The FIA has today (Thursday 16 June) issued the following:
Traditionally, Formula One rules have been written by the engineers. Save in very exceptional circumstances, the Concorde Agreement (Clause 7.1) prevents anyone except the team technical directors making technical rules. This may no longer be the best approach. A better method might be to specify what we want the rules to achieve and only then allow the engineers to make proposals. The purpose of this note, therefore, is to suggest objectives together with some new rules to achieve them.
Safety, fairness, keeping the current six major car manufacturers involved, preserving the independent teams and ensuring that the public continue to enjoy Formula One are the five principal challenges for the Formula One World Championship in 2008. Everyone is agreed on the need for the first two; the last three are more controversial.
The need to cut costs
On the face of it, costs need to be cut. We have lost two independent teams and one major manufacturer in the last three years with no replacement in sight. However, some manufacturers are opposed to any economy measure which might curtail technical exploration. Five of the six competing car manufacturers are very large companies. Each assumes it has the money and technical expertise to win the Formula One World Championship alone or in partnership with an independent team. Each is apparently prepared to spend large sums to do so.
The manufacturers’ dilemma
The problem is that however much money the six manufacturers collectively spend, only one can win, while each season one at least is going to finish with cars in 11th and 12th places or worse. Dr Helmut Panke, Chief Executive of BMW, said recently “We are not satisfied with the sixth and seventh places and we are in intensive discussions on how to do better”. But if all six manufacturers and their twelve cars stay in Formula One, one of them will have to be content with sixth or seventh place each year and two or three of the remainder will be even less successful.
The simple truth is that whether the six manufacturers collectively spend €1.5 billion or (at the extreme) €150 million, the result will be the same. The one with the cleverest engineers, the best-managed team and the best drivers will win, the others will fail. At the end of the season and after each race, manufacturers’ cars will be placed all the way down to 11th and 12th and possibly worse if there are one or two good, fully independent teams. But the Championship will look and feel the same whether €1.5 billion or (again, at the extreme) €150 million is being spent. Indeed it might be better with €150 million, because the gap between first and last would probably be less. So, arguably, some €1.35 billion is being completely wasted in Formula One each year by the six manufacturers.
Are costs the FIA’s business?
Some say this is no concern of the governing body; how the manufacturers spend their money is their business. But surely it is the duty of the governing body to do what it can to keep all the manufacturers involved, indeed to try to attract new ones. Manufacturers whose cars finish in 7th, 8th and so on, down to 12th place or below (which means at least half our current six manufacturers) are more likely to stay if their average annual expenditure is, say, €25 million rather than €250 million.
A 90% reduction in manufacturers’ costs without diminishing the spectacle of Formula One would probably be possible, given close and rational collaboration with the manufacturers and teams concerned. But even without such collaboration, the FIA must at least reduce costs to levels which independent teams can afford. If we fail, we will lose the independent teams. Should costs continue at present levels or, worse, escalate in the next ten years at the same rate as the last ten, we risk simultaneously driving out the independent teams and some of the less successful manufacturers. The result would be non-Formula One cars on the grid or, possibly, the collapse of the Championship.
To be clear, in suggesting a reduction from €250 million to €25 million, we are speaking of just the costs to a manufacturer of supplying engines to a single team. The cost of running the team must be added to this to arrive at the total cost of putting the cars on the grid. It is extraordinary, but true, that some manufacturers are spending upwards of €250 million just to supply engines. That this could be reduced by 90% or more is evidenced by the fact that Cosworth will be able to supply a fully competitive 2006 engine for less than €20 million and are even able to supply (to Red Bull) an engine to race and qualify in the top ten under this year’s relatively free-spending rules, for less than one tenth of the expenditure of some major manufacturers. It does not follow that expenditure is necessary merely because it is allowed.
A money-spending competition?
Formula One must not be allowed to become a money-spending competition. We need more emphasis on rules which allow a clever but under-funded team to defeat a less competent but richer rival. It must not be possible simply to buy success. This is essential for the survival of fully independent teams which rely on sponsorship and income from the commercial rights holder. An independent team will never have the same resources as a team backed by a major car manufacturer, but they are nevertheless an essential element of Formula One. In addition to being part of the tradition, they provide an entry point for young drivers and team personnel and bring colour and interest to the paddock.
It is probable that rules aimed at keeping all six manufacturers in the Championship will also make it possible for the independent teams to survive. Conversely, failure to introduce these rules risks the simultaneous loss of the independent teams and some of the manufacturers. The case for getting costs under control appears strong.
Resistance to cost-cutting
There has been a tendency for well-funded teams to resist cost-cutting, because the higher the costs, the smaller the number of teams which are their potential competitors. But rules which allow too steep a slope on the curve of performance versus expenditure must eventually result in the richest team dominating and the remainder unable to compete. This has happened in the distant past. If it were allowed to happen today, Formula One would quickly lose its international television audience. Collapse would soon follow. Even the best funded teams should support drastic cost-cutting in order to preserve Formula One in the medium and longer term.
