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Ruslan

Under New Management

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Here is what the head of the Renault racing team is saying (highlighting is mine):

 

As for F1 more generally, 40-year-old Abiteboul wants changes.

"It cannot go on like this," he said. "It cannot be that we already know the name of the world champion before the season.

"That is not healthy and serves no one. So we need to work closely with Liberty Media but also with Ferrari, Mercedes, McLaren, and so forth to make changes.

"But we must do so without damaging the DNA of formula one. The perception in the public has changed and the recipe of yesteryear no longer works in a world that constantly changes.

"Now the focus must be on sport, not technology," Abiteboul added.

 

Source: https://www.gpguide.com/News.aspx?articleId=MXwwMy8xNC8yMDE4IDAwOjAwOjAwfEFiaXRlYm91bCBzYXlzIEYxICdjYW5ub3QgZ28gb24gbGlrZSB0aGlzJw

 

I do get the impression that concerning Liberty's proposed changes:

1. Strongly opposed: Ferrari

2. Somewhat opposed: Mercedes

3. Neutral: Red Bull

4. Somewhat favorable: Renault, Force India, Sauber

5. Strongly favor: ???

6. Don't know: McLaren, Williams, Toro Rosso, Haas

 

 

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14 March 2018, 20:27

Wolff was quoted on several occasions that MB is fully aligned with Ferrari (as opposed to somewhat). Difference between those two teams is how their respective positions are being quoted in the media.

RBR is neutral..? That's news to me. In contrast, following F1 day in, day out, I am convinced that RBR together with McLaren are most vocal opponents to hybrid power plant, each for different reason. RBR wants shift from PU domination to aero domination, having Newey on staff. It hasn't escaped to anyone that this would be good for RBR, rather than F1. McLaren just wants 20 Cosworths on the grid, having Brown on staff. Prost meanwhile was quoted that current PU is being sold below its cost to produce, and is cheaper than engines he used to buy for his team; so, what's going on?

Abiteboul' issue is with regulations which were rigged in MB favor for past 3 years, and regulator instead adopting some measure which would put brakes on MB development, allowing others to close the gap, FiA and Brawn just let MB to continue built on that accumulated unfair advantage MB had already, and Renault now is worrying that season is over even before it began.  Problem is - I think - with FOG/FiA technical and competitive management, and not with Ferrari.

Rest of it is rather philosophical. Some would like to turn clock back 50 years, others are forward looking bunch. Those who will not like the environment after 2020 will leave, others will stay.

There is another race going on outside of the F1, relevant and more important to all automakers. Handelsblatt is running a headline: 

Quote

BMW eager to race ahead of rivals Mercedes, Tesla

 If it is a toss between F1 and relevance to road business, I know what I am betting on.

 

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1 hour ago, Sakae said:

 If it is a toss between F1 and relevance to road business, I know what I am betting on.

 

It would seem that as large team owners' main field of interest clearly lay outside F1 (Mercedes, Renault, Red Bull, (Honda)) FIA could be forced to choose: Is F1 primarily a sport or a marketing platform for multinational industry?

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1 hour ago, Robert Rick said:

It would seem that as large team owners' main field of interest clearly lay outside F1 (Mercedes, Renault, Red Bull, (Honda)) FIA could be forced to choose: Is F1 primarily a sport or a marketing platform for multinational industry?

Wrong question. What we have needs little polishing around the edges, and life could be good for fans and someone's bank account as well. Morphing F1 DNA into another run of the mill series is a sure way how to commit suicide and close the door for good (IMHO). F1 needs to be different - unique.

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5 hours ago, Robert Rick said:

It would seem that as large team owners' main field of interest clearly lay outside F1 (Mercedes, Renault, Red Bull, (Honda)) FIA could be forced to choose: Is F1 primarily a sport or a marketing platform for multinational industry?

Actually, it is a great question....perfectly framed.

Keep at it guy.

