Clicky

Jump to content

Archived

This topic is now archived and is closed to further replies.

Ruslan

Under New Management

Recommended Posts

14 hours ago, Ruslan said:

why would they so vehemently oppose the budget cap when it could clearly improve their bottom line?

because most certainly it would not improve their bottom line

Ferrari now can generate a lot of revenues from sponsors, the budget cap as proposed by Liberty means that they would "waste" a lot of their pulling power on the sponsorship front.

Then they would see their heritage money curtailed, obviously you look at them as a giant in financial terms in F1 whereas I look at them as a dangerously small organisation (just check out Ferrari's turnover compared to the one of Mercedes or Renault or Honda), and they seem to believe that the heritage money is only of the reason that allow them to be competitive, in purely financial terms, with the big manufacturers (and I totally agree with that view).

On top of that you have a price cap for the engines that they sell to other teams (they are contractually forced to supply engines to others, let's not forget that): so how do they fund the development of an engine? Mercedes, Renault and Honda could allocate to that just a small portion of their marketing budget (on the assumption that being in F1 helps them shift road cars), Ferrari quite simply hasn't the resources to do that, in order to come up with a competitive engine they would have to use a considerable amount of the entire Ferrari S.p.A. balance sheet, they would in turn incur in a net financial loss to fund their F1 plans. Obviously my assumption is that there being no budget cap on the PUs (because any budget cap would be a waste of time, they would never be able to enforce it) the engine manufacturers will continue to spend vast amount of money on that front.

I think that our different take on this matter has an underlying cause: you see Ferrari has a giant with limitless resources, I see them as the last of the true independent F1 organisations, who whether we like or not struggle to deploy the financial muscle that the other big manufacturers can deploy. My take is based upon the fact that Ferrari is now a different animal from FCA, in the 80s Ferrari could spend as much as they wanted because they had the backing of FIAT, now they have to make ends meet. 

Share this post


Link to post
Share on other sites

To certain extend Ferrari might be in more stringent income stream conditions than McLaren is.

Share this post


Link to post
Share on other sites
4 minutes ago, Sakae said:

To certain extend Ferrari might be in more stringent income stream conditions than McLaren is.

to my knowledge Ferrari hasn't made any money out of F1 for a very long time (if they ever did), the point with Ferrari is that no one ever dared pull the Scuderia out of F1 because they feared a public outcry, but my take is that if they are put in a position where they can't be competitive (let's assume that they might have $25om to spend on their engines where Mercedes, say, has $1bn) then they would pull out because they believe that the public would now understand.

Let's not forget who Ferrari's "rivals" are: Porsche, Lamborghini, Pagani, Bugatti, no one of them is in F1, from a purely business perspective F1 doesn't make any sense for Ferrari, Ferrari is way too small to be an independent F1 manufacturer.

In a sense Ferrari is the only truly independent team in F1 these days (the garagistes are at the mercy of their engine providers), and that seems to be part of the problem, they are independent

Share this post


Link to post
Share on other sites

This remains me what Marchionne said once about FiA (false) saving attempts through restrictiveness, admitting, that Ferrari is yet to save a single Euro. This confirms my suspicion, that alternative approaches to stay competitive and bypass roadblocks are just as expensive, if not more so, than normal (direct) development. I am not surprise that F1 is not money making machine.  

Share this post


Link to post
Share on other sites

For budget cap:

  1. Williams
  2. Aston Martin (or at least for the new engine regulations)
  3. Now Grosjean

Against:

  1. Ferrari
  2. Mercedes

I think it is kind of significant that everyone else has remained quiet. I assume acquiesce

 

Share this post


Link to post
Share on other sites
1 hour ago, Ruslan said:

For budget cap:

  1. Williams
  2. Aston Martin (or at least for the new engine regulations)
  3. Now Grosjean

Against:

  1. Ferrari
  2. Mercedes

I think it is kind of significant that everyone else has remained quiet. I assume acquiesce

 

