DECEMBER 21, 2005

A question of cost-cutting or power?

Timing is everything in the world of information and you can be sure that it was no accident that the FIA press release relating to regulation changes in Formula 1 in 2008 came out late in the day, four days before Christmas, when most of the Formula 1 teams are winding down for the holiday.

Timing is everything in the world of information and you can be sure that it was no accident that the FIA press release relating to regulation changes in Formula 1 in 2008 came out late in the day, four days before Christmas, when most of the Formula 1 teams are winding down for the holiday.

It is as if the federation is trying to sneak the rules in without anyone noticing or making much of a fuss.

The FIA says that the objective in drafting the 2008 regulations is to reduce significantly the cost of competing in Formula 1. The rules, it is argued, "must discourage financial profligacy and ensure than an independent team with ordinary commercial sponsorship (ie a budget in the order of $100m) can compete with a car manufacturer prepared to spend in excess of $300m". The FIA says that it believes that current manufacturers' budgets are unsustainable and are putting the whole of Formula 1 at risk.

In our opinion this is unnecessarily alarmist given the fact that at the moment the company forcing up costs in F1 fastest of all is not a car manufacturer at all but rather Red Bull, which makes soft drinks. If FIA President Max Mosley wants to stop people buying their way to the World Championship, he is going to have to ban money. The sport has always been about money, right back to the days when only rich gentlemen could afford to go racing.

The real argument is whether the changes are about costs or about the governance of the sport. Mosley thinks it is "all about costs". Others disagree.

If there are sufficient manufacturers to maintain the levels of spending - and right now there are - the sport is hardly in danger. Costs will reduce when companies can no longer afford to invest in the sport but at the moment that is not a problem. They may wish to cut back but that is their choice. Mosley cannot stop people spending their own money. There are 10 well-funded teams and one which is struggling. There may be others that would like to be in F1 but the reality is that if they want to join the party they have to find the money.

It is as it always has been. The reality is and always has been that if money is saved in one area, it will be spent in another area. If you ban wind tunnels, teams will invest in other simulation technology. All that matters is winning.

These things happen in cycles and there will come a time when the manufacturers will leave the sport and hand over their teams to others: as Ford did with Red Bull and as Renault will probably do in a year or two. As Ferrari itself proved in recent years one team outspending the others and winning too much drives TV viewers away. That reduces budgets so if one manufacturer does spend a squillion dollars to win the World Championship, it will not go on for long before the marketing men start reporting that the results do not justify the investment. Ferrari enjoyed its financial advantage five years ago and is now squealing about the costs.

The FIA has thus gone ahead with its rule-making and we will just have to see if this drives away the manufacturers. The FIA says it intends to have split rear wings because it will help overtaking. Teams complain that it will also remove the potential to advertise and cut sponsorship revenues. There will be reductions in downforce (which is pretty standard) and very vague rules on bodywork regulations so that "cars behave better in traffic" and limitations on "interesting areas" of aerodynamic research. This is largely meaningless. Reducing the minimum weight by 50kg to cut costs is an interesting call as the weight limit was previously raised to reduce cost, the argument on that occasion being that teams had to be stopped from using expensive exotic lightweight materials. In fact all that happened was that the teams continued to build super light cars and converted the extra weight into movable ballast.

The FIA also wants to have a 19,000rpm rev limit and standard electronic control units. The federation also wants to restrict the materials permitted to build the cars. None of this fits in with the current ethos of the sport and pushes F1 away from technology. In addition the FIA says that from 2009 teams may only make two changes to the bodywork after the start of a season. This will not change anything except that teams will probably now build completely new cars three times a year.

The FIA does at least attempt to put some technology back into F1 with rules about biological fuels and energy storage and recovery (hybrid systems).

There will be a single tyre supplier, three-event engines, four-event transmissions, weight penalties for early replacement of parts (which rather defeats safety arguments about weight), testing restrictions, a limit of two cars per event and teams will also be able to sell whatever they like to other teams.

The conclusion from all this is that it is a lot more compromising than it might have been, but the FIA is still going to get some opposition to the rev limit, standard ECU and restrictions on materials. The federation may now feel that it is in a strong enough position to tell those who do not like it to get lost but it is doubtful that anyone will save money. There may be new teams created as a result but they will not compete with the big teams, no matter how clever they are and teams will go on spending money on the areas where there is still leeway to do so. Simulation technologies will become more and more important with testing equipment becoming more and more advanced. The need for new aerodynamic packages will put on pressure for the development of rapid prototyping and will probably mean that teams will need more design engineers.

The one question that remains is the key issue.

Is this about costs or is this about the FIA showing its muscle?