MPH: Liberty and F1's impending arms race

by Mark Hughes on 25th January 2019

Haas and Ferrari's relationship has sparked a new focus on F1 cost caps and regulating against 'slave' teams

Ferrari's Kimi Raikkonen and Haas's Romain Grosjean alongside each other in 2018 Barcelona testing

How the post-2020 Formula 1 landscape will look is still far from certain but a series of strategy group meetings (one last week, two more towards the end of the month) is trying to put some meat on the bones of the long-established broad agreement of new aero and fundamentally similar power units.

The governing body FIA and F1 owner Liberty Media are presenting a united front in implementing a cost cap as well as trying to regulate against the prospect of ‘slave’ teams to the big manufacturers.

With regard to the first of these aims, there are two elements to the perceived problem of cost escalation: 1) minimising the lap time advantage of the extra spend of the manufacturers over the independents so we no longer have a situation where the former usually laps the latter; 2) saving the manufacturers from themselves by dissuading them from an arms race with the other manufacturers. 

Addressing problem 1) what was proposed last week was that the engine budget be taken out of the team cost cap, but at the same time have an engine supply price limit of $12 million per team per season (plus an extra $1.5 million allowance, which we’ll come to in a moment).

This would appear to leave engine manufacturers free to continue spending whatever they see fit on R&D – but without that cost getting passed on to the independent teams as the manufacturers remain obliged to supply engines identical to those of their works teams.

More: F1 2019: the big changes

It’s quite a clever strategy. It would go some way towards limiting the possibility of the manufacturer teams pulling ever further away from the independents.

If the manufacturer teams (which in most cases are de facto also the engine suppliers) choose to spend more of their budget on something outside the scope of cost control (i.e. power unit development), it leaves them less able to spend it elsewhere - thereby limiting their advantages over the independents in those areas. But at the same time passing on the fruits of the R&D spend onto the independents at no extra charge.

But that still leaves problem 2) – i.e. preventing an arms race between the manufacturers. Liberty/FIA hope to address this by means of much more savage controls than currently on power unit development – by way of a limitation on dyno time, the number of upgrades per season and controlled components. Sure, that still leaves scope for R&D outside those specific limitations, but their lap time value will hit diminishing returns very quickly. That’s the thinking, anyway.

Taking the $12 million engine cost out of the budget cap (along with driver salaries, marketing budget and the highest paid employee aside from drivers) would reduce the headline cost cap to $185 million in 2021 (after deductions, around $100 million less than Ferrari currently spends), with a glidepath down to $135 million by 2023.

A small but intriguing footnote is that an allowance of an extra $1.5 million engine spend is being proposed – and this is to cover the cost of adapting the engines to a new fuel. Which strongly implies that F1 is looking at introducing synthetic fuel, i.e. petroleum derived from gas – for example in processing biomass. Because the plants absorb carbon dioxide as they grow, there’s a net reduction in greenhouse gases.

More: MPH: F1 inequality could be solved by Le Mans

Regarding the discouragement of slave teams, the proposal is that the standard parts list is expanded which would oblige Haas, for example, to feature more uniquely-Haas parts in its cars, replacing parts currently supplied by Ferrari. This is in line with what Mercedes’ Toto Wolff outlined to Motor Sport a few months ago when he said, “I think [the listed parts rules] need to be tightened a little bit.

"If there is a financial advantage because of the economies of scale between the two teams I think it should be allowed. But if it becomes a must for a big team needing a small team in order to collaborate and share resource and a must for a small team to collaborate with a big team so as not to be at the back, then that should not be the case.

"It should only happen if it’s a win-win and is beneficial for F1.”

Ferrari and Haas have abided by the regulations in their co-operation, but the structure of their relationship as the most extreme interpretation of the listed parts regulation has always been more intimate than any of the other teams are comfortable with.

Mercedes has been as anxious to defend against Ferrari gaining an advantage from the arrangement as the independent teams have been to prevent Haas getting one up on them.

Haas’s punching-above-its-weight performance last season has probably brought this to a head.     

Join Mark Hughes, Damon Hill and Karun Chandhok for the 2019 Formula 1 Season Preview Evening in London




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