 

 

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6 hours ago, Sakae said:

14 March 2018, 20:27

Wolff was quoted on several occasions that MB is fully aligned with Ferrari (as opposed to somewhat). Difference between those two teams is how their respective positions are being quoted in the media.

RBR is neutral..? That's news to me. In contrast, following F1 day in, day out, I am convinced that RBR together with McLaren are most vocal opponents to hybrid power plant, each for different reason. RBR wants shift from PU domination to aero domination, having Newey on staff. It hasn't escaped to anyone that this would be good for RBR, rather than F1. McLaren just wants 20 Cosworths on the grid, having Brown on staff. Prost meanwhile was quoted that current PU is being sold below its cost to produce, and is cheaper than engines he used to buy for his team; so, what's going on?

Abiteboul' issue is with regulations which were rigged in MB favor for past 3 years, and regulator instead adopting some measure which would put brakes on MB development, allowing others to close the gap, FiA and Brawn just let MB to continue built on that accumulated unfair advantage MB had already, and Renault now is worrying that season is over even before it began.  Problem is - I think - with FOG/FiA technical and competitive management, and not with Ferrari.

Rest of it is rather philosophical. Some would like to turn clock back 50 years, others are forward looking bunch. Those who will not like the environment after 2020 will leave, others will stay.

There is another race going on outside of the F1, relevant and more important to all automakers. Handelsblatt is running a headline: 

 If it is a toss between F1 and relevance to road business, I know what I am betting on.

 

Well, the engine regulations are just one of the many issues being discussed. But your second paragraph clearly hits at one of the reasons that everyone is arguing over 2021 regulations....they all have a vested interest in a different outcome. While many voices may object to the specifics of what Liberty is trying to do....they are not in the least unified as to what should be done instead. And many of them agree with some of what Liberty wants to do and disagree with other parts. So.....who pretty much opposes everything Liberty is suggesting? As far as I know, it is Ferrari (and Sakae). 

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15 March 2018, 06:20 - To suggest F1 must be either road car relevant, or being sporty implies there is nothing between. This is not however how I think about this situation. Current technical and sporting rules need overhaul, no doubt about it, however that could be done without burning farm down. Scorch land solution is good only when patient cannot be saved, but I do not think that's where we are. Owners can simply put foot down, and do whatever they want, regardless who does or doesn't agree with them. Do that instead issuing bellicose headlines and steering hatred in public arena. Problem is, there will be consequences of such (hostile) move, so much is obvious.

Contrary to what I read on the forum, all three automakers are united, but don't let that stop you from vilifying Ferrari only. Honda did not stated publicly their position yet, but we know from the past, they explained the reason why they have returned to F1 was challenge hybrid PU represents, so who knows whether they have changed their mind. Business in US might play a role how they approach F1 dilemma.

My take, leave technology mature for a few years, that's the cheapest way going forward, however fix the rules how this PU is used (restrictions on oil and fuel consumption, reliability penalties etc.), address messy tires, address downforce, and things will improve, while farm stays intact.

Wolff: I think that F1 needs Ferrari more than Ferrari needs F1

Ecclestone

Quote

“I built a five star restaurant and they are turning it into McDonald’s,”

ECCLESTONE: MARCHIONNE KNOWS WHATEVER HE DOES I WILL BE THERE

Wolff

Quote

“But in my view not all the decisions (by LM) were positive.”

Marchionne

Quote

INDYCAR FOR FERRARI? WHY NOT?

 

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Ruslan, I saw the things Liberty are planning to do and I thought of you. They're bringing in a spending cap, though not until 2021. It's not ideal but you're finally going to get your way ;)

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Hey, it is still morning here....I am sipping my cup of coffee and about to read the news....

Budget caps........it is about time !!!!

