NASCAR: Caps, Limits and Level Playing Fields

Every sport faces it: One, or a few, teams pull ahead because they can spend more money than anyone else. Those teams and their fans are fine, but it means the league has failed to ensure a level playing field.

What is a Level Playing Field?

A level playing field is a lot like obscenity: People can’t describe it, but they know it when they see it. Especially when the field is tilted away from their driver.

In commerce, a level playing field is a concept about fairness, not that each player has an equal chance to succeed, but that they all play by the same set of rules.

Wikipedia

Megacorporations subsume or kill off smaller companies, becoming so large that no one can compete with them. In business it leads to monopoly. In sports, it leads to disinterest, and disinterest can be fatal, especially in this day and age

A level playing field does not mean everyone has the same chance of winning. If we put every driver in the same car, some of them will run faster than the others. If we put one driver in different cars, his lap times will be different in the different cars.

A level playing field means that everyone has to follow the same rules. They all have to make the same number of laps, but they don’t have to run the same line. The bodies have similar downforce counts even though they’re not identical. That’s a level playing field.

Motorsports is more complicated than racing or horse racing because there are more moving parts. It’s not just about the best driver. It’s about the best match between driver and car and the ability to adjust to meet the particular conditions of that track on that day.

A level playing field in NASCAR has to consider the driver, everyone who builds, maintains, repairs or services the car and the car itself.

The Constraint: Money

As in the stick-and-ball sports, the level playing field is usually warped because of different amounts of money. NASCAR is far from the only series worrying about this.

F1

• Only four F1 teams won races from 2012-2017.
• Three of those four (Mercedes, Ferrari and Red Bull) won all but one of those races.
• In 2017, those three teams won 59 of 60 podium positions.
• Even so, Gene Haas spent $128 million to start up a F1 team in 2017.

Compare the 2018 budgets for F1 teams. I used an average 2018 exchange rate of $1.15 per Euro to convert the numbers given by Autobild.

The lowest-funded team in F1 spends about one-quarter what the highest ranking team does. F1’s ten teams cumulatively spend about $2.6 billion annually to compete. The cost to compete is going up, too.

A couple notes about this graph because they aren’t the same teams

• Merdedes, who was the fourth largest spender in 2013, almost doubled their budget.
• Force India went bankrupt in 2018 and had to be bailed out
• Lotus, Caterham and Marussia are gone
• Renault and Haas are new

The budgets are larger because the audience is larger. F1 races reach an audience of almost a half-billion people around the entire world.

WEC

The World Endurance Championship series started in 2012 and includes the legendary 24 Hours of Le Mans race. Four car classes race, but the LMP1 cars (LMP = Le Mans Prototype) are the acme of technological race car achievement.

Audi and Porsche were reportedly spending $200 – $250 million each on their LMP1 programs. By the end of 2017, both had pulled out of the WEC in favor of competing in the Formula E Series. (To be fair, Dieselgate had some impact on Audi’s leaving.) Toyota has the only manufacturer team.

WEC has four classes and there are still privateer LMP1 teams, so it’s not like the class is dead — but it’s certainly lost a lot of luster.

NASCAR

The domination of three drivers in the early part of the season drew a lot of complaints from fans, as did the period of time when Jimmie Johnson won five championships in a row.

But NASCAR is focused not just on the current season: they’ve been concerned about the future of the sport. A level playing field can’t mean that everyone has equal opportunity to go bankrupt.

NASCAR instituted the Charter System in 2016 to help stabilize the sport. The charter system made NASCAR and the teams more equal partners, and gave some of the smaller teams a little more security going forward.

Some teams have fallen on hard times. In 2005, Roush put all five of its teams in The Chase and prompted NASCAR to put a limit on how many teams one company could run. This year, they’re down to two teams. Forbes’ numbers didn’t include Furniture Row, which closed last year.

But NASCAR racing is expensive. The BK Racing bankruptcy showed them spending about $20 million in 2016, which covered 82 race entries split over three cars. The best teams in NASCAR spend $20-$30 million per car. We’re also in a time where a lot more effort is needed to find sponsors because there are fewer sponsors willing to commit to an entire season of support.

