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Just Numbers in my Magic Square


Benjamin Disraeli is frequently credited as the first to say that, "There are three kinds of lies; lies, damned lies, and statistics." Mark Twain added to this view with his equally sharp barb being; "statistics is the art of never having to say you're wrong."

The only reason each uses statistics as a touch-point for evil is that 19th century tax law was, to say the least, primitive, and the "Big Four" accounting firms that have made an entire industry appear out of thin air to the benefit of no one other than themselves did not yet exist.

Should Benjamin, or Mark elect to reframe their sound-bites today I proffer that, "Lies, damn lies, and corporate tax accounting", would bless their new rendition with profundity. For it is not a world, not a solar system, but an entire universe of alternate reality whereby not only can two, plus two, equal whatever number one dreams of, but you can respectfully prove, beyond taxable doubt, that two does not equal two. Indeed for the bold within the Big Four, proving two is an invalid number and as such un-taxable, is entirely within a fine day's work.

Which brings us neatly to our delightful cast of pantomime villains currently acting out the "Cost Caps Cost Lives" drama within Formula One.

Oh dearest of readers, this is shaping up to be a classic. I can only imagine that on the odd morning when his bank balance does not bring a smile to his face, Bernie eases from his slumber, looks at the latest release from the financial, ah, "geniuses" at the FIA forensic accounting department, and promptly needs to be rescued from convolutions of laughter on his finely hand finished kitchen floor.

Those of you born into the simpler Disco-times of the 1980's or earlier, like, wow, when you didn't make mix-tapes for the car, because cars only had radios in them (you know who you are...) then you will remember the delights of a simple puzzle frequently called a Magic Square, a Gem Puzzle, or rather more dryly the 15 Puzzle.

Originating as a mathematical concept in 1879, it was first realised as a wooden sliding puzzle by Noyes Palmer Chapman a New York Post Master in Canastota in 1874. Zip forward to the 1970's and 1980's and this chipper-chap was more usually realised as a square of dubious-quality plastic, a touch larger than the palm of your hand, with space within for sixteen small tiles, arranged, it being a square after all, in a four by four matrix. Except! The cunning plan was the designers removed one of the tiles, leaving one with fifteen tiles, in the space of sixteen... thereby allowing for the endless high-jinks of sliding those chipper rascals into numeric orders other than one to fifteen. Ah! The hours of joy it gave us sweet innocent children before Candy Crush, Call of Duty, and Gran Turismo went all digital on our butts!

Hence the cunning display of jungle intellect that was the ability of your average seven-year-old to slide jumbled numbers back into the socially acceptable order of one to fifteen in increments of one, that is most often considered a sign of basic numeric literacy.

Accept dear reader, that just as the Formula One Piranha Club, aka Paddock, is not an utterly fair, reasoned, and loving place offering quiet evening hugs of moral support, so it was with the Magic Square. One of the first joys for the jungle-wise was to remove, say, the "3" tile, and add either a "6" or a "9" tile. Then ask your brainiac class mates to solve it in under a minute... Ah the simple joys! (For the slower out there, that's because "6", and "9" can look very similar hence in a sliding Magic Square easy to confuse...)

Next up was the discovery that differing magic squares were fractionally differing sizes. So you'd swap any tile between two sets and... The one with the out-sized tile would now jam, and not move, while the one with the small tile would now explode, spilling tiles all over the floor!

Ah, sides were splitting from Plymouth to Clydeside with that one... Once these merry japes were exhausted the final chuckle was to re-order the jumbled start point of the tiles as, due to the wonders of group theory, certain start positions could not be solved. Your, by now somewhat testy classmates could slide away all day. The only way to solve a Magic Square doctored in this manner is to pull out the tiles, re-order them correctly, and then jumble them without being naughty.

Magic Squares could lead to many a joyful playground civil war for the unsuspecting.

"Enough deranged scribe!" I hear you cry, dear, exhausted reader. Not to worry, I hear you...

