Salary cap, Shmalary Cap

[Adam43]

For interest how another sport dealt with a salary cap breach

https://www.rugbypass.com/news/damni...-cap-breaches/

https://www.rugbypass.com/news/the-k...ry-cap-report/

Like F1 this was in the public domain before it was confirmed. Then it was some time before the official report referenced above came out. I will guess that if a team is found to have breached the cap then there will be another stage of even more detailed investigation.

In rugby the cap is pretty much all player salary. Drivers aren’t included in F1, but engineers are players and included along with actually designing and making stuff. Hence the we’ve had a crash so can’t afford to go to a race stuff.

Sarries punishment meant a fine much greater than the value of the breach and relegation. Not reallly appropriate in F1. Although Red Bull and Aston Martin would make a hell of an F2 team Retrospective changes to the prior season results were not made, so the point Derwent makes is not satisfied. Overall the punishment was harsh I would say.

[peebee2]

Originally Posted by Adam43

For interest how another sport dealt with a salary cap breach

Thing is, a salary cap is suite, quite different.

The more you think about a budget cap, the more you realise how it is totally impossible to define, let alone manage and police.

[chillibowl]

Originally Posted by Derwent

The danger is that Red Bull could decide to walk away from the sport, or even look to create a rival series. They have a huge amount of financial clout.

that would be a massive shame for sure, with a couple of manus and privateers looking to enter, the fear of losing a team is not quite the strangle hold it used to be?

question about the leak, i would suspect all the top teams are running their own informal audits of what other teams are spending and where, is it possible that Toto and others are going off of their own information/speculation?

not that i think the FIA a tight ship and i hope it wasnt a direct leak but trying to be a bit optimistic there are other possibilities to how the allegations were formed?

[Adam43]

Originally Posted by peebee2

Thing is, a salary cap is suite, quite different.

The more you think about a budget cap, the more you realise how it is totally impossible to define, let alone manage and police.

For avoidance of doubt, I realise the difference. I just lazily used the same word, because my post was mainly on a salary cap in rugby. But there are parallels, which I hope are of interest.

Not least in how it played out, how they allocated pay to none sport things, and an interesting view in future or retrospective punishments.

Another interesting point, I didn’t mention it, in the article there was also a challenge to it being anti competitive. Which Sarries didn’t get anywhere with.

In both cases it isn’t easy to administer. But it doesn’t mean it doesn’t do it’s job.

Also interesting that Sarries got pinged beforehand too, but no action because it wasn’t clear cut. But then understanding of how it was measured and applied imported. That Sarries then chose to ignore this “ yellow card” was their look out!

I wish I could remember who on this forum said it, but it was suggested that it doesn’t have to be perfect. It is already doing its job of narrowing the gap. And this means it’ll get better at it too…

[Anyopenroad]

Originally Posted by Derwent

The danger is that Red Bull could decide to walk away from the sport, or even look to create a rival series. They have a huge amount of financial clout.

That would be awesome.

[bathurst77]

Maybe deduct constructors points from last year, but not drivers, and reduced spending limit or testing take effect for 12 months immediately following checquered flag of last race this year.

As said it can be bit bit of grey area, accounting, how do you cost parts labour, windtunnel and computer time if its all inhouse. Some things are deductable or offset. Just like with big business tax and accounts, it all depends who does your books and how creative they are and how agreeable the auditors are.

But if there is a definite breach, then that team broke the rules as much as if the car had bigger engine or aero.. its not compliant so the penalty must be severe or the cap for all teams next year will be $140mill + 5%

[Akrapovic]

Originally Posted by Derwent

The danger is that Red Bull could decide to walk away from the sport, or even look to create a rival series. They have a huge amount of financial clout.

lol. That's absolutely fine with me.

[Woolley]

Originally Posted by Derwent

The danger is that Red Bull could decide to walk away from the sport, or even look to create a rival series. They have a huge amount of financial clout.

No problem, makes space for Andretti to come in.

[Skam85]

Maybe Mercedes didn't need Michael Masi's head on a platter after all

[Casper]

Originally Posted by chillibowl

How many teams are even spending the full cap amount?