Aston Martin don't have the money to develop their road cars (Mercedes is helping them) so I don't see how they could ever be a bona fide contender for the role of engine marker in F1. Besides they agreed to be a sponsor on a car powered by the PU made by another company, I'm not sure that Aston Martin is the best example of what is good for F1, most proper car manufacturers would never put their name on a car powered by someone else, to my knowledge the only other example is Saab who used to sponsor cars in F3 in the 80s, we all know how Saab ended up (I truly loved the 900 Turbo). Do you think that Ferrari would put their name on a car with a Renault engine? Or Mercedes? Porsche? BMW? Honda? These companies have some engineering integrity. for that matter I don't think that Renault would put their name on a car with an engine built by someone else.

Share this post


Link to post
Share on other sites
1 hour ago, Publius Cornelius Scipio said:

Aston Martin don't have the money to develop their road cars (Mercedes is helping them) so I don't see how they could ever be a bona fide contender for the role of engine marker in F1. Besides they agreed to be a sponsor on a car powered by the PU made by another company, I'm not sure that Aston Martin is the best example of what is good for F1, most proper car manufacturers would never put their name on a car powered by someone else, to my knowledge the only other example is Saab who used to sponsor cars in F3 in the 80s, we all know how Saab ended up (I truly loved the 900 Turbo). Do you think that Ferrari would put their name on a car with a Renault engine? Or Mercedes? Porsche? BMW? Honda? These companies have some engineering integrity. for that matter I don't think that Renault would put their name on a car with an engine built by someone else.

I get the impression that they are putting their toe in the water, with the intention to enter an engine in 2021. Not sure if it will happen. Don't really know who owns Aston Martin...but according to Wikipedia, they employ 1,850 people, which I gather is about the same number that work just on Mercedes F1. So yea, in the current environment, Aston Martin in F1 looks to be a bit of a reach. In the budget cap environment, it may make sense. Right now, three of the four engine manufacturers in F1 are major corporations (Renault, Honda and Mercedes).

Share this post


Link to post
Share on other sites
1 hour ago, Ruslan said:

I get the impression that they are putting their toe in the water, with the intention to enter an engine in 2021. Not sure if it will happen. Don't really know who owns Aston Martin...but according to Wikipedia, they employ 1,850 people, which I gather is about the same number that work just on Mercedes F1. So yea, in the current environment, Aston Martin in F1 looks to be a bit of a reach. In the budget cap environment, it may make sense. Right now, three of the four engine manufacturers in F1 are major corporations (Renault, Honda and Mercedes).

to my knowledge Aston Martin's main shareholder is InvestIndustrial which is an SPV of the Bonomi group. then there should be a middle eastern sovreign fund (I don't remember which one) and Mercedes Benz which should have around 5%.

I think that Aston Martin would not be able to develop an engine even if there was a budget cap (notwithstanding the fact that under the current Liberty's proposal there doesn't seem to be any budget cap for the PUs, only a capped cost that the teams pay to the manufacturer, ie. the manufacturers sell their engines at a loss) if they have to use Mercedes' engine for their road cars because they can't afford to design, develop and build a V8. 

Share this post


Link to post
Share on other sites

sadly I fear that Aston Martin is just a red herring, they quite simply don't have the resources to build an F1 engine, if they had more money they would build more road cars, I don't think that they would spend huge amounts of their balance sheet on F1 (let's be honest, Aston Martin hasn't got a great racing pedigree, they just build lovely cars and were lucky enough that James Bond used a DB5)

Share this post


Link to post
Share on other sites
1 hour ago, Publius Cornelius Scipio said:

to my knowledge Aston Martin's main shareholder is InvestIndustrial which is an SPV of the Bonomi group. then there should be a middle eastern sovreign fund (I don't remember which one) and Mercedes Benz which should have around 5%.

