Failure to reach an agreement on capital expenditure sees Toto Wolff hit out at the “bandwagon” mentality of rivals.
Last week’s meeting of the F1 Commission saw those in attendance fail to reach agreement on all manner of issues including power unit equalisation.
Another issue left up in the air was capital expenditure, with further discussions to be held in the “coming months”.
The driving force behind the need for the sport to look into this aspect of the budget cap regulations is Williams boss, James Vowles, who argues that the rules are in need of a serious rethink if a genuinely level playing field is to ever happen.
He called for the move after discovering that much of the infrastructure at the Grove outfit is twenty years out of date, and that serious investment is needed.
“Twenty years of underinvestment is why we are where we are today,” said Vowles in Canada. “But I’m in a fortunate position that my predecessors weren’t – where we have investment, significant investment, behind us. In fact, there is a strong desire to have Williams return back to a competitive position. But to do that requires investment… and the money’s available and ready.
“The cost cap itself is split into two things. There’s an operational cost cap, which is about $145 million, which everyone knows and talks about, probably, the most frequently. Perhaps more hidden than that, there is a CapEx, a capital expenditure version of the cost cap. That’s round about, it’s a bit complicated, but $36 million spread across four years.
“If you like, every year you can spend six or seven of that, if you just do it fairly equally. That’s good in as much as it’s restricted down spending. But in many regards, where we are today, that money is disappearing on what I think is basic infrastructure.
“If I take an example of things that were in Williams, and this is being very transparent about it, when a designer releases a part, it sort of goes into a black hole. And then there’s emails going backwards and forwards between production to try and find out where their part is, how it’s being upgraded, how big it is, how long it will take. Normally, that would go into a digital system that can be tracked, so you understand actually, what does the car get made up of. And bear in mind, there are 17,000 components and by the time you have designers doing this 17,000 times, you get lost. So you have inefficiencies.
“That software to fix that isn’t, unfortunately, £100, but millions, and even up to 10s of millions if you get it right. So, CapEx for me, at the moment, my expenditure was more spent on trying to get some infrastructure in place, so at least we know how long it takes to design space.
“It’s all publicly available. But if you actually go look at companies house, you can sort of see that the numbers we’re talking about here is hundreds of millions, not 10 million, or 20 million, but hundreds of millions to sort of catch up with the level of investment, from where Williams is today, to perhaps the most extreme expenditures you see in the sport.
“That’s a big deficit. And what it’s leading to is… Formula 1, the FIA and other teams have been supportive in this, what we’re looking for at the moment is the ability to have sporting equity, the ability to have infrastructure that matches our peers, such that we’re not fighting with one hand behind our back, but fighting in the same way as other people are.
“Where we are at the moment the numbers aren’t small,” he admitted. “In fact, they’re scarily large and what we would have to spend on the site and on infrastructure… The site’s OK, that’s actually external to the cost cap, interestingly enough, but on machines, for example, or simulators, or the software I was talking about here, or your composites facilities, or and I can give you a list, there is a list, in fact. What we’re looking for is the ability to show where we are today, where the benchmark is, and the ability to spend in order to catch back up to that benchmark.”
The matter was duly discussed at last week’s meeting of the F1 Commission but, as has ever been the case, the majority of teams were only interested in how the situation could be used to benefit themselves and as a result there was a failure to reach an agreement.
Toto Wolff, a former executive director and shareholder (until 2016) of the Grove outfit, was not impressed.
“Why the Capex discussion came up is that a team, Williams, said their infrastructure is sub-par,” said the Austrian, “and they wouldn’t be able to catch up with trivial things like machine equipment, and up to the technical things like simulators. That was the starting point of all discussions.
“Then, as a consequence, some teams jumped on that bandwagon to say, but actually, we would like to have a little bit more capex. And that number went up from $50 million to $60 million, $70 million, $90 million, and suddenly, it was like free reign and why don’t we change the Capex levels? But there is no reason to do that. I think there is one team we need to treat differently than all the others.
“We came up with a list. Some of the big teams said we don’t want a list, and if Williams get stuff, we want to have stuff. And that was simply shut down.
“We need stability of regulations, on financial relations. And you need to be able to have a business plan that is valid and not a free rein every two years where we change the goalposts on capex. So that’s why this was the end of the capex discussion, but maybe we will find a solution for Williams.”
“It’s unfortunate and it’s disappointing,” admitted Vowles, “that we’re in a situation where again, that meeting, I would argue, went round in circles if nothing else.
“And to a certain extent, it will do, because everyone in that room wants to make sure that they’re not losing out relative to everyone else.”
Plus ca change, James, plus ca change.