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Teams could miss races over budget cap warns Horner

NEWS STORY
24/05/2022

Red Bull boss, Christian Horner has warned unless the budget cap is increased some teams could be forced to miss races.

There was much mutual back-slapping when Liberty appeared to have done almost overnight what Max Mosley and Bernie Ecclestone had spent years trying to do, but with no success, the introduction of a budget cap.

For Liberty, the intention was clear, for curbing spending was a means of levelling the playing field, ensuring that essentially everyone had a chance of success not just the big guns.

Of course, even with the agreed limit - which this year is $140m and falls to $135m from next year - there remain the haves and have nots, with Haas' Guenther Steiner making it quite clear at the weekend when he admitted that his team's failure to follow the example of all its rivals and introduce upgrades in Spain wasn't about budget cap but budget.

Initially, it was intended that when the budget cap was introduced (in 2021) it would stand at $175m but following discussions which led to a number of exemptions such as driver salaries and those of 'leading team members, marketing and so on, it was reduced to $145m.

The first sign of dissent was when a number of teams argued against the increase in the number of Sprints, claiming that rather than 'compensation' payments for damage incurred at these events the budget limit should be increased. Of course, as has always been the nature of F1, some teams were against this.

Then, as the season got underway, and teams sought to get down to the weight limit, they were divided on how they should go about this, admitting that every trial - and error - would affect their spending.

Now, of course, as the championship fight develops, the bigger teams want to be able to spend more in order that they can continue to introduce upgrades with which to beat their rivals... while the smaller teams, those with no hope of reaching the limit, far less exceeding it, sense the possibility of some giant killing as their bigger rivals hit the spending ceiling.

As was always the case in F1, this has led to a certain amount of huffing and puffing from the bigger teams, the latest example being Christian Horner who warns that unless the cap is raised some of the bigger teams may have to 'sit out' races.

"Seven of the teams would probably need to miss the last four races to come within the cap this year," warned the Red Bull boss, according to the BBC.

"It's not just about the big teams. It's teams in the middle of the field who are really struggling with inflationary issues," he added.

So, it's not about the need to continue upgrading the car and thereby beat Ferrari - and possibly Mercedes - no, it is about the cost of living crisis that most of us are currently experiencing.

The FIA has a duty of care," he insists. "I know they are taking it seriously. Energy bills, costs of living, costs are going exponentially, and F1 is not exempt. Freight has quadrupled and that's not something we can control."

At the recent meeting of the F1 Commission Alfa Romeo, Alpine, Haas and Williams understandably voted against the proposal that the cap be adjusted based on the International Monetary Fund's inflation figures.

"We've set our budgets early, we kind of anticipated a little bit of the inflation," explains Alpine's Otmar Szafnauer. "Inflation didn't just creep up on us. If we can do it, for sure others can do it too. I'm not for just increasing the cap.

"When freight costs go up by 2.5m or 3.5m but your development budget is 20m, can you not make your development budget 17m and still be under the cap? You can.

"What that then does is it limits your development. So it's a lot easier, if you have the money, to go to the FIA and lobby to raise the cap and keep your development budget the same."

Of course, Horner's 'threat', other than the potential of a major row between the teams, the FIA and F1 - the like of which Liberty hasn't really encountered up until now - raises some interesting possibilities in terms of the sport's owner's increasing demand for 'soap opera' levels of entertainment to fit the Netflix narrative.

Other than Guenther Steiner effing and blinding at the thought of the limit being raised, imagine the TV drama as Red Bull, Mercedes and Ferrari are forced to miss races towards the end of the season... the anticipation of their rivals gaining an edge... the possibilities of the likes of Haas or Williams benefiting and winning a race or two.

And... action!