The Challenge

So… we want a level playing field and we don’t want to do it by making everyone spend more money. We want to protect the existing teams and owners, nurture new teams, and have great competition.

No problem, right?

It used to be that going faster meant spending money on better car parts. Now you’re spending it on better (and more expensive car parts), but also on engineers, wind tunnels, simulators, 3D printers, computerized milling machines, vehicle dynamics simulation programs, computer clusters…

Whereas NASCAR could once control costs with fairly simple rules, like “no exotic metals” and limited rear gear ratios, it’s a little harder when you’re talking about people and computers.

This All Started With Testing

The biggest challenge is that this is a giant game of whack-a-mole. Every rule has a consequence and sometimes the consequences are bigger than whatever the rule was meant to prevent.

NASCAR steadily cut on-track testing in an attempt to save teams money.

• In 2003, teams had
  • 5 two-day and 4 one-day tests at Cup tracks of their choice
  • Unlimited testing at non-Cup tracks
• In 2018, teams had
  • 4 two-day tests at Cup tracks chosen by NASCAR

These limits drove teams to develop other tools: driver simulators, software to model everything from suspension movement to engine combustion, seven-post rigs, wind tunnels and computational fluid dynamics. Teams that could spend more money on these elements got faster. Teams that couldn’t fell behind.

Is it feasible for NASCAR to control how teams use these tools?

Driving Simulators

I blogged earlier this month ago about the amazing driving simulators the manufacturers have developed. it doesn’t make sense for NASCAR to try to limit those

• The manufacturers create and run them, so it’s not a team expense.
• Manufacturers are increasingly using simulators for passenger car design and testing, so much of the technology can benefit their street-car programs
• The simulators do generate data for engineers to analyze, but the time any one driver gets on the simulator isn’t huge.

Wind Tunnels and CFD

F1 realized the importance of aerodynamics in the 70’s and 80’s. Their teams initially used facilities at universities, many of which could only accept up to 40% scale models and worked at lower wind speeds.

In the 90’s, the bigger teams built their own wind tunnels that were specialized to F1 racing, ran at high speed, and could accommodate full-sized cars. F1 teams ran their tunnels 24/7, with one set of engineers running tests and another analyzing the data from those tests.

Teams also invested heavily in Computational Fluid Dynamics (CFD), a computer-intensive simulation technique that uses fundamental equations of physics to model how air interacts with objects. You can buy CFD programs, but you need specialized expertise to understand how to use them properly. Most commercial CFD packages aren’t optimized for racecars, so most race teams invest in developing their own, proprietary CFD packages, which they keep top secret.

NASCAR teams have pretty much done the same thing with CFD and wind tunnels, although they not every team has their own wind tunnel.

NASCAR teams primarily utilize two wind tunnels in the Charlotte area: Windshear and Aerodyn. Gene Haas opened Windshear, but it’s available to anyone willing to pay. Penske has a proprietary wind tunnel, but’s a 40-50% scale.

An hour in one of the two full-scale wind tunnels costs anywhere from $2000 to $3500 depending on which wind tunnel and what features you need. Aerodyn has enough business that they run two shifts: from 6 am to 3 pm and from 3:40 pm to 12:40 am. The hourly cost doesn’t include getting the car ready for and to the wind tunnel, or paying your engineers to run the test and analyze the results.

NASCAR teams have also invested in high-speed computer clusters, advanced graphics processing units and aerodynamics specialists to develop, run and maintain CFD programs.

Limiting Aerodynamic Research

F1 has restricted CFD and wind tunnel time. Wind tunnel research is limited to 60% scale models and speeds of 50 m/s (112 mph). Aerodynamics work is even banned during a designated two-week period in July/August.

F1 has limited the computing power that can be employed for CFD and require teams to submit fortnightly (that’s every two weeks) logs of CFD time, which is supplemented by periodic inspections. They implemented a formula that gives teams a little leeway in how they divide CFD and wind tunnel time; the two techniques together can only add up to some maximum amount.

The FIA has restricted wind tunnel and CFD time since 2009, but each limit they impose spurs teams to find new (and often more expensive) ways around the limits. One F1 team even worked with chip manufacturer AMD to develop a brand new type of computer processor that effectively doubled their CFD capacity.

