F1 team chiefs discuss about the cost cap situation and outfits having projects outside of Formula 1 whose advantages can be used in the sport.

The beginning of F1 2023 saw a technical directive drafted up and furthermore recently revised and put into force. Quite simply, the FIA stated clearly to teams there is no permission for teams to transfer any Intellectual Property from projects outside of their Formula One operations back into the squad without that work falling under the cost cap.

Known as TD45, it advises while teams remain free to run these special projects divisions, any IP from them that is used by F1 teams must be accounted for under the cost cap, so cannot come from free sources within the same company. As is well known, the knowledge can still be freely passed out to the technical divisions, so can continue be utilised in outside business interests.

This triggered a discussion. With TD45, it is apparently a precise effort from the FIA to investigate the spending of teams in 2023 as a part of the cost cap analysis. So much so that they have been visiting teams recently looking for forensic analysis of their finances.  The latest questionnaire from the FIA regarding compliance has more than 100 questions.

As has been well documented, Red Bull, Aston Martin and Williams have faced a cost cap breach penalty where the former had the highest. Here’s some of the F1 team chiefs discussing about the latest cost cap situation –

Otmar Szafnauer: “It’s had an impact. Some have been forced to act because they realised what they were doing is no longer allowed. But the difficult part is they will have been doing it since January 1 (when the TD declared a cut off point), so they will have had a spend up until this point that they now need to address and somehow claw back. I think what some of the other teams are now doing, the bigger teams, is they’re looking to exploit or have a better understanding of where there’s some loopholes or some organisational changes you can make to actually stuff more people under that budget cap. And we’re not there yet. They’re looking at: ‘I got rid of 100 people, but now I want to hire them back’. They can find spots for them, where they either don’t count as a whole person or they do some marketing stuff or whatever it is, or they work on a boat for some of the time.”

Pierre Wache: “At the end, the cost cap, the purpose of it is to have a limited amount of money you can spend and it’s fair enough in our system to make the playing field common to everybody. After what is true is when you analyse where the cost is going, salaries and payroll is part of it and the big payroll is also part of it. Then there is a risk also that you compare to some other competitors that is not a Formula 1 competitor but some other company in the field of research, we can do lose talent by having this kind of limitation, that is a risk and we will see if the effect is not now but the effect could happen in a few years. Yeah, for sure”.

Dan Fallows:  “I think in terms of the effect of the cost cap on how we operate, we have an opportunity with Aston Martin, particularly with the road car division, that we can expand our operations and it’s something that I know the FIA have been pushing for recently to allow that bleeding of F1 technology, F1 skill into other areas. So we’ve seen it as an opportunity, I think, as you have to do with all of these things, you have to see where the opportunities lie on that. And we’ve been able to set up a performance technologies division, which can then add value to other projects, not only in Aston Martin but some other racing projects that we can get involved in. I think it’s a similar model to what’s being used in other teams. So from our point of view, it’s been pretty positive”.

James Allison: “Yeah, we’re racing teams but we’re also businesses and we make a decent amount of money doing jobs that are not in the racing world. If we misjudge who we put in there and end up hurting ourselves in F1 because we bleed away experience that should have stayed in the team, well, then we will have shot ourselves in the foot. And it’s, I guess, the challenge of all the teams on the grid to try and make sure that they get the balance right, so that they retain the best team they possibly can within the constraints of the cap, and that they make a decent wedge with the activities they do outside the cap”.

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