A point I have made previously and makes a bit of a mockery of the concept altogether. If all the teams spent the same amount then the concept of a restricted budget begins to work but it still falls short of totally levelling the playing field. The top four or five teams have a huge advantage because they have the in house production ability where smaller teams have to out source a lot of the car and that alone means they will never be competitive as we all would like. The budget cap is a sop to levelling the field all it does is put a spending limit on the teams.

To make the problem worse the larger teams have the design & engineering capacity way in excess of the smaller teams and it will always be that way because they have already established the R&D side and it is doubtful smaller teams could ever reach the same level. All the yelling and screaming about Andretti joining by the current larger teams could be an attempt to keep them out simply because they are likely to be able to build a similar engineering capacity that might allow them to be a threat.

[Adam43]

Not having it allows the differences to be maintained, or even grow. This moves towards it. Hence the change to the cap over time. Also the hope that with stability in the teams their income grows to meet the cap.

Over time the residual advantage will lessen. It was never considered after one year there’d be some sort of parity. But the spending gap is lower than it was.

Pragmatically you couldn’t in one season reduce the cap to a level where they all could hit it. Such was the uneven distribution of spend.

Even if you do get to some sort of parity you will still have a Detroit Lions sort of team and a Green Bay Packers sort of team. Doesn’t mean it’s not helping the situation.

[Casper]

Originally Posted by Adam43

Not having it allows the differences to be maintained, or even grow. This moves towards it. Hence the change to the cap over time. Also the hope that with stability in the teams their income grows to meet the cap.

Over time the residual advantage will lessen. It was never considered after one year there’d be some sort of parity. But the spending gap is lower than it was.

Pragmatically you couldn’t in one season reduce the cap to a level where they all could hit it. Such was the uneven distribution of spend.

Even if you do get to some sort of parity you will still have a Detroit Lions sort of team and a Green Bay Packers sort of team. Doesn’t mean it’s not helping the situation.

Not being familiar with US sport I have no idea what that means.

[steve_r]

Originally Posted by Casper

Not being familiar with US sport I have no idea what that means.

I think that he means that you will always have some teams like Leeds Rhinos and other teams like Keighley Cougars.

[Greem]

Originally Posted by steve_r

I think that he means that you will always have some teams like Leeds Rhinos and other teams like Keighley Cougars.

Part of me is really hoping someone replies with "Not being familiar with UK sport I have no idea what that means."

[Aysedasi]

Originally Posted by Greem

Part of me is really hoping someone replies with "Not being familiar with UK sport I have no idea what that means."

I was going to, but I didn't want to look that silly......

[grantp]

I can't help but feel that with the huge media circus needing to generate some form of content on a daily basis and the points battle being all but over for this year ... there may be a sort of desperation to come up with anything at all to keep interest going.

Anything that appeals to the game players and egos in the teams will likely work well enough.

[Woolley]

Originally Posted by Greem

Part of me is really hoping someone replies with "Not being familiar with UK sport I have no idea what that means."

Not being familiar with the sport of a narrow strip of northern England...

[Richard C]

Originally Posted by Woolley

Not being familiar with the sport of a narrow strip of northern England...

I struggle on both accounts. I don't really follow US football and I have zero clue who the Leeds Rhinos and Keighley Cougars are. But I am inferring that the point is that given equal resources (money) you will still have disparity of performance between various teams? Success is then about how you manage and utilize your resources and less about how many resources you have.

Richard

[PhilipR]

If a team has overspent last year thinking they can cover it into their accounting and tuns out it is not covered and results in an overspent of X amount. What are the chances that team is doing the same for this year as they had to wait until October to find out the results of the audit? - Could this linger into next year as well if the overspent wa ssubstantial?

[Richard C]

Originally Posted by PhilipR

If a team has overspent last year thinking they can cover it into their accounting and tuns out it is not covered and results in an overspent of X amount. What are the chances that team is doing the same for this year as they had to wait until October to find out the results of the audit? - Could this linger into next year as well if the overspent wa ssubstantial?

Potentially. But I think the reporting period is calendar year, so if a team was "creative" in the prior year and the results of the FIA audit are just now coming out and they think they might be at risk of a creative interpretation not being accepted, they might still have some time to halt (or slow) spending between now and the end of the year.

