UK Karting - Notice Board (Chat) : Re: There needs to be some control of costs

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Re: There needs to be some control of costs
Posted by 'davidmc' on 14 May 2009 @ 10:13

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davidmcJoined: April 2003
Total Posts: 2
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The real issue the teams have is the massive downsizing that would be required to achieve the budget cap set. Essentially, all these top teams have had their businesses devalued in one fell swoop of the regulations.

Teams have invested hundreds of millions into high tech factories, wind tunnels, supercomputers, support vehicles, people and on and on. Whilst many of these items aren't covered by the budget cap, they wouldn't be required when operating under a budget cap. Who, apart from another F1 team, is going to want these facilities?

These teams (businesses) only have value as F1 teams. Lets say it costs Ł500m to setup a team under the current regs. Any team looking to enter would consider buying an existing team for, say, Ł100m. Under the new regs, it may only cost Ł50m to setup a team. Any team looking to enter would, perhaps, only consider buying an existing team for Ł10m.

Now consider teams running customer cars, Torro Rosso for instance. They already "purchase" the design of the car from another company (Red Bull Technologies). If Red Bull Technologies choose not to charge Torro Rosso for these services, Torro Rosso would have the design of a high budget team but be able to operate under the budget cap with the technical freedom that allows. What we then have is a situation where customer teams and low budget teams will be intrinsically faster than large manufacturers. What's the issue now? Why would anybody even consider purchasing the large teams when being a large teams results in being at the back of the grid rather than the front?

Look at this from Renault's point of view. Assume Renault are pulling out at the end of 2009. Under the current regs, they might have found a buyer. Under the new regs, being automatically uncompetitive, they have no hope of finding a buyer. Max is essentially asking the teams to wipe out any value their businesses had. Would you do it?

We then have the sponsorship issue. Lets assume teams are currently receiving Ł100-Ł200m in sponsorship. Under the new regs, sponsors will see no need to spend such sums. One sponsor could have sole rights to a Ł40m per year team and be at the front of the grid. As someone looking to purchase TV rights, wouldn't you reconsider how much you should be paying? There's still a worldwide TV audience, but those sponsoring the teams are able to do so for considerably less and have the benefit of this. Why shouldn't the TV companies too?

Dave

Message Thread:

ferrari pulling out of next years F1!!?? by 'chriskasch' (12 May 2009 @ 15:57)

Re: ferrari pulling out of next years F1!!?? by 'carladingding' (12 May 2009 @ 16:29)

Re: ferrari pulling out of next years F1!!?? by 'MattScott' (12 May 2009 @ 16:31)

Re: ferrari pulling out of next years F1!!?? by 'AlfaCRG' (12 May 2009 @ 16:40)

Re: ferrari pulling out of next years F1!!?? by 'PaulMRotax' (12 May 2009 @ 21:17)

Ferrari didn't bring anything new to the table.... by 'Chad' (13 May 2009 @ 2:01)

It is going to be an accountants by 'bt3962' (13 May 2009 @ 7:38)

Re: It is going to be an accountants by 'HC64' (13 May 2009 @ 8:53)

Re: It is going to be an accountants by 'Roblin' (13 May 2009 @ 9:56)

Re: It is going to be an accountants by 'HC64' (13 May 2009 @ 10:07)

Re: It is going to be an accountants by 'Roblin' (13 May 2009 @ 10:17)

Re: It is going to be an accountants by 'michaelg36' (13 May 2009 @ 11:08)

Re: Red Bull , Toyota and renault by 'pccsystems' (13 May 2009 @ 17:04)

Re: Red Bull , Toyota and renault by 'tsp' (13 May 2009 @ 19:29)

Re: Red Bull , Toyota and renault by 'jnrblue91' (13 May 2009 @ 20:49)

Re: It is going to be an accountants by 'DanTheK1RaceGearMan' (13 May 2009 @ 23:49)

Re: It is going to be an accountants by 'AlfaCRG' (14 May 2009 @ 0:34)

There needs to be some control of costs by 'Chad' (14 May 2009 @ 2:51)

Re: There needs to be some control of costs by 'DanTheK1RaceGearMan' (14 May 2009 @ 9:07)

Re: There needs to be some control of costs by 'davidmc' << You are here!

Re: There needs to be some control of costs by 'Gillard77' (14 May 2009 @ 11:46)

Re: There needs to be some control of costs by 'davidmc' (14 May 2009 @ 12:33)

Re: There needs to be some control of costs by 'Gillard77' (14 May 2009 @ 13:09)

Re: There needs to be some control of costs by 'davidmc' (14 May 2009 @ 13:54)

Re: There needs to be some control of costs by 'Gillard77' (14 May 2009 @ 15:17)

Re: There needs to be some control of costs by 'davidmc' (14 May 2009 @ 16:17)

Re: There needs to be some control of costs by 'Gillard77' (15 May 2009 @ 10:02)

FIA Cap Meeting over by 'Gillard77' (15 May 2009 @ 16:55)

Budget Cap by 'Scotto89' (16 May 2009 @ 21:05)

Re: Why, is F1 racing for buttons? nt. by 'DanTheK1RaceGearMan' (17 May 2009 @ 10:02)

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