Should Supercars Have a Budget Cap?

 

Should Supercars have a budget cap? It’s a question that doesn’t come up very often, despite constant complaining from fans that the same wealthy teams always win. A lot of major sporting codes have them, but do they work in motorsport?

Throughout the history of the Australian Touring Car Championship, the teams/drivers with the most money have usually had the most success. For a long time this was mostly because genuine professionals were thin on the ground. Since the early 1990s the competition has been getting closer in lap times but no closer in results. The teams that can afford to spend increasing amounts of money chasing the slightest gains are consistently on top.

Now we have one team owner, Roger Penske, who is capable of out-spending all of the other owners. Triple 8 owner Roland Dane relishing the challenge.

“Any time you win against stiff opposition of that calibre then, to be honest, it’s a lot more satisfying than just being a steamroller,” he said recently in an interview with Auto Action.

“Roger is older, wiser, richer and more successful than I am. We both sell cars and we both have a deep knowledge of racing, but RP does it with more naughts, a lot more.”

That doesn’t mean that Penske will pour all the resources he has into his Supercars team. He wants his team to be financially sustainable and run off the income it generates. That’s no different to the way Triple 8 operates. But in today’s difficult sponsor market, that’s generally easier to do if you’re up the front winning all the time and drawing sponsor interest. Even if that doesn’t work out, Penske could have his own businesses sponsor the team on a short-term basis. Roger won’t spend more than necessary, but he has the capacity to outspend anyone else.

A budget cap would place a restriction on how much they can spend each year, and theoretically place the teams on equal footing.

It would be difficult to enforce. All the teams are run as businesses and need to declare their income and expenditure to the Australian Tax Office every year, but teams could, if they wanted to, not declare expenses above the budget cap. This would be easier for teams with wealthier owners. Because of this a budget cap might not actually achieve anything.

A salary cap like those widely used in other sports would be more practical. It would prevent a small number of teams from poaching all the best staff. It’s not without complications. What happens when teams employ extra staff to support customer arrangements? Well, you could allocate the additional employees’ wages to the customer team’s salary cap. Suppose a quarter of Triple 8’s chassis go to Tekno and Team 18. Then a quarter of relevant Triple 8 staff could be allocated to Tekno and Team 18. Perhaps more simply, they could only count staff whose services aren’t offered out to other teams. This would not only help smaller teams compete for staff, but encourage larger teams to offer their resources to smaller teams.

Could teams outsource services to get around the salary cap? Yes, but they wouldn’t have exclusive rights to those services. If a team hires a technical director as an external consultant instead of an employee, their income for the time spent could still be counted. If they’re on a retainer or voluntarily only work for one team then their entire income could be counted against that team.

Another drawback to a budget cap is that it could prevent a smaller team from ever catching up. You’d have to have some sort of small team exemption so if they land a big new sponsorship deal, they can go out and spend it. You’d also need a way of accommodating new car homologation.

Enforcement of a salary cap is much easier than a budget cap, it’s widely applied elsewhere after all. The only way to deliberately evade it would to not declare an employee’s full salary. This wouldn’t just a breach of the salary cap, it would also constitute tax evasion. As for teams trying to employ staff through sister companies, it would be pretty obvious if they were doing that. Exempting anyone not directly involved in racing, such as administrators, would prevent that from happening.

Under a salary cap, smaller teams like GRM and Erebus would be on a more level playing field

Under a salary cap, smaller teams like GRM and Erebus would be on a more level playing field

It also depends on whether or not the Supercars Commission would support it. Brad Jones and Roland Dane currently represent the teams on the commission. A salary cap would be beneficial for Jones’ team. Albury-based Brad Jones Racing would be able to lure staff with a lower cost of living compared with Melbourne and Gold Coast-based teams. There’s also a good chance that mid-pack privateers BJR would come well under any salary cap. For Dane, the benefit would come from the fact that Triple 8 are a major component and complete chassis supplier. They would get sizable concessions on their fabricators. DJR Team Penske, meanwhile, would have to get all of their staff under the salary cap. Prodrive and Walkinshaw would receive some benefit for supplying various parts to other teams, but not as much as Triple 8. Dane and Jones would likely put the sport as a whole ahead of self-interest, but it’s still worth considering how it would affect different teams.

I’m not suggesting that Supercars should immediately adopt a plan thought up by a part-time blogger over breakfast, but a salary cap needs to be considered. And it needs to happen before we have a situation like the later years of the 2003-12 Project Blueprint era. One or two major teams winning every single race.