Formula One has become divorced from reality. If you ask a man in the street how many people devote their entire working lives to putting two Formula One cars on the grid 17 times a year, he will probably reply 20 or 30, plus maybe some part-timers. The reality is about 300 for a small team and up to 1000 for a top team, all full-time employees. Most of these highly skilled and expensive people add nothing to the spectacle or to the sporting contest. They are working on things which the public never see and even enthusiasts are unaware of. Hundreds of talented people, all duplicating each other’s efforts in the different teams, all to no purpose. It is difficult to justify this on any rational basis.
It is sometimes suggested that reducing the scope for expenditure in Formula One reduces its technical interest or “dumbs it down”. The immediate question is: reduces its technical interest to whom? It may fascinate the relevant engineers that by spending millions of Euros they can build a new gearbox with ratios that are 0.25mm thinner, but no-one else knows or cares. There is no additional value for the watching public who, ultimately, pay for the whole thing. If we eliminate pointless (but very expensive) engineering exercises, there will still remain huge areas of technical interest, some of which can be directly relevant to automobile engineering. For example, a breakthrough in chassis dynamics (more probable with very low downforce) or the reduction of engine internal losses would give a big advantage to the team which made it. It would also be more generally relevant than generating huge levels of downforce or making an ultra-small gearbox.
Keeping the public interested
If we manage to control costs and retain a reasonable number of competing cars, we must also think about the public appeal of Formula One. Everyone considers themselves an expert on this, but until very recently there has been no serious attempt to find out what the public think. This is extraordinary when one remembers that the commercial success of Formula One would disappear overnight if the public were to lose interest. We hope that the survey which the FIA is conducting in conjunction with AMD will provide an insight. In the meantime we have taken a conventional approach and aimed at (i) closer racing through a drastic reduction in downforce combined with significantly increased “mechanical” grip; (ii) a more competitive field by reducing costs and hence the competitive disadvantage of the smaller teams; (iii) eliminating electronic driver aids to give greater importance to classic driver skills. If these objectives are achieved, Formula One should at least be able to maintain its current level of popularity.
Keeping speeds under control
In addition to containing costs, we hope to contain speeds. Excessive speeds in Formula One not only endanger the drivers, they also cause problems for the race organisers. This is because increased speeds necessitate upgrading circuit safety measures. Safety work increases the organisers’ costs without producing any additional income. Indeed moving the public further away from the action on track, which is increasingly necessary for safety reasons, makes spectating less attractive and risks further reducing the organisers’ income. This is an additional reason for rules which restrict the rate of increase in performance.
A tight schedule
Once matters of principle have been decided, it becomes easier to write rules. However, not all the manufacturers and teams have joined the discussions during the first four months of the year. The FIA cannot continue to wait for proposals, because it is obliged to publish the 2008 Formula One Technical Regulations before the end of 2005. In practice this means the new rules must be finalised by the fourth week of September for submission to the World Motor Sport Council and the FIA General Assembly at the end of October. This, in turn, means we can allow the whole of July for comments from stakeholders, but final preparation of the rules must begin internally on 1 August.
Some suggested objectives
We have prepared a first draft of the 2008 rules with the following objectives:
Expensive technology which is invisible to the public and known only to a tiny band of specialist engineers should be eliminated where possible;
This, then, has been our approach to 2008. Criticism, constructive or otherwise, is welcome. All comments received during the July consultation period will be carefully considered when the FIA technical department finalises its proposals, which it will do in consultation with those teams and race organisers which have indicated their intention to participate in the Formula One World Championship from 2008 onwards. We will also take full account of the results of the FIA/AMD survey of public opinion. Once finalised and approved by the World Motor Sport Council and FIA General Assembly, the rules must be published before the end of 2005 as required by the Concorde Agreement. Thereafter the 2008 technical regulations cannot be changed without the agreement of everyone concerned.
Changes for 2009 will still require two years’ notice (ie publication before 31.12.2006). Thereafter notice of changes which affect the design of the car (sporting or technical) will be announced no later than 30 June to come into force for the next-but-one season (ie a change for 2010 will be announced before 30.6.2008).
Summary of the main changes proposed for 2008
Total advertising area on the car to remain unchanged
Wheels and Tyres
Tyres will be supplied by one manufacturer appointed by the FIA after an invitation to tender. Such an appointment will be conditional upon:
Data Acquisition and Telemetry
Notice of Change
Spare Cars **
Car Acqusition **
** For the purposes of the submission to the World Council these Sporting Regulations will be included as an addendum to the draft Technical Regulations