McLaren CEO Ron Dennis has spoken out against a budget cap in Formula One.
"The actual cost constraint has to be exercised by the senior management of a Formula One team, cost constraints can't be controlled by an outside entity," Dennis said, per ESPN F1.
There is nothing surprising about his position, given he runs one of the wealthiest teams in the sport, but Dennis is wrong.
Spending in F1 is out of control. Marussia and Caterham have already gone bankrupt, while Sauber, Force India and Lotus are teetering so near the brink they threatened to boycott the United States Grand Prix last November.
The only way to get spending back under control is for an outside entity—namely, the sport's governing body, the FIA—to impose and enforce a budget cap on the teams. Dennis even admitted in the same interview that, "Formula One teams spend the money they've got, and they always will."
Unfortunately, the FIA under president Jean Todt has abrogated its responsibility to govern the sport.
Dennis argued that the individual teams must take responsibility to ensure they do not spend more than they have, but sometimes they have no choice.
Take the new hybrid V6 engines introduced last year. They are a marvel of engineering, but they were also expensive for the manufacturers—Ferrari, Mercedes and Renault—to develop. With no controls in place, those costs were passed on to the customers—mostly the smaller teams. According to The Telegraph's Daniel Johnson, engine costs more than tripled last season, to an average of £27 million, eating up a huge portion of the smaller teams' budgets.
Since the end of the 2012 season, three teams have gone bankrupt. Those three teams—HRT, along with the aforementioned Marussia and Caterham—all entered the sport in 2010 with the promise of a £40 million budget cap, per MotorSport's Mark Hughes.
Neither that cap, nor any other form of cost control, ever came into force and, according to the Independent's Christian Sylt, Marussia spent £72 million in 2014. If their original business plan called for a £40 million budget, it is not difficult to see how they ran out of money.
McLaren and the other big teams do not want a budget cap because limiting their spending would certainly allow some of the smaller teams to close the gap on the track. In 2014, with a budget perhaps one-third of McLaren's, Force India nearly beat Dennis' outfit in the constructors' championship.
That is why Dennis and his counterparts at Ferrari, Red Bull and Mercedes do not want a budget cap. And, given the control those teams exercise through the Strategy Group, they will continue to get their way for the foreseeable future.
But a plutocracy is not what is best for the future of the sport—not if the plutocrats cannot find a way to help the smaller teams survive.
Otherwise, the rich teams will be the only ones left—and you can bet it will not be a pleasant day for Ron Dennis when he has to explain why, with no minnows left to beat, his team is finishing last.
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