I think that Aston Martin would not be able to develop an engine even if there was a budget cap (notwithstanding the fact that under the current Liberty's proposal there doesn't seem to be any budget cap for the PUs, only a capped cost that the teams pay to the manufacturer, ie. the manufacturers sell their engines at a loss) if they have to use Mercedes' engine for their road cars because they can't afford to design, develop and build a V8. 

sadly I fear that Aston Martin is just a red herring, they quite simply don't have the resources to build an F1 engine, if they had more money they would build more road cars, I don't think that they would spend huge amounts of their balance sheet on F1 (let's be honest, Aston Martin hasn't got a great racing pedigree, they just build lovely cars and were lucky enough that James Bond used a DB5)

Yea....I have no idea of who is InvestIndustrial, Bonomi, etc. are. I have heard of Mercedes Benz.

I am mystified how the budget cap applies to engines. It appears to be a team budget cap. If there is no budget cap on engines...this does not quite do the trick. I don't think that just eliminating the MGU-H makes the engines a whole lot more affordable in 2021. So yea, I am not exactly sure how this works for Aston Martin, but they did issue out a very positive press release, so maybe they know something we don't.

 

 

Share this post


Link to post
Share on other sites
1 hour ago, Ruslan said:

Yea....I have no idea of who is InvestIndustrial, Bonomi, etc. are. I have heard of Mercedes Benz.

I am mystified how the budget cap applies to engines. It appears to be a team budget cap. If there is no budget cap on engines...this does not quite do the trick. I don't think that just eliminating the MGU-H makes the engines a whole lot more affordable in 2021. So yea, I am not exactly sure how this works for Aston Martin, but they did issue out a very positive press release, so maybe they know something we don't.

 

 

InvestIndustrial and Bonomi are the ones who used to own Ducati before they sold it to Audi. Andrea Bonomi is a guy who knows what he's doing, he's been the major shareholders of Aston Martin for years and I understand that business under him has flourished.

Re engines and the budget cap, that is exactly my point, if there is a team budget cap, a cap for the cost of a supply of engines and there is no budget cap for the engines themselves it means that only the really big guys like Mercedes can stay, Ferrari will never be able to compete with Mercedes, they will be pushed out of the sport (I assume that they won't stay just to finish 5th or so), in a sense under the proposed rules if you want to build an engine you're going to do that at a loss, Mercedes or Honda can take it, Ferrari (or Aston Martin, for that matter) cannot

Share this post


Link to post
Share on other sites
1 hour ago, Publius Cornelius Scipio said:

InvestIndustrial and Bonomi are the ones who used to own Ducati before they sold it to Audi. Andrea Bonomi is a guy who knows what he's doing, he's been the major shareholders of Aston Martin for years and I understand that business under him has flourished.

Re engines and the budget cap, that is exactly my point, if there is a team budget cap, a cap for the cost of a supply of engines and there is no budget cap for the engines themselves it means that only the really big guys like Mercedes can stay, Ferrari will never be able to compete with Mercedes, they will be pushed out of the sport (I assume that they won't stay just to finish 5th or so), in a sense under the proposed rules if you want to build an engine you're going to do that at a loss, Mercedes or Honda can take it, Ferrari (or Aston Martin, for that matter) cannot

I guess we will have to hear more from Liberty. I noticed that they allowed for a $10 million payment to anyone who was an engine manufacturer, but that can hardly begin to cover their expenses.

But, if there is no cap on the engine manufacturers, then it is for the engine manufacturers, the same situation we already have. I don't see how that disadvantages Ferrari compared to Mercedes any more than they are currently.

Share this post


Link to post
Share on other sites
7 hours ago, Ruslan said:

But, if there is no cap on the engine manufacturers, then it is for the engine manufacturers, the same situation we already have. I don't see how that disadvantages Ferrari compared to Mercedes any more than they are currently.

Because now the Scuderia has a big budget thanks to sponsors, heritage money, etc, then all that will be gone and they are going to be stuck with the costs, in a sense building an F1 engine will be a marketing tool, Mercedes or Honda or Renault can afford to spend that much money on marketing, Ferrari (or Aston Martin) cannot. All the money that now comes into Ferrari's coffers and that under Liberty's plans will be gone is spent developing the most expensive bit of a F1 car there is, the PU, no money no party!