 

 

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OK...read it (and lots of other news about porn stars and presidents):

A summary from the front page:

  • Cheaper, simpler, louder engines, while remaining road-relevant and hybrid, but making F1 more attractive for new entrants
  • A cost cap that "maintains Formula 1's position as the pinnacle of motorsport with state-of-the-art technology" and aiming to ensure "how you spend the money must be more decisive and important than how much money you spend"
  • A "more balanced" revenue distribution "based on meritocracy of the current performance" while "recognising historical franchise and value"
  • "More race-able" cars "to increase overtaking opportunities" which "maintain performance differentiators like aerodynamics, suspensions and PU performance" but standardisation of "areas not relevant to fans"
  • A simplified and streamlined governance structure.

 

My comments/opinions:

1. They obviously needed to do something about the engines. I would have recommended making them a little larger (2.0 liters) and allowing multiple cylinder configurations (including V-12s). Maybe find other areas to reduced the power.

2. Cost Cap was needed. Along with that, they should now also removed restrictions on the testing and the number of engines, as these are issues that are now controlled by the cost cap. Now, they can pretty much remove all other cost-control like regulations. The cap is $150 million. Not sure if that includes driver salaries or team principles salaries. I gather only four or five teams are above that cap and only three are significantly above it.

3. It looks like they compromised some on revenue distribution, which I figured they would. On the other hand, with proper revenue distribution, sponsors, and a budget cap, some teams may actually turn a profit. This would make Formula One attractive to entrants.

4. More "race-able" cars of course makes sense. Not sure about standardization of "areas not relevant to fans"...not sure what that means. I am the guy who still wants different tire manufacturers.

5. Governance structure: I gather this means they are eliminating the "Strategy Group" which appeared to do more damage than good.

 

I gather the real resistance to change is from Ferrari and Mercedes. If the rest sign on....then they probably need to go along. At this point, I don't see why the rest won't sign on. Red Bull certainly got nothing out of the new era. They can sell bad-tasting fizzy drinks just as well with a budget cap as without one. These rule changes also probably work in favor of at least five other teams and probably don't disadvantage McLaren or Renault. In the end though, it is not the decision of the teams what the regulations are, but of FOM and FIA.

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Pitpass has a few more details: https://www.pitpass.com/61364/Liberty-proposes-150m-budget-cap

1. The $150 million budget cap would not include driver salaries, key executives or marketing budget.

2. Cap would be introduced in two stages.

3. The redistribution of the prize pot would leave teams only having to raise around $30 million in sponsorship in order to reach the $150 million limit. 

4. Ferrari would continue to receive a $50 million bonus and a gather $10 million more as an engine manufacturer.

5. Engine manufacturers would receive a $10 million bonus.

 

My comments:

So, with only a need to raise $30 million in sponsorship does this mean:

  1. Teams can be run at a profit?
  2. Pay drivers should be worried?
  3. Ferrari will make $30 million a year, even with no sponsors?

I gather there is still a challenge to entry, in that a new team will have to show up with its own budget and will need to establish itself to get a part of prize pot. Still, this is a much lower challenge than what it has been in the past.

Anyhow, I think this is all for the better.

 

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Just for reference (source Sakae...):

19 March 2018, 17:31 - Est. team budgets for 2018 (origins unknown)

Mercedes Approx. €450 million
Ferrari Approx. €430 million
Red Bull Approx. €350 million
McLaren Approx. €250 million
Renault Approx. €200 million
Sauber Approx. €135 million
Williams Approx. €135 million
Toro Rosso Approx. €125 million
Haas Approx. €110 million
Force India

Approx. €110 million

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16 hours ago, Ruslan said:

I gather the real resistance to change is from Ferrari and Mercedes. If the rest sign on...

I think that what would be surprising was if Mercedes and Ferrari were happy with the changes. Because there is a thing that Liberty didn't care to explain: how about measuring and then capping the cost of developing and building an engine? From the look of things it seems that Liberty forgot this rather important issue when doing their homework. It looks as if Mercedes and Ferrari (and to my knowledge Renault as well) will have to spend a huge amount of money to design, develop and build engines, then they will have to sell these engines at a loss at some other team, and if that was not enough some of the work that they do on their engines might be considered as part of their budget (which is going to be capped) and therefore might even end up in a situation where they have less to spend on their cars than their clients/rivals.

