A ceiling on budgets but

We’ve been talking about it for years, it’s now going to become a reality: F1 teams will not be able to exceed a spending cap for a season. But will it have the desired effect?

Here we are. The final figure has been unanimously adopted: teams will not be able to spend more than 175 million dollars to develop their performance over a season of 21 Grand Prix. It is planned to adjust this figure by one million dollars for any race above or below this reference, knowing that it is now possible for Liberty Media to hold a maximum of 25 races per season. With already 22 events planned for 2020, it can already be considered that the owners of F1 will not hesitate to go to new lucrative destinations.

In order to reduce costs for the teams, it is planned to shorten the weekends, which will go from four days (including Thursday, where drivers are occupied with their various obligations to the media and their team’s sponsors) to just three. Currently, there is no plan to reduce the number of sessions, but that could be a consideration.

This cost reduction effort obviously involves technical regulations. Currently, one of the largest cost centers concerns hybrid power units. To reduce costs, the FIA has planned to impose an increase in minimum weight to allow the use of less expensive materials than currently used, while engine manufacturers will be required to provide exactly the same configuration to their own team as to their customer teams. The most important element is the freeze on gearbox spending for a period of five years, as analyses have shown that teams are currently dedicating significant sums to this area.

If all these restrictions are put in place, it’s because the leaders are well aware that they must offer an attractive show and that the performance gap between the top and the bottom of the grid needs to be narrowed to prevent three teams from monopolizing the podium spots or the same team from winning both titles for six consecutive seasons.

While the effort is commendable, it’s important not to forget that budget caps are not a miracle solution. One of the main reasons is that many current teams do not reach that amount! It is therefore primarily a restriction for the larger teams, which will be forced to part with some of their staff.

Moreover, this cap does not include the salaries of the drivers, nor those of the three highest earners on the team (team managers, technical directors…). The wealthiest teams can therefore continue to attract the best drivers without any constraints on the rest of the research and development budget. We are not in the same situation as in American sports (basketball, baseball, or hockey) where the players’ payroll is capped to prevent all the best players from ending up on a limited number of teams.

The goal is indeed to limit expenses related to performances, not towards marketing operations that the teams may implement. Similarly, all public demonstrations of old cars do not fall under this cap: the idea is not for teams to become even more insular, but rather for them to continue reaching different audiences, as was the case this week on Hollywood Boulevard.

In order for the teams to adapt to this new environment, a gradual implementation has been planned: on March 31, 2021, volunteer teams can submit their accounts for the 2020 season so that auditors can determine if they adhered to the required budget, but there will be no sanctions if this was not the case. The sanctions (which can range from simple financial penalties to exclusion from a race, or even the championship) will only be applicable a year later when the teams submit their accounts for the 2021 season. It is therefore highly likely that the leading teams will not adhere to the budget for the 2020 season to best prepare for the transition to the new technical regulations.

So just a stab in the dark or a true revolution? Only the future will tell.

With the participation of www.racingbusiness.fr