Share this post


Link to post
Share on other sites
6 hours ago, Publius Cornelius Scipio said:

Because now the Scuderia has a big budget thanks to sponsors, heritage money, etc, then all that will be gone and they are going to be stuck with the costs, in a sense building an F1 engine will be a marketing tool, Mercedes or Honda or Renault can afford to spend that much money on marketing, Ferrari (or Aston Martin) cannot. All the money that now comes into Ferrari's coffers and that under Liberty's plans will be gone is spent developing the most expensive bit of a F1 car there is, the PU, no money no party!

Well, Ferrari is still going to get $40-50 million in heritage money (vice $100) plus $10 million as a manufacturer. So this is hardly drastic. There cost of running the team (not counting the engine) is going to be capped. There is no reason why they are going to loose their sponsors. In fact, the whole arrangement might well make F1 more profitable for them (or more to the point: less of a loser).

But if we indeed have 1) no budget cap on the power unit, 2) requirement that engines supplied to otherl teams are equal, 3) limited development on engines (by keep the same engine less the MGU-H), 4) and a maximum engine cost for purchasers (I am not sure if this is the case)......then 1) certainly Mercedes will not have lay off a whole lot of people, and 2) the competitive balance between Mercedes and Ferrari will remain unchanged.

I am not sure how you can argue that the new regulations are going to be a major disadvantage to Ferrari relative to Mercedes/Renault and Honda....compared to the current situation. If Mercedes/Honda/Renault can outspend Ferrari under the new regulations....then they certainly can under the current ones.

The budget cap really does not disadvantage Ferrari relative to Mercedes/Renault/Honda. What is does do it make all the other non-factory teams more competitive.

 

 

Share this post


Link to post
Share on other sites
5 hours ago, Ruslan said:

The budget cap really does not disadvantage Ferrari relative to Mercedes/Renault/Honda. What is does do it make all the other non-factory teams more competitive.

Ferrari, Renault and Mercedes are going to subsidise their rivals, that doesn't make much sense to me. Developing and bulding an engine costs in excess of USD500m, the non factory teams pay USD10m, that itsn't very fair. If the budget cap is the way forward then each team should build their engine, what's the problem?

Share this post


Link to post
Share on other sites
4 hours ago, Publius Cornelius Scipio said:

Ferrari, Renault and Mercedes are going to subsidise their rivals, that doesn't make much sense to me. Developing and bulding an engine costs in excess of USD500m, the non factory teams pay USD10m, that itsn't very fair. If the budget cap is the way forward then each team should build their engine, what's the problem?

Have they set a price of $10m for an customer engine in 2021? I thought they just gave all engine manufacturers an extra $10 million.

Share this post


Link to post
Share on other sites
14 hours ago, Ruslan said:

Have they set a price of $10m for an customer engine in 2021? I thought they just gave all engine manufacturers an extra $10 million.

my understanding is that it's a fixed price of USD10m for each supply plus a USD10m bonus, so Ferrari is supplying 2 teams and they would get USD30m (20 from their customers and 10 from Liberty).

On top of that if you make the sport cheaper the small teams who are struggling will be more willing to accept "cheap" sponsorship deals just to break even and that in turn will afftect the sponsorship money that the big teams can attract because if now to be a title sponsor you need in excess of USD20m from 2012 (assuming that the predictions of Liberty are correct) some teams could go as low as 5 or 10 and that will impact the sponsorship deals of the big guys as well who will be reduced. That's why I'm saying that Ferrarti can't be competitive with the proposed system because on one side they would have the same or very similar costs and on the other they will have less heritage money, less money from the sale of their engines and in all likelihood less sponsorship money

Share this post


Link to post
Share on other sites
13 hours ago, Publius Cornelius Scipio said:

my understanding is that it's a fixed price of USD10m for each supply plus a USD10m bonus, so Ferrari is supplying 2 teams and they would get USD30m (20 from their customers and 10 from Liberty).

