reality before trying to jam regulations down the teams throats - unless they are aiming to crush this sport into meaningless or non existence."

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4. Posted by Your Mom's Best Friend, 06/04/2018 23:26

"Well then, so it's pretty much as I and many others expected, and assuming that it all goes through - the tangible end result won't look appreciably different from what we see now.

Budget cap ! Yes !! FINALLY !!! And it's only been, what, like almost fifteen years since a cost-cap was first mooted ? Better late than never I guess.

But hold on; a proposal for a budget cap - that doesn't include driver or "key executive" salaries, or marketing spend... Umm... that's not really a budget cap at all then is it ? So the question is begged: When is a budget non-cap actually a budget cap ? When the Ministry of Truth says it is, that's when ! And all these years here I was thinking that two plus two equals four. Silly me. And what the hell is meant, exactly, by "marketing" anyway ? Last I checked (and somebody please correct me if I'm wrong), a businesses marketing expenses are 100% tax deductible, so I really don't understand how that's supposed to square up. Regardless, what is the marketing cost to a team like Red Bull, a team that exists solely as high-speed billboards for garbage sugar-water, versus a team like, say Williams. Who presumably exist at this point to sell, what (?), carbon-ceramic flywheels to municipal bus manufacturers ? Martini liquor to Russians ?

There are more contradictions than I can count in what amounts to the rest of Liberty's proposals.

It will be painful, but go back and read the quotes from Chase Carey again. When it's not unambiguous, naked PR BS, any other time that he opens his mouth, nonsense comes out. I mean that literally. Literal nonsense. Study his grammar. Half of the time, this guy doesn't seem to know what words actually mean, and/or how to use them properly, in sequence.

It's really quite astonishing, but I guess that's what an expensive, exclusive education will get you. I don't know.

What I really don't understand is HOW and WHY does Liberty have any say over any of this ? I thought that the F.i.A. was supposed to make the rules and govern the sport. Don't get me wrong, I'm not suggesting that the F.i.A. wouldn't make a total hash of it, of course they would. Or rather, they have, by allowing the present situation to come about. What I mean is, I thought that FOM's remit was administering the commercial side of the "entertainment package" period. When did they get legal authority and responsibility for more than that ? For "rules" and "power units" ?

From where I sit, FOM as it is presently constituted (and for that matter, as it was previously constituted) should not exist.

Racing circuits, and nation-states for that matter, should not have to pay FOM for hosting a Grand Prix. They should get paid. More precisely, the wealth should be more evenly distributed. Sell tickets at reasonable cost, not sell-your-children prices. Split the take equitably. Give the circuits a portion of the TV income for that particular race that weekend. In other words, Spa gets a piece from the Spa broadcast, Monza, the Monza broadcast. Etcetera. If a race fails to get sufficient attendance for it to be profitable FOR ALL PARTICIPANTS, then we can talk about dropping it.

And for all of you Silverstone lovers, I feel your pain. Truly. But if you're British, and have to get righteous about it, consider this: Lewis Hamilton ALONE could put up the costs of running that race for at least a few more years, and it wouldn't dent his "lifestyle" one bit, such is the amount of cash that he's managed to chisel out for himself. Where's your patriotism now ? I'm not suggesting that Hamilton should pay for the British GP. But on the same token, neither should British taxpayers. Especially those that (sacrilege!) have no interest in power-unit racing. Nor should the taxpayers of any other country, for whatever respective country hosts a Grand Prix. It's just absurd. Absolutely ridiculous.

The income generated by the sport should be divided into three parts, the splits being something like: 60/35/5. The largest percentage subdivided equally amongst the teams, this income should cover the majority of all of their yearly operating costs (sponsorship, and Canadian and Russian pay-drivers can cover the rest, if necessary). The second portion reserved for the points scored in the races, and obviously more points would equal some more money for whoever scores (this would be what I believe is colloquially known as "profit"). The third and smallest portion reserved for F.i.A.'s administrative costs, and their quaint, annual "let's repair the potholes in Provance'" projects. Or, even better perhaps, we could have a four-way split: 55/30/10/5. That 10% being set aside into some kind of interest-bearing accounts that could be used (in future) for the acceptance of new entrants, so that any new team(s) who wish join wouldn't put a dent straightaway into any of the teams income who are already participating. And if no new teams want to join right away, fine. Some of that dosh could be used by F.i.A. to repair the potholes at Silverstone, or Imola. Or wherever.

Simple. And sustainable.

No more arcane, multi-column grids determining who gets what share of the loot, two years after the fact. No more "bonuses" for whichever teams are most bribable in that particular period's Concorde. Definitely no bonuses, zero, for multi-national car manufacturers who are already worth multi-billions. And no more "Thank You for Gracing us with Your Presence, Ferrari" bonus. That shit has to go, period. But most of all: NO NEED anymore for greedy, self-important lampreys and leeches either singular (Ecclestone), or plural (CVC, Liberty), hoovering and suctioning every dollar, euro and pound that isn't nailed down. Or half (or more) of the value out of the sport, if one prefers.

Notice I haven't said a word about technical matters. You know why ? Because it doesn't take a Ross Brawn to figure it out. Everyone who reads PITPASS at least, should have some clue. Get rid of most (not all) topside aero. Bring back ground-effect IN CONJUNCTION WITH active suspension. The majority of the problems - solved. If they must keep these god-awful motors then fine, BUT increase the fuel-flow and rev limits. Which is about the ONLY THING Liberty says which makes sense, if they even actually say it. Anyway, if they did this, then kers or ers, mug-k, h, xyz or whatever they're calling them now could go where it belongs: in the recycle bin. Or send it over to WEC, I don't really care. Either way F1 keeps those ever so important green credentials.

And again: The majority of the (racing) problems are solved.

Lengthy riposte over."

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5. Posted by Rhaycen, 06/04/2018 18:41

"If you put a header above the power unit part of their cliff-notes that says: "The 2018 F1 engine rules."

I think I would believe you, those engines notes pretty much describe what I've been hearing the past 10 years.

"

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6. Posted by Rock Doc, 06/04/2018 17:48

"This should be interesting, let's see who blinks first. "

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7. Posted by Uffen, 06/04/2018 17:40

"The real issue is: how will it be enforced?"

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8. Posted by ryanhellyer, 06/04/2018 15:37

"I like the "take it or leave it" bit! Those nutbars have proven themselves useless to negotiate with."

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9. Posted by GrahamG, 06/04/2018 14:58

"Why this preoccupation with noise - if there's no-one listening (or watching) is there actually any sound?
Just a heap of aspirations without any real proposals for "how" other than to make F1 into a show rather than a sport
"

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10. Posted by nonickname, 06/04/2018 13:00

"Sorry Sammy, Stroll pays the team budget,not vice versa."

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11. Posted by Sammy, 06/04/2018 12:48

"And after all these changes, what do they do when Mercedes is dominant and the top teams are the only ones able to afford the top drivers. While the midfield still have pay drivers and the likes of Stroll? They are not realistic if they believe this will bring race wins from Force India one week and Toro Rosso the next..."

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12. Posted by Ro, 06/04/2018 12:19

"Let me ask a very simple question : What the hell has the FIA to do with Budget caps? They are more likely to decide on public road safety, nothing about motor racing safety.....Its not safe to race!. They meddle, they change, they ruin."

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13. Posted by Simon in Adelaide, 06/04/2018 11:25

"Trouble is, there is a direct correlation between Planet Paddock ego and/or self-interest and money and, even though there is a distinct possibility that these proposals will improve 'the show' I'm not sure the 'top end' are prepared to relinquish their financial advantage."

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