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Carey confident that 2021 rules will not lead to 2020 spending war

NEWS STORY
30/10/2019

From 2021, the teams will face a spending limit of $175m, which, though well over the current spending of some teams is around 100% less than what the bigger teams are spending.

For some time there have been fears that once the 2021 rules are confirmed - tomorrow will see them presented to the FIA's World Motor Sport Council for ratification - the bigger teams will begin spending in anticipation of the changes due the following year when their budgets will be forensically monitored.

Speaking to investors in a conference call today, F1 boss, Chase Carey insisted he is confident that the big teams will not seek to take advantage.

"There's been noise around it," he admitted, "but realistically these teams are rebuilding the car every year no matter what.

"This is a transition," he continued, "and we feel it's important to move forward with the transition. Some of the arguments that were put were arguments to try to defer the implementation as opposed to issues about what are the consequences of the transition.

"What we are really doing is transitioning to a long-term structure that's healthier for the business," he added, "healthier for the sport on the track, healthier for the teams in it.

"The transition through to that next year, they're going to do what they do every year when they go in and rebuild the car."

Ahead of the budget cap in 2021, next year will see a cost cap introduced, effectively a litmus test of what follows, the teams subject to monitoring but without the strict regulating of 2021.

"We have gone through a very extensive process to try and establish the principles for determining the costs, what's in it, what's covered," said Carey. "We'll have independent parties so it needs to be independently verified.

"What we're going to do is use 2020 as a sort of a dry run, to hopefully shake out whatever the issues are, so teams can understand how things are accounted for. We'll put the rules into practice, it'll be independently run, there will be procedures for appeals."

Asked what the penalty might be if teams exceed the limit, Carey was giving little away. "Clearly to make this effective it needs to have consequences and penalties," he admitted. "Those penalties are not pre-defined, but they will be significant."

However, as recently as last week, Christian Horner was saying that the timing is wrong.

"I think we've missed a bit of an opportunity," he said, "if you look at it, we have the budget cap, which in principle I think is pretty much agreed. It's painful for the bigger teams and obviously will prevent the bigger teams from spending beyond that 175 million cap.

"I think with hindsight we would have been better bringing the cap in first for '21 and then taking more time to develop these regulations and evolve them and bring them in in time for '22, so that any development that the big teams undertake would be under the umbrella of the cap.

"I think it's impossible to bring that cap forward to 2020 because you will never achieve agreement on it," he admitted. "So therefore, my feeling is that a budget cap is ultimately a sensible thing for Formula 1, but the interim period of 2020 with the current regulations we have as teams gear up for 2021 with unrestricted spend makes it a very expensive year and I think it will create a broader gap between the teams going into 2021 as those teams with more resource will simply spend more time in the research and development phase before the cars hit the track at the beginning of '21.

"An opportunity has perhaps been lost to have that process more controlled under the cap and delay these regulations and evolve them, because there is some great stuff going on, but the car and the concept looks very underdeveloped at the moment and I think if another 12 months was taken to develop that concept and bring in something that works and perhaps addresses some of the other issues like weight and so on, I think would have been perhaps a more beneficial approach."

"I think in Formula 1 we are very actionistic," agreed Toto Wolff. "Things need to be done immediately and everything is so bad and we can't continue without deploying a more strategic long-term vision.

"There are arguments that said 'well, why don't we put the cost cap forward, why don't we implement it one year earlier and then start with the technical and sporting regulations in 2021', but, as Christian said, I think they are not very mature, the regulations will need some more input around the cost cap.

"The single most important factor is the auditing and policing process and none of that is in place for 2020 and obviously if you can't police it in the right way it makes no sense to implement the rule. In general it's a situation that we need to see a ramp-up in resource, in the way things are being policed, on the financial side and on the technical side. This is something that we need to address and therefore I think that the idea of pushing it one year out looks logical and strategically well thought through, but it didn't gain the traction and didn't trigger enough appetite with the ones that decide."

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READERS COMMENTS

 

1. Posted by Oldgit, 31/10/2019 13:43

"Strange to have an article on financing with such a basic arithmetic error in the first paragraph. Did the author really mean that some of the teams can compete by spending $0 for a season ? (If the big teams are spending $350 million and you spend 100% less then you are spending $0)

I agree with Christian Horner, some teams are going to be spending 100s of millions more next year (even more than the reputed current 400-500 million) to steal a march on the other teams for 2021 and subsequent years."

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