On top of that what incentive have Mercedes, Ferrari and Renault to spend huge sums of money for such a silly formula? Mercedes, Ferrari and Renault are for profit organisations, they are not charities, with the rules being proposed by Liberty Mercedes, Ferrari and Renault will be asked to give money away to their clients/rivals

If they really want to a level playing field AND a budget cap then each team should build their engine, OR they should have an independent engine manufacturer providing the engines, at a fixed cost, to all the teams, and if I remember correctly that idea has been circulated some time ago.

IMHO Liberty's proposal doesn't make any economic sense for the engine manufacturers

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7 April 2018, 09:02 (CEST) - Perception I have, that Ross Brawn is asking automakers as exchange for less winning shares actually support financially LM's product by means of supporting less well off teams (by subsidizing development cost), and therefore propping up their competitors at no cost to LM. No wonder that Williams is being quoted as being "delighted". Development cost of changes on technology v. low budget makes no sense to me whatsoever. Clarification could clear up momentary confusion. As stated, they are not going to negotiate in public, then we can hope we get occasionally some odd leaks (mostly defaming some teams for not surrendering to blackmail), otherwise we will have to patiently wait. At the moment I can't add this all up.

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2 hours ago, Sakae said:

7 April 2018, 09:02 (CEST) - Perception I have, that Ross Brawn is asking automakers as exchange for less winning shares actually support financially LM's product by means of supporting less well off teams (by subsidizing development cost), and therefore propping up their competitors at no cost to LM. No wonder that Williams is being quoted as being "delighted". 

I totally agree with your description of the situation, the point here is not Ferrari's heritage money (I wonder why we never mention the heritage money paid to the other teams... :rolleyes:) but the fact that Liberty is trying to have a situation where the engine manufacturers, ie the big team, subsidise their opponents, if you think about it it's ludicrous, it's as if asking a country at war to supply weapons and ammunition to their enemy.

To me this looks like an invitation to the big teams to go, I don't believe that it's about reducing the cost of running an F1 team or about improving the competition (in fact there is no mention whatsoever of reducing the reliance on aerodynamics), to me it looks like a power struggle, Liberty doesn't want to relinquish too much power to the engine manufacturers so they put them in a situation where on the one hand it doesn't make any economic sense for them to stay, on the other it makes them look bad and greedy (all this talk about Ferrari's, and only Ferrari's heritage money). 

Once the big manufacturers will be gone and the likes of Cosworth will get involved Liberty will do as they please because if Mercedes or Renault or Ferrari walk away from F1 that won't break their business, but Red Bull or Williams or Force India have nowhere else to turn, they're either in F1 or they would have to close down, so Liberty will be in a stronger negotiating position and impose on them tougher conditions. The fact that Williams seems to be delighted only goes to corroborate my view, since they are always wrong on important decisions, IMHO they are shooting in their own feet (without having realised it :rolleyes:)

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22 minutes ago, Publius Cornelius Scipio said:

I totally agree with your description of the situation, the point here is not Ferrari's heritage money (I wonder why we never mention the heritage money paid to the other teams... :rolleyes:) but the fact that Liberty is trying to have a situation where the engine manufacturers, ie the big team, subsidise their opponents, if you think about it it's ludicrous, it's as if asking a country at war to supply weapons and ammunition to their enemy.

To me this looks like an invitation to the big teams to go, I don't believe that it's about reducing the cost of running an F1 team or about improving the competition (in fact there is no mention whatsoever of reducing the reliance on aerodynamics), to me it looks like a power struggle, Liberty doesn't want to relinquish too much power to the engine manufacturers so they put them in a situation where on the one hand it doesn't make any economic sense for them to stay, on the other it makes them look bad and greedy (all this talk about Ferrari's, and only Ferrari's heritage money). 

