12 December 2019
Fascinating F1 Facts: 9 - Budgetary considerations
The 2021 Formula 1 season will be the first to feature a budget cap, in an effort to stop teams from spending silly money in their quest to win F1. Racers are racers and as long as they have access to money, they spend it. It’s illogical, of course, in a world where automobile companies are obsessed by cost-efficiency, but the rewards for winning are great and so the big guns each burn through more than a million dollars a day - and consider this to be money well-spent.
But it is nonetheless like a nuclear arms race, with rivals spending vast amounts on futile machines that are developed only to keep them ahead of their rivals, without having much value in the real world. F1 engines today are amazing and useful for the world, but the chassis and aerodynamics are completely useless outside the sport. The money is being spent so that teams can “keep up with the Joneses”.
It is now 15 years since a budget cap was first suggested in Formula 1 and the irony is that the idea came from a man called Parry-Jones. Richard Parry-Jones was Welsh, as the name suggests. He hails from the city of Bangor, close to the Menai Strait, which separates the island of Anglesey from the Welsh mainland. His family had been involved in slate quarrying in the region but from childhood his passion was for cars, inspired by watching the RAC Rally passing through the forests close to his house. Parry-Jones joined the Ford Motor Company as a trainee, working in product development while also studying for a degree in mechanical engineering at Salford University. He rose through the company to become Chief Technical Officer.
In 1999 the Lebanese-Australian Jacques Nasser became the boss of Ford. “Jac the Knife” had big plans and rapidly bought Cosworth and Stewart Grand Prix and in 2000 launched Jaguar Racing. This was not a success and while there were internecine fights for control of the F1 operation, Nasser fell out withFord chairman William Clay Ford Jr and was removed from office in 2001. A year laterParry-Jones was asked to review Ford’s F1 programme and decide what to do to make it work. He took charge.
It was in Australia in 2004 that he left his biggest mark on the sport, when he proposed a budget cap.
"The cost trends in the sport are unsustainable," he said. "Other sports have successfully created ways in which costs can be capped and there is no reason that we cannot do the same in F1."
Parry-Jones said that to get everyone in F1 to agree to cap the budgets there would need to be a high cap to begin with and strong penalties to make sure that anyone found to be overspending would face serious trouble.
The idea was laughed out of the paddock at the time because F1 team bosses argued that it was naïve to believe that spending could not be controlled and that there would inevitably be off-the-balance-sheet operations if teams had their budgets restricted. They cited the case in the 1960s when the American Automobile Manufacturer Association announced that to keep down costs, none of the companies would compete in racing. But then Chevrolet secretly used the Chaparral company as a so-called "skunk works" to develop all kind of extraordinary racing technology, while pretending not to be involved.
In 2006 the then FIA President Max Mosley took up the fight, saying that F1 should scrap income-sharing deals with manufacturer teams saying that it would "entirely reasonable to offer the manufacturers that join the Formula 1 World Championship no income" and suggesting that the least successful teams should get the most money. No-one took that very seriously either, as Mosley was clearly stirring up trouble in the negotiating process to get the automobile manufacturers to sign up to a new Concorde Agreement.
Alas, there was not much patience in Detroit and at the end of 2004 Jaguar Racing was sold to Red Bull. The rest is history, culminating in World Championship success in 2010, 2011, 2012 and 2013.
Parry-Jones remained at Ford. In 2005 he was made a CBE in the New Year honour list, for services to the automobile industry and then retired in 2007 to life as a technology and policy advisor and academic.