News : Fear of “Bookkeeper World Cup”: The details of the budget cap

News :

Fear of "Bookkeeper World Cup": The details of the budget cap

The hard budget cap that Liberty Media presented a year ago has become a jelly with millions of exceptions

So in 2021 it comes, the budget ceiling that has been negotiated for years in Formula 1. But of the originally envisaged $ 150 million that rights-holders Liberty Media set as their goal in the Bahrain presentation ("Vision 2021") a good year ago not much left over.

"There are so many exceptions that the 175 million are in fact rather 250," says Racing Point team boss Otmar Szafnauer. Even though the details of the budget cap have not been officially announced, information is gradually filtering through. For example about the mostly well-informed platform in sport policy issues.

As a result, the final Liberty proposal was first reviewed by the teams on June 4 and discussed on the Canada weekend. Meanwhile, the extremely detailed formulated budget cap is considered carved in stone. Even if the reform package for 2021 is to be finalized only in October.

Out of 150, 175 million dollars (equivalent to 155 million euros) have been made, and the exceptions allowed have also been relaxed. Originally, it was envisaged that the budget ceiling could only be bypassed for drivers, marketing and the highest-paid employees. This list has now become much longer.

Why Liberty wanted an exception too

It now includes the three highest-paid employees, the first $ 15 million in engine costs, and the total travel and race travel expenses, in addition to driver and marketing expenses. The latter was important to Liberty. Because this is the only way to ensure that teams do not complain when more races are added to the calendar.

The idea of ​​introducing the budget ceiling in the form of a three-year transitional arrangement and reducing the total from year to year has been dropped. The 175 million plus exceptions are for the entire next "Concorde period", which is expected to cover the years 2021 to 2025.

Formula One boss Chase Carey is pleased with the result: "It took us one year to discuss this process, not only to find a suitable limit, but also a process that would allow us to check that out leave the cost structure reliable. "

He is not afraid of fraud: "Our sport is complicated, but these tricks are common in any business worldwide, the rules are clear, you need access to the information to make sure it is done reliably, but I'm confident that that can be checked properly and reliably, "says Carey.

The auditors, who have to document compliance with the budget cap against the FIA, may choose the teams themselves. The FIA ​​can theoretically veto it should it disagree with an auditor. Most likely, these will mainly be well-known companies such as KPMG or Deloitte.

Practical test for budget processes starts in 2020

"Dry exercises" will start in 2020. At first without penalties - only to internalize the processes, on both team and FIA side. "The plan is to run a test run, everyone should be given a year to understand how it works, now it's just words on paper, we need a year of implementation experience," says Carey.

"It's going to be a learning process, I'm sure of that, we're not under any illusions." When something new comes along, you'll have to iron and correct something here and there. "That's just the beginning, we'll learn from it, but we need a starting point, and that will stay in place for a while now. "

2021 is just "the beginning of a process that will continue," announces Carey. "We're trying to re-create a sport that makes the competition better than it does today, it has to be a healthier business for everyone involved in it, these are the two big goals we're going to continue to work on."

But the big question remains: can a budget cap be reliably monitored at all? Does the FIA ​​get along, for example, when a secret Honda group tests a new Formula 1 engine somewhere in distant Japan? And where is the line between a good deal and fraud, for example, when a supplier delivers extremely cheap parts to a team?

Red Bull team boss Christian Horner admits that this has always been my concern. He states, "The intent is there, but each team is structured and organized differently, for example, if you are a department of an OEM, how is the internal cost charged?" Big works, he argues, have opportunities to hide and disguise costs.

Leniency Notice as a protective mechanism

But a team boss who gets involved in such a game risks a lot. Even in secret projects, at least a few senior executives need to be involved, and when they cheat their employer, they fall into the FIA's forgotten whistleblower regime. This means leniency protection and, in the best case, even financial compensation.

Suppose that Toto Wolff came up with the idea of ​​hiding Formula One costs somewhere in the Daimler Group. He would have to initiate some confidants. It works well as long as the chemistry is right. But alas, you quarrel. Anyone who is mad at Wolff at some point will perhaps report it to the FIA. Maybe only years later.

Singapore's "Crashgate scandal" was just as flawed. When Flavio Briatore threw out his driver Nelson Piquet, he went to the FIA ​​and unpacked. A team boss can not risk that. Especially since he is threatened with a violation of the financial rules a license withdrawal. That would be the end of the career.

"The rules are 42 or 48 pages long and every detail is described," says Red Bull Motorsport consultant Helmut Marko. "We've prepared ourselves so that we've included a financial expert and a lawyer in the system all year long, so that we do not initiate these regulations internally."

The Austrian sees two major drawbacks of the new regulation. First, "It's very complicated, and in the worst case scenario, we have an accountant championship, where you'll be disqualified two months after the race because you've crossed a budget somewhere," he explains.

Second, big teams, like Red Bull is one, has to cut back on staff in order not to break the budget. Ferrari and Mercedes, who develop their own engines, are currently estimated at 1,400 employees each. Red Bull has 860. "Some people will have to break down," says Marko. But: "We then look for other fields of activity for them."

This article was written by Christian Nimmervoll

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