Once the big manufacturers will be gone and the likes of Cosworth will get involved Liberty will do as they please because if Mercedes or Renault or Ferrari walk away from F1 that won't break their business, but Red Bull or Williams or Force India have nowhere else to turn, they're either in F1 or they would have to close down, so Liberty will be in a stronger negotiating position and impose on them tougher conditions. The fact that Williams seems to be delighted only goes to corroborate my view, since they are always wrong on important decisions, IMHO they are shooting in their own feet (without having realised it :rolleyes:)

7 April 2018, 12:17 (CEST) - I have similar - if not identical - thoughts for some times since LM bought into F1. Question is, how do teams respond, since the proposal is DOA in my view at least for MB and Scuderia. Joining E-series or something else? Renault might be on the hook to stay until 2023 if I am not mistaken. (I am not sure of exact wording of the agreement and exceptions within which they signed).

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there's another thing to consider: assuming that Ferrari decides to leave, what happens between the moment when they make public their intention of not signing up to the 2021 rules and the moment when they are contractually free to walk away? are we going to see odd stewards decisions? will Ferrari ever manage to win a race? are they going to spill some beans in retaliation? My take is that if Ferrari decides to leave F1 they should be allowed to walk out at the end of the season, irrespective of what the Concorde agreement says. If both Ferrari AND Mercedes walk out IMHO F1 as we know is dead

I hope to be wrong but in terms of the proposals and especially of their timing it seems to me that Liberty is trying to pick up a fight with Ferrari, I hope that Marchionne uses his head when coming up with a strategy

BTW I didn't know that Renault had a longer lock up than the others

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War  -  Allegation of "rulers" conducting war on manufacturers is not new nor it would be first time.  (I am not sure about Renault; I've read something about it long time ago, and cannot find that reference right now).

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7 hours ago, Publius Cornelius Scipio said:

I think that what would be surprising was if Mercedes and Ferrari were happy with the changes. Because there is a thing that Liberty didn't care to explain: how about measuring and then capping the cost of developing and building an engine? From the look of things it seems that Liberty forgot this rather important issue when doing their homework. It looks as if Mercedes and Ferrari (and to my knowledge Renault as well) will have to spend a huge amount of money to design, develop and build engines, then they will have to sell these engines at a loss at some other team, and if that was not enough some of the work that they do on their engines might be considered as part of their budget (which is going to be capped) and therefore might even end up in a situation where they have less to spend on their cars than their clients/rivals.

On top of that what incentive have Mercedes, Ferrari and Renault to spend huge sums of money for such a silly formula? Mercedes, Ferrari and Renault are for profit organisations, they are not charities, with the rules being proposed by Liberty Mercedes, Ferrari and Renault will be asked to give money away to their clients/rivals

If they really want to a level playing field AND a budget cap then each team should build their engine, OR they should have an independent engine manufacturer providing the engines, at a fixed cost, to all the teams, and if I remember correctly that idea has been circulated some time ago.

IMHO Liberty's proposal doesn't make any economic sense for the engine manufacturers

There was no explanation of what to do about engine manufacturers other than a $10 million payout to them and that new engines will be cheaper. We will have to see what they propose for that, but obviously, somehow or the other, engine manufacturers must be addressed (perhaps a separate cap, set at a value that they can all make a profit if they sell it to two or three other teams).

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I gather from Horner's and Marko's remarks that Red Bull is on board (and I assume Toro Rosso). Williams, which is actually a for-profit firm listed on the stock market, is ecstatic. By default, I assume the same applies to Haas, Sauber, and Force India. This is six teams. I have no indications from McLaren or Renault but I would not be surprised if they are not on board. This makes eight. It also means they potentially already have three engine manufacturers: Renault, Honda and Aston Martin (which has already voiced its approval).

The only two who have publically objected that I am aware of is Ferrari and Mercedes, and they have with some sway. So.....where does that leave us?

  1. An F1 series of 8 established teams, 3 engine manufacturers, plus new teams, or....
  2. A decision by Mercedes and Ferrari to agree to the new regulations, or.....
  3. Mercedes and Ferrari break away to establish a competing series., or...
  4. Mercedes and/or Ferrari quit F1, or....
  5. A negotiation to modify the new regulations and then they all agree.