Let me provide some words to hold lightly front of mind as we proceed; FIA; statistics; forensic accounting; magic squares; gullible folk; and, smart bunnies. Now, between corporate tax laws that bend the laws of physics, make the Pope cry, and generally turn innocent accountants into either alcoholics, mad axmen, or worse case, alcoholic mad axmen, and the sleight of hand that is confusing your unwitting audience with a skilfully manipulated magic square... one can, as the old teaching aid so amusingly noted... have "Fun with Numbers."

Not just any old fun, but civil war in the playground, I'm telling your mum, taking my bat and ball home fun. The sort where you watch all those not in on the secret proceed to rip one another into very small pieces of lamentable babbling incoherent blubber.

Which brings me so neatly to Christian Horner, long may his larynx wax sweetly, Mr Stroll Senior, long may his wallet of plenty overflow, and the FIA, long may they not run with scissors, or be given pencils that are over-sharpened (Esteemed Editor Balfe - my theory is the FIA wear Blazers to protect themselves from both scissors, and sharpened pencils. Club Bar acceptable body armour if you will... possibly a future Pitpass exclusive investigation...?).

To listen to Christian you'd think that Lewis just blocked the Suez Canal when he punted V. Max into the river bank. It is going to cost seven times the GDP of Lichtenstein to repair the RB16B! Not to mention all those potential future gird penalties, the implication being they will ruin a close end to the season. Not to mention all the trauma counselling for all the boys, and girls back at the factory that built the dang thing in the first place.

Mark my eccentric-typing well dear reader. This is a strategic long play to box the FIA into a corner on the cost cap killing great seasons. The funny thing being all the teams are already in on it, but the FIA are simply too slow-witted to notice a nod-and-a-wink approach to, well, anything. There is no team collusion here! They all know where they need to go, and they are all smart enough to go in that direction without any secret "Team Principles Star Chamber" to work out how to be smart. Trust me dear reader. These people are already alarmingly smart...

...which brings me neatly to Mr. Stroll senior, long may his Joe Biden Aviators sparkle in the rising sun of a perfect new day (I admit I own a 1980's pair of Randolph Aviators which I can now wear for irony, amusement, to irritate others, and if necessary to keep bright lights out my eyes... but I really, really do digress...)

Mr Stroll? Oh yes. Some napkin-bistromatic-maths coming right up.

The King of the Magic Square is making the finest job of reforming a Formula One team in many years. Paul Stoddart was the last Man of Money, that I really wanted to see succeed in Formula One. Eddie Jordan is actually an alien, so he is an exception in many more ways than one. Frank Williams, Bruce McLaren, even Max and Bernie in the early days, and dear lord do not get me started on the insane delights of Lord Hesketh! They made it on a range of no-money-at-all, through to a modest pile which I set fire to in less than two seasons.

Let us examine that factory expansion...

So, Aston Martin F1 is currently at 535 workers, according to Otmar Szafnauer, and wants to expand to 800.

Ok. So $150m divided by 800 is $187,500 per staff member. Now those manic accountants from a few paragraphs ago can quibble with me if they wish, but a general rule is that salary is around 50% to 60% of the cost of running a staff member. This is because of the business impacts of paying for rent, insurances, IT infrastructure, buildings, and depending on how you structure your business, it also needs to cover research, and development, marketing, and corporate overhead costs recovery. Yes, I am making this a simple model so that this article can remain shorter than Australian Tax Law, so please, let us ease down the road on this musing.

We will split the difference and say that 55% of that figure is salary. That implies Aston pays a typical staff member around $103,125. A quick conversation to UK pounds makes that a figure of around 75,200. Which, given the UK average salary is currently stated as 29,600, looks like a jolly fine deal for all those chaps at Aston!

Oh. Hang on. We pay all of 800 people the same amount? Nope me neither. Ok, let's ignore that for a moment, and keep moving.