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READERS COMMENTS

 

1. Posted by Max Noble, 27/05/2022 2:38

"@Kenji - I did a couple of articles a short time ago around the manner in which multi-national companies could spread costs, yet still have the F1 “company” 100% within the budget limits. While this is based on an understanding of business structures, finances, and a cap-nip fuelled imagination, I’m sure it is close to the truth… The reason Haas is complaining more than most is it has the least-complex company structure within which to bury costs. Mercedes, and Ferrari in particular have layer upon layer of multi-national confusion within which to place dollars far from the FIA. And I’ve had many a chuckle each time I look at Honda’s “departure” from Red Bull which now involved the Honda Ninjas working for themselves… to give stuff to Red Bull… it was a flawless half-pike with triple twist… :-)

I’d cheerfully undertake the globe-trotting to pull the thread and follow the money… if someone else will pay for what will be a very long journey to the Golden Fleece…
"

Rating: Positive (1)     Rate comment: Positive | NegativeReport this comment

2. Posted by kenji, 25/05/2022 12:05

"@ Max Noble... One of the problems for fans/followers like me istrying to peek through the cloud of opacity that hovers over the F1
household operations. We've been told over and over about the massive costs of say, the MGU-H but no one ever attacches an actual figure, likewise with so many other items, A cost analysis of just one hypothetical team would be terribly interesting. We could also see where each teams priorities lay simply by looking at lines of expenditure. I have at times seen estimates of front wing costs but they were just educated guesses. Then there are the below the line entries such as driver salaries, marketing and salaries of the top dogs! Someone should undertake this exercise so that we can see just who are the princes and who are the pauoers."

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3. Posted by Max Noble, 25/05/2022 5:44

"@Superbird70 - I rather like that idea… Teams are given the bounds that you must attend at least 70% of races, and no more than 85%. You best 75% of finishes will then count.

…or take it to an extreme, and allow each driver to only count their best five races… and we would have a three way tie for World Champion between Red Bull, Mercedes, and Ferrari…. Year, after year… :-)"

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4. Posted by Max Noble, 25/05/2022 5:40

"I’m really enjoying how the entire Budget Cap Racing is playing out. Each team has a series of tactical, and strategic ploys they apply to a given situation. Love it! Far more fun than waiting for the next DRS overtake.

…as to corporate entertainment… well within reason (….cough) it allows companies to splash dollars on top employees, potential investors, share holders etc.etc. Well managed it is a useful reward for folk. It also generates jobs for relevant support staff, and pours more dollars into local economies as the Paddock Club offers the local finest.

Or it can be a bunch of fat cats layering on kilos while flicking caviar at the peasants… Sigh…

Same with air travel. One swiftly reaches a point whereby hiring a jet is most cost, tax, and time effective than regular flights. And management only ever send the worker bees economy class. The last remaining business, and first class tickets will always go to the top executives, while the exhausted workers fold themselves double in economy 40+ times a year (22 races, plus pre-season…). As ever, the problem is humans… :-)"

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5. Posted by Superbird70, 25/05/2022 2:03

"Why not then revert to only the top 75% of races entered counting towards points. Something similar existed in the past. Don't like your chances at Monaco, give it a pass."

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6. Posted by kenji, 25/05/2022 0:06

"I should expect that the bean counters will lay down some markers on the 'expenses'. No more private jets, no 1st class air travel, no hotel suites and a clampdown on salary increases until the Championships are concluded. Entertainment expenses in F1 must be humungous likewise appearance fees for 'celebs' as well! Lots of areas to prune and although they are small by comparison to actual design, manufacturing and operational costs it all heads towards the 'lean and mean' mantra of successful enterprises when face with tough times."

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7. Posted by ARL, 24/05/2022 20:21

"How good of Christian to show such altruistic concern for teams lower down the grid.

After all, it was only the other day that Helmut was claiming that Red Bull were not overspending on development when those rascals at Ferrari suggested that they may be. So obviously Red Bull have no need for an increase in budget.

Perhaps the FIA should permit a budget increase for any team currently outside the top three. That should bring a happy glow to Christian's heart. Or could that be heartburn?"

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8. Posted by elsiebc, 24/05/2022 15:31

"The budget cap, like every other progressive "solution", just ensures the status quo. Enjoy the racing now because once the money runs out whoever has the fastest car will do so for the rest of the season."

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9. Posted by Superbird70, 24/05/2022 10:53

"Don't the race contracts specify a minimum starting grid?"

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10. Posted by moorfieldmike, 24/05/2022 8:57

"What are the penalties for exceeding the budget cap compared to the penalties for not fulfilling the contract to compete. So if Max has the title sewn up with three races to go could Red Bull sit out the last races, would they be penalised points, or if they race and go over the budget cap would they be deducted points."

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