Similarly, as wind tunnel time was reduced, teams put more effort into designing more advanced data acquisition tools that allowed them to get more data in less time. Some teams also put money into upgrading their wind tunnels, for example by creating rotating platforms that allowed them to run the car through a series of yaw angles.

Again: money and time.

And every time technology advances, the limits have to be revisited. They now have two sets of rules: one for teams that have the chips they’ve been using; and one for teams with the newer chips. Why don’t they just have one option? Because either teams would be forced to invest in old technology or teams would be forced to upgrade, which would cost money, which was the opposite of what they were trying to do.

If we look at it in terms of dollars per tenth of a second gained, the cost is going up, not down. This means that the teams with the highest budgets still have an advantage.

And how do you monitor the research and development of CFD programs? A good aerodynamicist is thinking about new ways to understand aerodynamics day and night. Nothing about these rules prevents teams from hiring consultants or a battalion of aerodynamicists. The same arguments apply to other types of simulation programs.

Honestly, this starts to sound way too much like the nuclear monitoring arguments during the Cold War.

Budget Caps

Instead of trying to dictate individual elements, what about just capping how much money a team can spend, analogous to the salary caps in stick-and-ball sports?

New series have a much easier time because they can build cost control into the series design. Formula E has a $3.5 million spending cap, and has mandated that the price of any racecar should not exceed 800,000 euros ($945,000). That’s a ready-to-race price with powertrain included — but it’s a mostly spec car at the moment. The plan is to gradually allow more customization, but they realized there was no way to start a new series and attract teams if the intial investment was huge

F1’s Struggles with a Budget Cap

F1 has been trying to implement a budget cap for quite some time to create a level playing field without having to get into the weeds of details. They have to overcome some problems NASCAR doesn’t, notably that the top teams have banded together to oppose cuts. They tried to create the equivalent of a RTA, but it splintered into two groups: the haves and the have-nots. In addition, the sanctioning body and the rights owner haven’t always been on the same page. Those issues are the primary reasons why they don’t have a cap already.

In 2010, F1 proposed a $60 million cost cap, which enticed three new teams to sign up to run. The cost cap failed and all three teams collapsed — one reason why the new proposals for a cost cap are being met with skepticism.

The current cap proposed by the sanctioning body (FIA) and the rights owner (Liberty Media) is $185 million in 2021, $160 million in 2022, and $135 million for $2023 – but that excludes

• engine costs
• top manager and driver salaries
• marketing and hospitality expenses

Considering that the top teams are current spending upward of $500 million, we’re talking significant cuts. But Gene Haas says that the big teams have five people for every one his team has. Cutting their research and development efforts is the only way a new team will ever catch up.

An analysis of a previously proposed budget cap of $150 million said it could cut as many as 1,244 jobs — and that’s only counting the seven UK-based teams. Those jobs are 31.5% of the workforce.

Would It Work in NASCAR?

NASCAR took steps in 2018 to limit how many people teams could bring to the track, but they’ve never tried to mandate how many people a team employs at the shop. Hendrick Motorsports has over 500 employees: A cap comparable to that imposed by F1 might mean cutting 158 jobs.

NASCAR has the best cooperative relationship with the teams they’ve had in a long time. Even if everyone agrees a budget cap is a good idea, it’s not a simple thing to do.

Some teams exist strictly for racing, whereas others have allied businesses like engine companies and performance racing products. As precision machining becomes important, how do you weigh contributions from Haas CNC? Or Brad Keselowski’s new manufacturing concern? Henrick and RCR’s performance car parts divisions?

Enforcement is also a problem. NASCAR isn’t rolling in money, either, as evidenced by recent layoffs. (To be fair, they’ve also made a couple new, very good, engineering hires they haven’t trumpeted very loudly.)

But consider the costs of having to hire accountants to review each team’s budget and the costs to the teams of having to adopt accounting procedures that allow them to comply with the regulations. That’s especially onerous on the smaller teams, who are already at a disadvantage.

Creating a level playing field is complex problem with no simple answers, but the future of racing series may depend on it.