The principle of a global cost cap has been adopted. The limit will be applied from January 2015. A working group will be established within the coming days comprising the FIA, representatives of the Commercial Rights Holder and Team Representatives.
The objective of the working group will be to have regulations approved by the end of June 2014.
Red Bull, Ferrari, Mercedes and McLaren sit in the upper echelons able to attract the necessary funding or sponsorship that is needed to compete at the highest level (somewhere in the region of 100-150m per season).
Lotus, Force India, Sauber, Williams & Toro Rosso are what we ubiquitously refer to as the 'midfield' teams and with the exception of Toro Rosso are what I would call independents, ie run by the backing of their owners, pay drivers and any sponsorship they can accrue.
Caterham & Marussia are the tail enders or the lap markers starting from nothing when they arrived in the sport in 2010. Both teams have seen several guises but the core ownership/management remains intact.
The 2 teams at the bottom of the pile arrived in Formula One (along with HRT) bright eyed and bushy tailed fully expecting the rest to have to play on a level playing field to them in the forthcoming seasons. Their feasibility studies for entering Formula One were firmly targeted at the 40m budget cap and when this didn't arrive they had 2 choices: Re-Budget and spend beyond their means or pack up their toys and move on. The latter would have course had financial ramifications anyway with the FIA/FOM going after their share of damages for not competing but it seemed all accepted their fate and stumbled on.
I think we can all agree that a budget cap isn't necessarily a bad idea, afterall we may still have 3 more manufacturers onboard had the FIA / Formula One acted more swiftly at the start of the financial crisis (BMW, Honda and Toyota). All of which made their exit from the sport citing financial pressures most of which came from them over spending, in order to overhaul the already commanding positions the established teams had.
There is a certain ebb and flow in Formula One every time a large regulation change occurs which see's some teams move between the tiers, able either to establish themselves as a more potent force or languish in the lower bowels. The last big regulation shake up saw BrawnGP emerge as the front runner but this came off the back of the team abandoning their 2008 campaign, using 2 full scale wind tunnels (Brackley & Japan) and assimilating most of the Super Aguri staff (which is where the Double Deck Diffuser idea was born). Red Bull however for me were the team that made the largest leap, which had the DDD been banned at the start of 09 I feel we could be seeing Vettel/Red Bull holding 5 consecutive Championships now and not 4. Their rise is somewhat disconcerting for the other teams but was born out of the way they invested their money on the run up to the 2009 rule changes.
We must remember that prior to 2009 the way in which cars were designed and then improved was firmly skewed toward a testing regiment, something that suited the likes of Ferrari and McLaren as they were adept at producing mass quantities of physical parts to test. Red Bull settled into the new regulations quicker than the others as they had pre prepared for the new challenge, instead of adjusting their tunnel to a 50% scale like most of their rivals and adopting the same scales for tooling they invested in the 60% route. A much more accurate investment allowing correlation between the test environments of CFD and the Wind Tunnel to that at the track. This gave a head start to Red Bull and though 10% may not seem like a significant number, in terms of scale it is, stall and boundary layer turning turbulent are but a few elements that more easily definable with the larger scale. Scaling can of course be mathematically calculated when given the right information from 100% testing (correlation) the problem comes when you get inconsisent results on a constant basis from the prediction to the 100% model.
This has been prevalent during this last regulation set when teams have had to design area's of the car with the use of the exhaust plume in mind. The problem with using the exhaust is that it runs at a significantly different temperature to the atmosphere but is also ballistic. You can't simply build an engine 60% the size and use it in the wind tunnel and so teams have to improvise and fabricate other methods to simulate the exhausts effects. Having the ability to do this effectively whilst also getting the jump on the rest of the field by moving to 60% scaling earlier gave Red Bull the impetus to overhaul some of the established names.
So as we can see, sometimes it's not about how much you spend but the context in which that money is used, utilising the right equipment at the right time can surmount to a huge swing in the positioning of a team in the field. Red Bull managed to outscore BrawnGP once they had their DDD but as we know financially the BrawnGP team were suffering from the pull out of Honda and now left with the legacy of staff cuts and 50% modelling tools from which to relearn their trade (having used 100% tunnels up until the start of the 09 regulations). Red Bull meanwhile had designed their RB5 from the ground up in 60% plying their trade and learning more than anyone about the necessary tools required to extrapolate results.
The ban on in-season testing also led Formula One to proliferate it' use of CFD, adding another tool to the pre build / test phase that can determine whether a solution is worthwhile investing time and money on.
For 2014 the Sporting Regulations have been amended to include CFD usage for the first time putting a limit on the amount of Teraflops that can be used for CFD at 30 Teraflops in an 8 week cycle. Although this is the first time I've seen it written into the rules publicly it's long been assumed that the FIA/Teams have had an agreement bordering on 40 Teraflops in an 8 week cycle. Whether teams have adhered to this with it not actually being part of the Sporting/Technical Regulations is a matter for debate.
The rules regarding the precise use of the Wind Tunnel has also been included in the appendix of the Sporting Regulations for 2014 with a maximum of 80 runs per week and 60 hours of tunnel occupancy allowable. (The 60% scaling and 50m/s regulations remain)
Of course these changes have been made and stipulated by the FIA in the Sporting Regulations as F1 will return to in-season testing next season. The re-introduction of track testing brings with it a significant cost and will also have an impact on how the teams face in-season development. The additional limitations imposed on the scale tools is an attempt to negate the advantages gained by teams at the track, I do however fear that some teams will make significant gains because of this and especially those that can spend the most on actually testing full scale development parts.
Just as we saw with the rise of Red Bull in 2009 the regulatory changes that have been coming for some time will certainly benefit some teams more than others. It therefore begs the question is a budget cap what Formula One needs? I'd suggest it's moreover a constriction of resources IF we want all the teams to have a similar playing field. However I'd almost certainly suggest that I prefer a situation where teams are able to express theirselves individually and make decisions and indeed mistakes on what is the best method for them. I'd certainly like to be a fly on the wall in the working group that is tasked to arrange the cost cap and have a plan in place for June. Everyone that is privy to this group are opposed to one anothers agendas and finding common ground could be somewhat of a challenge.
Whatever figure the group decide to utilise I suspect it will still be too high for some of the smaller or lesser funded teams to generate. Furthermore remember the saying "There's more than one way to skin a cat"? If the teams want to spend money, they will find a way. EVERYONE that works within a Formula One team does so because they are the best at what they do, F1 teams have been finding ways around the FIA's rules for decades and this won't stop with a budget cap.