How Mercedes Can Really Benefit From F1 Budget Caps – Motorsports

In addition to sustainability, the main purpose of F1’s budget cap is to curb the performance of top teams by leveling the arena.

Still, in a typical glassful style, Mercedes boss Toto Wolff sees the cap as an opportunity to get stronger than the Blackley team’s hurdle.

F1 has long been about purchasing power. It’s no coincidence that the dominant team had the largest budget, and so far there have been no official restrictions on what they can put in.

The 2021 FIA financial regulation, which set a budget cap of $ 145 million, changed all of that. Although many areas have been excluded from that number, they still represent a major shift in the approach of Mercedes, Red Bull and Ferrari.

All three are busy shuffling staff for non-F1 projects, which explains why Ferrari is working on a sports car programAnd why is Mercedes busy looking for customers in its applied sciences department?

Given that extra cash is a benefit in all areas, it is clear that spending cuts will impact competitiveness. However, there is another important consequence. It’s the confusion caused by the necessary reorganization and downsizing.

Mercedes pit stop practice, Valtteri Bottas car, Mercedes F1 W11

Photo: Steve Etherington / Motorsport image

Initially, midfield teams want to be able to benefit from the problems of F1’s heavy spending teams. In the old outfit, Aston Martin created the virtues of lean, average and efficient, and the budget cap landed in the right place, so the team didn’t have to dramatically adjust their way of working. did. The situation is similar for Alpine.

“It’s all about getting the car to run faster, but efficiency is also important,” says Marcin Budkowski, executive director of Alpine Electronics. “We put a lot of effort into the efficiency of our team and use the resources we have to work better and smarter.

“Fortunately, we weren’t the best-funded team. We’re always known as efficient teams and probably in a better position than the top cost-cap teams, so in the future I would like to take advantage of this. “

The rules show how detailed the discussion was when it was finalized. There are references to topics such as how to allocate maternity leave, sick leave, and salaries for mechanics whose main role is to prepare historical or demo cars. The team now needs to dig into all the pounds, euros, or dollars that meet the cap.

The process of going back to the basics and tracking and justifying all spending in each department of the company from scratch is known as zero-based budgeting.

“In my personal business life experience, taking a zero-budget approach can tell you how much is actually left on the table,” says Wolff.

Mercedes-AMG, Executive Director (Business), Toto Wolff

Mercedes-AMG, Executive Director (Business), Toto Wolff

Photo: Steve Etherington / Motorsport image

“And how much you carried over each year was a cost that could have been avoided simply by streamlining the process and the entire organization.

“Money isn’t the only performance in the F1 world. You can have the most money, but you can’t do what you want. And we’ve seen examples in the past. . “

One of the main benefits of consumer power is the ability to place groups of people in R & D and special projects that may not go well for a year or two.

Aerotest restrictions have already leveled some competition in that teams can no longer run 24/7 in multiple wind tunnels, as they did a few years ago.

However, the wealthier teams had production resources that allowed them to bring more bodywork iterations to the track more often. On the other hand, there are no mechanical restrictions, allowing large teams to pursue innovation.

Now every team needs to have the discipline to spend where they believe it is important. You can’t afford to pursue multiple solutions to the same problem and eventually discard the one that doesn’t work. They have to be smarter and call on what direction to go before too much time and effort is spent.

“We never wasted [resources]”Wolf says. “For us, prioritization has always been the key to our capabilities, rather than trying to do A, or A and B. You have more performance.

“But the cost cap has taken it to a new level because it wasn’t previously operating within regulatory cost constraints, and that means you need to understand your process.

Mercedes AMG F1 W12

Mercedes AMG F1 W12

Photo: Mercedes Benz

“The cost of all items will be reduced or evaluated [as to] How much does it cost? And you need to arrange how you operate. But I believe this is a performance advantage. Because we need to rethink what we do and how we do it.

“And that means more focus and focus on areas we believe to deliver the best performance.”

Important to all of this is that the budget cap was set in the very year that the team had to race and develop the 2021 car while refining a whole new concept for 2022.

Aviation research was banned until January 1st, so until December 31st, at least mechanically, it was possible to work without both financial restrictions. It helped larger teams get off to a good start in 2022 just because more people could see it in the long run.

The window of opportunity closes and the team needs to split valuable funding between this season’s race and 2022 development. This is the same as having to call on how to split the wind tunnel time and CFD usage.

“This is the question we need to find a solution every year,” says Wolff. “How do you balance your current car with the development time you want to give it to next year’s car?

“And in 2022, due to the scope of change, it will be an even more important topic, and we will see teams that are very focused on 2022 from an early stage and a great opportunity for the 2021 World Championship. There are other teams to do.

“And it’s important for us to have the right perspective on how we want to balance development next year. It’s the subject of weekly discussions.”

Toto Wolff, Executive Director (Business), Mercedes AMG, Lewis Hamilton, Mercedes-AMG F1

Toto Wolff, Executive Director (Business), Mercedes AMG, Lewis Hamilton, Mercedes-AMG F1

Photo: Steve Etherington / Motorsport image

Spending restrictions aren’t just about R & D-it affects all areas of racing. At the launch of the W12, Mercedes technical director James Allison revealed that the team was cutting costs by simply reducing the number of parts it needed to produce.

“”[There are] Development trying to make it so that the lower bit can live longer, “he said. “Because you don’t have to replace it often, you can operate it more efficiently on your budget.”

The dual project underway in 2021 is clearly a difficult season for top teams. However, the budget cap will need to be adjusted from $ 145 million to $ 140 million in 2022 and to $ 135 million in 2023. This means further reductions in workforce.

Can a regular front runner adapt to a new world of limited spending and stay one step ahead of others? Wolff is confident that his team is at least on the right track.

“In my opinion, budget caps are very important,” he says. “In the last 10 to 15 years, costs have increased and become unsustainable.

“And that way, we now operate in the same financial framework, and it’s exciting because there aren’t many differences in spending between teams.

“We love the challenge. We undertook it, and it is sometimes very painful as all your processes need to be finally adapted to achieve more efficiency.

“During the process, we found that efficiency really meant performance. The group that avoided the project did a great job. And we did the best we could from the limited resources available. I believe we are in a good position to bring out. “

Mercedes AMG F1 W12

Mercedes AMG F1 W12

Photo: Mercedes Benz

– Motorsports

How Mercedes Can Really Benefit From F1 Budget Caps How Mercedes Can Really Benefit From F1 Budget Caps

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