Is the budget ceiling already being questioned?
The budget cap set at $140 million for the 2022 season for each team seems difficult to meet for Red Bull given the economic situation we are experiencing. Christian Horner is sounding the alarm.
In order to limit certain teams’ access to enormous resources and to avoid a discrepancy in means between “small independent constructors” and factory teams, Formula 1 has decided to control the expenses of each team throughout a season.
This is how the budget cap is introduced, and MotorsInside explains the details to you through this article. (translation of the main sentence)
Here is the translation of the linked title and phrase:
“What is the budget cap imposed in F1?”
This ceiling is decreasing year after year. It went from 145 million dollars to 140 million for 2022, and it must be reduced to 135 million for 2023.
Nevertheless, depending on inflation, it can be revised upwards.
Even though the new regulations were delayed by a year, to take effect in 2022, teams had to spend significant amounts of money for the development of these racing cars. The Covid crisis has at least allowed them to spread this cost over an additional year.
However, one of the negative effects of this health crisis is starting to be felt. This is inflation. Managed differently by central banks, this inflation is still global.
The crisis in components, labor, transportation, energy costs, and also the Chinese economic bubble have created strong tensions in the markets in 2021.
This inflation has worsened at the beginning of the year in Europe after having affected the United States last year. The war in Ukraine may also heavily impact the rise in overall costs.
Christian Horner questions the legitimacy of this ceiling in these uncertain times: “I think it is a real issue. We are already experiencing extremely high inflation.
It must be noted that in 2020, when the budget ceiling was imposed, we could not anticipate the issues the world is facing today.
The potential imminent worsening of the ongoing crisis perplexes him and he wishes for the regulator to intervene quickly.
“The inflation risks reaching record levels. We can already see its impact on air freight. This is a very serious problem that our regulator must investigate and resolve quickly. It must take into account the increases in cost of living that we will all experience,” he concluded.
It is expected that if inflation exceeds 3%, this ceiling can be revised upwards. There is no doubt that the FIA will quickly address the issue.