Engines are $20m a year. Christian is saying a couple of car park scratches came to $1.8m. And last time I checked senior members of teams tended to make more than the national average. Oh... And we are assuming the 45% left over will actually cover operating costs, travel costs, testing costs, simulators, wind tunnels, COVID-19 tests, car park dent removal, and new tubes of super glue to repair broken carbon fibre... Not to mention a free flowing supply of new carbon fibre. Which, as any reader who skis, fishes, cycles, or generally partakes of a sport that can use light, quality items will know, is always alarmingly expensive.

Let's revise our salary pool down a fraction (breaks out vintage abacus, and uses sleeping cats paws to carry the ten...)



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1. Posted by Max Noble, 01/09/2021 11:12

"@sagosac - just saw you comments, and thank you. Keep in mind and smile that the UK, USA, Australia, and New Zealand are indeed divided by the belief that they think they have a common language… which on investigation they do not… American is as special and different to English as that clicking thing out of Africa… it is just the African’s know that… and the Americans do not… please drive safely…"

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2. Posted by sagosac, 16/08/2021 11:04

"if it was like every crash damage to be paid by the "guilty" driver (anyway hard to judge),
this would cost another portion of aggressiveness => less good sports;
A budget cap is wrong because limiting sporting efforts / R&D-efforts while still investing remarkable means -- is not wise.

The more standardised, the more limited, the less effective / efficient / ROI.
It is not more complicated.

Even funding of the contestants is key, and now that it was applied, 3 decades too late, they added the cost cap -- to thwart the gain in knowledge about this former measure.
I don't know where to start when it comes to unfavourable developments in F1 ... "

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3. Posted by sagosac, 15/08/2021 13:17

"[as a non-ENG mother-tonguer I envy your literacy & eloquence forever, likely many ENG-tonguers, too]

When the privateers (aka the sportspeople) were pushed out of the sport, and then the fox (who initiated that) stepped back, public noted / corporation & series procution car manufacturers (corporations) took over power.
Public noted companies work after the principle of minimization, opposite to sports / R&D / show-biz.
That's all the clue.
=> it needs to found a new progressive hi-tec racing series (in which no listed corporation shall have majority ownership of a contestant, nor rule the sport)"

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4. Posted by Max Noble, 13/08/2021 9:49

"@CL - quite… hopefully you’ve drifted over to read, “Cash on Delivery”… :-) Hope you enjoy…"

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5. Posted by CL, 13/08/2021 9:15

"Were the teams (not just FIA bureaucrats) involved in setting and agreeing the budget caps in the first place? Feels a bit “Boris Johnson complaining about the Brexit deal devised and agreed to by Boris Johnson” to me.

In the end it will probably boil down to who can afford the best tax accountants (bonus to those who keep their own expenses outside the cost cap of course), which may be a battle as interesting as many we have seen on track (*cough*Monaco*cough*)"

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6. Posted by Max Noble, 11/08/2021 10:45

"@Spindoctor - quite. I’m musing over a possible article exploring the entire “not my fault insurance excess claim” within F1, but it’s not quite gelling just yet. Sufficient to say, you’re quite right…

@Steve W - So true! Simply put… Capitalism for all its failings is a self regulating machine. The Motorhomes, the jets, the “I threw Ayrton’s brief case out of a helicopter” stories… (the we cannot afford Messi so he is off to PSG stories…) Put simply, companies that run legally do not spend money they do not have… but will spend every cent they do have to get an outcome! Let the “fre market” work it out. The FIA is a “self licking lollipop” bureaucrat heaven looking for endless jobs. The teams will simply spend all they have to race… Just look at the latest (Australia kicked Arse) Olympics and you can see that as they spend… so a country shall harvest… Why not tell countries that to make it fair for sub-Saharan folk that “first world” countries need to cut their grass roots sporting budgets by 99.8%. Yup… that’s going to go down well. Cost caps are daft… technical term…"

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7. Posted by Steve W, 10/08/2021 20:03

"Personally, I don't like the cost cap. I started following F1 in the late 1960s and over the years, I've found it enjoyable to see some of the outrageous extravagance from some of the teams. Those "motor homes" in the paddock appear to be nicer than a lot of folk's homes. And wasn't it McLaren who laid down marble flooring in their pit garages at the inaugural US GP at Indianapolis in 2000? And didn't Toyota budget something like $500+ million a year - and never won a race? Is memory serving? I think the world today is richer than it ever has been - at least for those who want to work for it."

