Saturday, March 26, 2011

F1 teams battle over cost-cutting

The first race of the 2011 season is still two months away, but the fight for a competitive advantage in Formula 1 is still raging away behind the scenes.

As their engineers put the finishing touches to their new cars in time for the start of pre-season testing next month, team bosses are trying to thrash out a new cost-saving agreement. And it's getting a bit nasty.

Rivals - almost without exception, I'm told - believe Red Bull exceeded en route to winning the world title last year the limitations laid out in the document that defines how teams commit their budgets. They also claim that Red Bull are blocking a new version of the so-called Resource Restriction Agreement to take the sport through to 2017, where the current one runs only to 2012.

One insider at a rival team said Red Bull had been "flouting" the RRA. This is quite a serious accusation, as it effectively claims Red Bull either spent longer developing the aerodynamics of their car, employed more staff, or spent more money - or all three - than they were allowed to. In other words, they had an unfair advantage.

Red Bull deny outright that they overspent in 2010, and insist they are objecting to the revised agreement only because it is flawed in its current form and they want to ensure it is "fair and equitable". More of which in a moment.

"We've worked in accordance with the RRA limits since they were introduced," Red Bull team principal Christian Horner told BBC Sport. "With tremendous hard work and internal efficiencies, we believe we've absolutely adhered to it.

"Red Bull has committed its budgets wisely and it's obviously surprising that people will feel that way, but it's inevitable, I guess, when you're at the front and winning races."

No one will go on the record to confirm their suspicions about Red Bull, but Virgin Racing chief executive officer Graeme Lowdon, while making it clear he does not know about Red Bull's budget, says: "On something as fundamental as this, on something that's there to make the whole business you're in sustainable, if someone was to even breach the spirit of that, then that's extremely disappointing.

"I cannot see how anyone can level a criticism at an RRA. If it made a worse show, or watered it down, then there would be a case to answer. But it doesn't so it's very disappointing if teams ignore something as fundamental as this."

In many ways, this financial dispute echoes the technical rows that enveloped Red Bull in 2010.

Unable to explain or understand how the RB6 car was so fast, rivals first accused Red Bull of having an illegal ride-height control system, and then of an overly flexible front wing. Red Bull insisted the car was completely legal, and the FIA, F1's governing body, never found otherwise.

Red Bull team boss Christian Horner

Horner finds Red Bull in the middle of another controversy about 2010. Photo: Getty

"We expect other teams to potentially challenge [whether we have over-spent]," Horner says, "as they have done on front wings and ride heights and everything else in the course of last year. But we don't have any issue.

"Red Bull probably has the third or fourth biggest budget in F1. We spent prudently and have achieved great efficiency within the factory, and we have to top that in 2011."

This row has come up in the context of negotiations over revising ways of controlling F1's costs. Keeping a lid on budgets is, along with ensuring the racing remains as good as possible, one of the central themes for F1 stake-holders at the moment, as the sport's bosses seek to ensure it remains both compelling for its audience and affordable for its competitors in a difficult economic climate.

The RRA is the document the teams drew up in 2009 to control costs in F1. It defines a series of limitations on resources, getting stricter through 2010, 2011 and 2012, and the penalties for exceeding them. But it was always meant as a stepping-stone to a longer agreement.

In the current agreement, there is a sliding scale of penalties covering the following main areas of resource commitment:

  • Aerodynamic development, measured in wind-tunnel hours or computational fluid dynamics data, with the more you do of one, up to a given limit, meaning the less you can do of the other;
  • Total staff numbers, from 350 in 2010 down to 280 in 2011, and total external spend, from 40m Euros in 2010, down to 20m Euros in 2011, with the more you commit to one, the less you can spend on the other.

The penalties were based on a sliding scale. For example, a breach of up to 5% is punished by having that same amount taken off your resource allocation for the next year; a breach of 5-10% means having 1.1 times that amount taken off; and so on.

The new document - the fundamentals of which were largely agreed at a meeting at the Singapore Grand Prix last September - changes that.

One team principal, who did not wish to be identified, said that the new RRA relaxes the restrictions on resources - teams can spend a bit more money and employ a few more staff - and in return the policing is stricter, both in terms of how teams' spending is analysed and the penalties for exceeding the limits.

But the detail is proving problematic, with Red Bull in particular unhappy about the new document as it stands.

Horner says his objections are rooted in ensuring the new RRA, which would run until 2017, does what it is intended to do.

"The RRA is a positive thing for F1," he says. "I think a solution can be found for the outstanding issues, it just needs some sensible discussion between the teams, because the thought of an unrestricted spend in F1 is unpalatable for all the teams.

"So it is a matter of achieving transparency and a fair and equitable system between all independent and manufacturer-owned teams so that no party is at an advantage or disadvantage."

"The resource restriction needs to be sorted quite quickly because at the moment it is unclear what rules we are working to in 2011 in many respects, so it's important a solution is found and I think one will be found."


Roger Loyer Jean Lucas Jean Lucienbonnet

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