I don't believe that Mercedes and Ferrari breaking away and establishing a competing series is a credible threat if McLaren and Renault stay with F1. I think, in light of their investment and commitment, quitting F1 is not likely for either also. A gather another round of negotiations is the more likely scenario.

One wonders what that negotiation might be. In the case of Mercedes, the complaint is that the budget cap is too low and they are going to have to lay lots of people off. Liberty did say that the budget cap would be set to be established in two stages. So, it appears that they have already addressed this issue, but obviously not to Mercedes' satisfaction. So a phased or extended introduction of the budget cap (although it can't be too extended) or a higher budget cap (it can't be too much higher). The other unspoken complaint is that they can't win by outspending their opponents, which obviously really isn't a negotiable point.

Not sure what Ferrari's actual complaint is. I gather the unspoken complaint is that they can't be a top team if they don't get to spend more than almost everyone else.

If McLaren, Renault and Honda are on board with these new regulations, then I suspect that Mercedes and Ferrari will have no choice but to compromise and comply.

 

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Quote

Not sure what Ferrari's actual complaint is. I gather the unspoken complaint is that they can't be a top team if they don't get to spend more than almost everyone else.

Has anyone from Ferrari organization ever said that? I think putting words into someone's mouth hasn't really accomplished anything.

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5 hours ago, Ruslan said:

There was no explanation of what to do about engine manufacturers other than a $10 million payout to them and that new engines will be cheaper. 

and that is the problem, saying that the engines will be cheaper but how? and $10 million is peanuts compared to what they spend.

I rest my case why don't every team design, develop and build their engine? I really don't get this, it would be great

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5 hours ago, Sakae said:

Has anyone from Ferrari organization ever said that? I think putting words into someone's mouth hasn't really accomplished anything.

No...nor would they. But they are for profit business....why would they so vehemently oppose the budget cap when it could clearly improve their bottom line?

 

We are not exactly breaking new ground here to note that rich people tend to oppose income re-distribution.

 

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52 minutes ago, Publius Cornelius Scipio said:

and that is the problem, saying that the engines will be cheaper but how? and $10 million is peanuts compared to what they spend.

I rest my case why don't every team design, develop and build their engine? I really don't get this, it would be great

We will have to see what they come up to address the issues of engines. If Mercedes is building engines for three teams.....then how is this covered under the budget cap, if engines are covered at all.

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Pit Pass interview of Toto Wolff that I found very interesting: https://www.pitpass.com/61385/Wolff-150m-cap-is-not-achievable

A few points:

  1. "....that number is much too low for the big teams, but if you look into the detail, we need to work with Liberty and find a compromise. That number will not be achievable, but maybe something sensible can be..."
  2. "When you add all the extra bits that are being excluded, you are probably looking at a much higher number than $150m, maybe $250m, then suddenly it doesn't look so crazy any more."
  3. "Now we know what the position is and we can work towards that position. Now at least you can properly assess this and say what do we like, what do we not like, what's feasible and what's not."
  4. "We have to assess how we will achieve compromise, that will be our main priority. As long as we have confidence that there are good ideas kicking in that will grow revenue, that will grow our audiences and preserve the ones we already have, we are in."
  5. "We want to preserve Formula 1's traditions. It's a high-tech sport, the best racing drivers in the best machines. As long as we can maintain that with a solid business model, we are happy."

This sounds like he (and Mercedes) are willing to work with Liberty to come up a reasonable compromise. Interesting enough, when the number of $150 million first came out, I believe I posted somewhere on this board that this was too low and probably needed to be more like $250 million.

Anyhow, I gather from this interview (and I assume he said it with full approval of the Mercedes management), that Mercedes has accepted the budget cap and it will be some figure from $150 to $250 million. If Mercedes is willing to discuss compromise, then I pretty sure Ferrari will compromise also. I am assuming the Liberty is willing to compromise.

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