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8. Posted by Spindoctor, 05/08/2021 16:45

"@ nmw01223 - very clearly put.
In particular the notion that teams should cough-up when they lead to accidents damaging other teams' cars is blatant nonsense, but nonsense engendered by the need to "cap costs" at arbitrary levels set by FIA's bureaucrats in their command bunker.

I feel that RBR & Horner should be sanctioned for accusations regarding Hamilton's driving and intentions, especially as reading between the lines they repeated and\or enlarged on these in their hilariously irrelevant submission to FIA.

"Motor Racing is Dangerous" as it says on the tickets and also (as it doesn't say) very expensive to participate in. The loss of the randomness of unpredictable component failure is now largely of historical interest, but the unexpected in other guises is, as you note, a vital ingredient."

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9. Posted by Batman, 05/08/2021 14:24

"I've found a solution ... to laught about.
Welcome to the New Bank of FIA for F1 (NBFF1). A quite clear institution in his core business: manage the F1 cost cap agreement and promoting the best performance per money spent. With every team getting his one account, they annually capitalize his one account to the extension of the cost cap. The teams send they'r descritionary bills and in echange they receive his one cash. All under the FIA's microscope eyes. Don't beat me up too much."

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10. Posted by Max Noble, 04/08/2021 10:28

"@nmw01223 - Very well stated. Captures the issue precisely. "

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11. Posted by Max Noble, 03/08/2021 0:10

"@fenris - glad you enjoyed the article; Amusing observation of yours about “high-pitched whine” from power plants… yes indeed!"

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12. Posted by fenris, 01/08/2021 20:05

"@Max -- +1 for the HHG2G reference ;)

I always find it amusing that the powers-that-be keep nattering on about cost cutting, but at the same time actively engage in that single biggest source of excess expenditure -- rule changes.

And a word about Horner, Wolff and the merry band -- when we complain about their complaints, we should remember that we have actually asked for it, in a way. After all, do we not keep harking back to the "high-pitched whine" of the power plants of old and demand to hear them?"

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13. Posted by fenris, 01/08/2021 20:03

"@Max -- +1 for the HHG2G reference ;)

I'm always amused that the powers-that-be keep nattering on about cost cutting, but actively engage in that single biggest source of excess expenditure -- rule changes.

And finally, a word about Horner, Wolff et al -- when we complain about their complaints, we should remember that we have actually asked for it. After all, do we not keep harking back to the "high-pitched whine" of the powerplants of old and demanding their return?"

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14. Posted by Superbird70, 31/07/2021 18:00

"For me the solution is to shrink the magic square. You have given me a 4x4 but what if I were only allowed a 3x3? Limit the bodies track-side. Cut the number of pit crew, limit the number and size of computer screens, get rid of the mobile laboratories, and most importantly cut the electronic umbilical cord from car and track back the mothership factories. That should at least be a start. It would help the small teams for sure."

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15. Posted by Max Noble, 31/07/2021 0:50

"@Spindoctor - ah those were the days! I remember a story doing the rounds that Iraq tried to pay for some armaments with truck loads of fresh fruit at one point because they were out of US dollars just before the war started… not sure how true that story is… but it was amusing none the less!

I’m sure the corporate accountants found a way to treat the fruit as a tax loss, and turn a profit on the whole deal…!

Your accounting observations are exactly what I’m driving at in this article. Even if both sides want “the Truth” they will never be able to pin down and agree all the facts, and “best intent” will evaporate to be replaced by the lawyers… who will cover themselves in Gold prior to telling everyone to give up…"

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