How real is the idea that the top 3 teams may have to sit out races?

I would love for Merc to take a vacation. But wont happen

 

What is the penalty of breaking through the budget cap ?

 

Aye, there's the rub.
Maybe a secret meeting with the FIA. It's all about the show, doncha know?
Curious if there is a 'real' answer to this question....

 

If there's a way for the FIA to put the screws to Ferrari, I'm sure they'll do it.

 

The teams are contracted to attend all the races of the championship, so I don't think any of them will not turn up.
They may forfeit the money due to them if they do not attend, and that can finish in court in the worst case.
The answer is simple to stay within budget: stop development, and reduce expenses by shedding some staff.
Any business knows the solution: "You cut your cloth according to your means".

 

Any team missing a race would suffer zero. They can just toss budget cap in the face of Liberty and the FIA. It would be a welcome
situation to see as the budget cap is weak and need’s addressing. Id like to see any major team do this. Their sponsors would not be happy!

 

If teams don't respect the budget and get away with it, there will be no incentive to observe any other part of the regulations, IMO.

The FIA and Liberty' s authority is at stake on the budget issue.

 

The budget cap was a gift to smaller teams. Now their values have increased. Nothing changed in terms of competition. Raise the cap a bit so we have more updates and innovation. 200mil would more than enough. If the smaller teams don’t raise their spending who cares. They look great getting passed now with the current cap that is too low!

 

I can't imagine that for a couple of reasons: The top teams would never concede to their competitors and even the rest of the field fights for points which means TV money $. Which leads us to my second point: The Liberty and TV show would take a huge beating if one of the top teams would suddenly miss a race. They won't allow that to happen no matter what the budget cap is.

 

If the FIA sets rules that are ignored by the "big spenders", it's a complete mockery of its authority.

The budget cap should only to be reviewed through consultation, not dictated by the rebellion of the most wealthy teams, IMO.

BTW, I think the budget cap has no place in F1, and I kind of predicted these problems.

When a team was used to spend $400/450M, a limit of $200M will never be "more than enough" !

To work, a budget cap must be accompagneed with other restrictions, like a token system for upgrades, limit in staff number, etc ... and nobody wishes that on F1, I hope.

 

Which brings me to my second question: Is the TV money in addition to the budget cap or part of the budget cap ?

And if the later: how does a team know how much it can spend until the end of the season arrives and they know how much their TV income will be ?

 

Not that I know any details but I would assume that the TV money is not related to the budget cap: The budget cap limits the spending. TV money is income and has to a degree always been capped as it is a predetermined number. Yes, the teams won't know exactly how much they will get before year end, but I think that doesn't matter as it is income and not expense.

 

It's part of the budget cap.

I would have thought that the money received at the end of the year will contribute to the following year budget.

 

I think it is. TV money from the previous year + sponsorship money = team budget for the following year, IMO.

 

Again, I don't know any of this for sure but would disagree: What you described here is how they make an income but that's not related to the budget cap.

A team like Ferrari has TV money, sponsorship money plus factory money. Could be any amount. But the budget cap is a given number they're not supposed to go beyond in spending. How and from where the money comes they are spending is not defined/related to the budget cap.

 

I also assume this is basically how it works. Of income were to be factored in, then the cap would have to be applied to deficit rather than total budget. I don’t see how that would be practical. It would also not be on point to what they’re trying to do as the “richer” teams have greater income, so a deficit cap would not help to close the spending gap.

 

Yes, you are correct, I meant income, not budget cap. Haas budget doesn't even reach $100M according to them.

I suppose several teams have a spending below the budget cap too. (Alpha Tauri? Williams ? Alfa Romeo? perhaps)

In opposite, the top teams are making a profit, and cannot use all their income.

Ferrari has explained their Le Mans program by the fact that they cannot spend their income in F1.

 

Actually I assume all teams make a profit, otherwise they wouldn't exist. That said, of course a team like Haas or Red Bull (no matter how successful they are) will always have unlimited income through their sponsorship so an actual operational loss would not show up in the books.

But I don't see any such help for underlings like Williams or Sauber. I bet they just get by without much of a win/loss.

 

The less successful teams (often the less well funded) live on overdraft, go bankrupt, or sell after a while ... like many businesses these days.

 

I agree. Except that in recent years things have been fairly stable. So even the backmarkers must be making enough $ to get by.

Trying to remember: What was the last team that folded? I guess it was Team Farce India before they got bought up by Stroll.

 

Who owned Force India in the end ? The banks !!! The team was living on overdraft.

Before it was Caterham probably, or Manor/Marussia, which both also owed plenty of money and went bankrupt.

 

I'd have to think that part of the reason "nothing has changed in terms of competition" is that the smaller teams have planned out the season within the budget cap (not because they are more honest, but because they simply don't have the money to exceed the cap no matter what). The bigger teams, on the other hand, have planned out the season in a way that they'd spend up to the cap by mid season. They know they're the powerful teams and will get away with exceeding the cap. So there's no downside in burning through money

And I'm saying that's just part of the reason. The other significant part is that the big teams have years/decades of structural advantages (years of spending a ton of money in R&D; years of capital improvements; etc.). It takes a long time for budget caps to visibly affect overall competition. No one can possibly think the budget cap was going to instantaneously make all 20 cars competitive.

FIA has to decide whether it's serious about leveling the playing field (i.e., keep the cap, maybe adjusted up a bit, for at least five years) or not.

And having said all of that: I'm not entirely convinced that artificially leveling the playing field is a good thing for a sport like F1. Part of what I like about F1 is the constant improvements through technological developments. Capping the money for that = artificially slowing down technological development.

 

I can't imagine 1 of the top teams not showing up to a race. I think Formula one is considered more entertainment then a sport and the tracks running these events would get financially effected if a top team was not allowed to compete. At the end of the day its all about the money.

 

It will be interesting to see how the FIA will choose to enforce the budget cap if some teams go over it.
I'm sure Liberty don't want teams not turning up; that's bad for business.
So I guess, some of the TV money owed will be retained if a team goes over budget.
I think the FIA opened can of worms when it decided with that budget cap.