I believe Horner has said that they feel they are under the cap. But it is also likely that if anyone was being creative they may not just outright say "we spent too much" and may rather account for it in a way that fits under the cap limits. If they do get their hands slapped, that also allows for a much better narrative... "We thought we were under the cap, but via FIA interpretations we were over by a small amount. We don't agree with their assessment, but don't plan to challenge the penalty" I can see some statement like that assuming the overage is under 5% and the penalty is relatively minor. I think it all just depends in the end how big of an infraction it might be. Also there is others ways to get an infraction such as procedural breaches (which has already hit Williams)

I think the "certification" by the FIA is supposed to happen on Wednesday of this week. Even then, I don't think we see final outcomes on Wednesday. I think that if there is a breach, then there is a second phase which is either the team and FIA coming to an ABA (Accepted Breach Agreement). Think of that as a "plea bargain" arrangement in which the team says they are guilty of something and accepts some penalty. Not sure, but I can imagine there is room for negotiations here. The other option is to go before the Cost Cap Adjudication Panel. Think of that is "going to trail". If it is minor, I imagine it might be quite risky to go before the Adjudication Panel as that decision is final and might be severe.

Lastly, while I think this is a very important topic (and one I frequently post about), I hate to speculate more about RBR and AM on this because who knows what is true or not. I am generally going to try to not speculate much about the specific teams and will comment on the process and maybe my opinions on what strategies team might employ within the entire financial regulations.

If someone did go beyond the 5%, bring the hammer down on them. As I posted earlier, if they are under the 5% and there was a strategy of playing in that 1-5% range, then they should consider shrinking that 5% window down to something much smaller so that any overage in that range is truly minor in the grand scheme.

Richard

[Casper]

Originally Posted by steve_r

I think that he means that you will always have some teams like Leeds Rhinos and other teams like Keighley Cougars.

And what are they famous for? A lot of people don't live in the US or Europe, if I quoted in local terms for me then you would be asking the same question.

[Casper]

Originally Posted by PhilipR

If a team has overspent last year thinking they can cover it into their accounting and tuns out it is not covered and results in an overspent of X amount. What are the chances that team is doing the same for this year as they had to wait until October to find out the results of the audit? - Could this linger into next year as well if the overspent wa ssubstantial?

Give the teams anything but a hard limit with no ifs and buts then they will use it and penalties on performance such as points loss are about the only thing that really hurts them. Prior to the budget cap myself and others said they would pull stuff like this because they are used to interpreting rules to suit themselves. I still think until all teams spend the same amount of money the budget cap is a farce of the highest order.

[Adam43]

Originally Posted by Casper

Not being familiar with US sport I have no idea what that means.

They have a spending cap in NFL. It is very effective. Obviously, it is just on player salary (the players are the car, engineer and development equivalent all in one - although you don’t have to be too clever if to find differences).

I would say it is very good at providing parity. Teams don’t struggle to spend up to the cap. Although that doesn’t mean they do. But the income they get really helps them here.

However despite this some teams are good pretty much every year (Green Bay) and some teams aren’t (Detroit Lions).

[bathurst77]

Does the fact that teams are having trouble staying under the cap mean it is too low?

Should the cap be set to allow room for R&D and test hardware.
Does it mean teams cant afford to experiment with radical ideas, like they did with turbo, ground effects, 6 wheelers, fan cars etc. All those things were expensive radical ideas at the time. SOme worked some didnt some were outlawed, but all would not have been tried if the teams didnt have the budget to build them.

Are we now stopping new tech like flux capacitors, energy polarisers and improbability drives.
Should the cap be set higher such that teams can easily be under now with a margin stiill for innovation, but not go supercrazy.

[Adam43]

Originally Posted by bathurst77

Does the fact that teams are having trouble staying under the cap mean it is too low?

I don’t think so. It is about bringing it down to where everyone can afford the cap. Which, as Casper points out, they aren’t there yet.

But your point is true it may stop creativity. Assuming that you can only be creative if it is expensive. It does mean you can’t afford to try something and it fail.

I guess a cap means the aim is competitiveness of more teams (except the Lions ), and it’s not about innovation. Which, I agree is a shame.

In some ways it is a choice to be made. It’s a balance and at the moment the choice is to try and increase competitiveness across the teams.

It’s not mutually exclusive, but if you had to chose would it be encourage innovation or competitiveness. At the moment there is more shouting and emphasis on the later.