I am not sure what my understanding is.....but if that is the case, then it really doesn't work out financially. I gather any engine program alone is going to cost more than $30 million a year (although if development is limited, I am not sure how much more). If they are indeed going to limit the cost of engines sold to other teams to $10 million, then they probably need to cap or control the cost of the engine programs.

<<On top of that if you make the sport cheaper the small teams who are struggling will be more willing to accept "cheap" sponsorship deals just to break even and that in turn will afftect the sponsorship money that the big teams can attract because if now to be a title sponsor you need in excess of USD20m from 2012 (assuming that the predictions of Liberty are correct) some teams could go as low as 5 or 10 and that will impact the sponsorship deals of the big guys as well who will be reduced. That's why I'm saying that Ferrarti can't be competitive with the proposed system because on one side they would have the same or very similar costs and on the other they will have less heritage money, less money from the sale of their engines and in all likelihood less sponsorship money>>

OK...understand your point. Not sure I entirely accept it.

 

Share this post


Link to post
Share on other sites
9 hours ago, Ruslan said:

I am not sure what my understanding is.....but if that is the case, then it really doesn't work out financially. I gather any engine program alone is going to cost more than $30 million a year (although if development is limited, I am not sure how much more). If they are indeed going to limit the cost of engines sold to other teams to $10 million, then they probably need to cap or control the cost of the engine programs.

otherwise they should choose a simple formula for the engines and stick with it for many years

the problem with a budget cap for engines is that IMHO it's impossible to enforce it

Share this post


Link to post
Share on other sites
11 hours ago, Publius Cornelius Scipio said:

otherwise they should choose a simple formula for the engines and stick with it for many years

the problem with a budget cap for engines is that IMHO it's impossible to enforce it

Actually, I think that is what they are doing, basically keeping the engine the same for 2021 as they already are, less the MGU-H. I am not sure what other changes that they have made or why suddenly all these engine manufacturers are expressing interest (like Aston Martin and Porsche). There may be something I am missing.

Actually, budget caps for engine are enforceable, but might require the engine manufacturers to establish separate plants (if they don't have them already) and dedicated engineers.

 

Share this post


Link to post
Share on other sites

PU current design less MGU-H will return us to years 2010 - 2014. New research, new design, new testing, new expenses, probably (tbc) more complexity. Who will pay for all of that? 

Porsche is in exploratory phase, and nothing more (as are several others). Berger stated that they are waiting for PU specs past 2021, which is suppose to be published next month.  Their interest in F1 seems rather warm than hot.

Share this post


Link to post
Share on other sites

Oh....I think the revs are still limited, there are other restrictions on engine design (I forget them all now), fuel flow limits, engines have to last a third of the season, etc. I really haven't been paying close attention to the current engine rules.

Share this post


Link to post
Share on other sites

Engine manufacturers currently engaged in F1 will have to run simultaneously two distinct operations. Develop new power unit system, and upkeep of current one at competitive level. Race for those who plan to stay after 2020 will be effectively kicked off next month. I further think this elimination of MGU-H is not straightforward linear problem of additions and subtractions, and it will cost dearly.

I have to admit that I would not re-sign with the current owners. Too much of dismissive perversity (for my taste) towards manufacturers, occasional complacent grandiloquence by the owner's (sue me; I have lawyers, time and money), and post-war like imperial fantasy about English-speaking global touch. Thanks but no thanks.

 

Share this post


Link to post
Share on other sites
15 hours ago, Sakae said:

...and post-war like imperial fantasy about English-speaking global touch....

 

Pray tell, what does this mean?

Share this post


Link to post
Share on other sites

Well, Liberty I gather is now talking about a future schedule with 24-25 races, including a race in Vietnam and a second race in China. I am kind of ambivalent about more races. I tend to prefer to watch the entire season (although sometimes I quit watching if one team is dominating), but having F1 races on half of my weekends is kind of a grind. I think I prefer a season reduced to around 16 or so races. More is not always better.

 

Share this post


Link to post
Share on other sites

×
×
  • Create New...