A reduction in the budget cap will come, but the conditions are still being discussed. It’s about the amount, a step plan and a fair distribution of the costs. There should be a new meeting before Easter.
In the Coronavirus crisis, Formula 1 is learing about saving. Prolonged summer breaks, homologated components, freezing of development, postponing the new regulations until 2022 – all of this should help to relieve the teams with immediate effect. Four of the racing teams based in England have already resorted to temporarily furloughing a number of employees. McLaren, Williams and Racing Point take up an instrument of the English state in times of crisis, send part of their workforce on unpaid leave and have wages paid out of the state bag. The Haas branch in Banbury also wants to follow the example.
Some of the workforce was even released at Formula 1 headquarters in London. About half of the F1 organization’s employees had to leave the offices. To set a good example, the management decided to forego 20 percent of the salary. F1 boss Chase Carey has even announced plans to further reduce his earnings.
The recent discussions between the teams, the FIA and rights holders are about the future. Many teams will still suffer from this season’s reduced earnings in 2021 and 2022. This was the golden opportunity to rethink the budget cap agreed in July 2019 from 2021. DTM boss Gerhard Berger speaks of a “given penalty”. Not only the small teams recognize their chance to reduce the advantage of the large teams. A new round of negotiations is also opening for the FIA and Liberty. They originally dreamed of a $ 130 million cost cap with far fewer exceptions.
The first major video conference on the topic on Monday (April 6) lasted four hours. However, no decision was made. But we got a little closer. “It’s going in the right direction,” AMuS hears from the meeting.
The only thing that was agreed was that the new rules would come in 2022 and not just a year later, as Red Bull had requested. The four engine manufacturers agreed on a reduced development of their drive units. Similar to the token system at the beginning of the hybrid era, but much simpler. A further reduction in wind tunnel times still hangs in the decision loop.
The discussion about budget cap was intense. The ten teams went to battle with clear ideas. McLaren, Renault, Racing Point, Williams, Alfa Romeo and Haas demanded a $100 million cut. Alpha Tauri would swim on the same wave, but hangs too close to Red Bull to express this dierectly.
Ferrari and Red Bull don’t want to be under $150 million, and even that amount gives them a stomachache. Mercedes is somewhere in between. It is said that Mercedes can live with $140 million. For the group teams, the following applies: Formula 1 simply cannot cost any more money in the future.
In the end, a suggestion came up that sent the teams home to think about. Three-step plan: $150-140-130-120 million. So you would not be forced to release so many employees in one step. Small teams’ argument: “If we die, many more people will lose their jobs overnight.” The exceptions to the budget cap remain for the time being, so as not to open up a side war scene.
Special treatment for manufacturers
But it is not quite as simple as the thought model sounds. Ferrari and Red Bull brought up a point that still needs to be discussed. They are manufacturers who supply customers. The same is true of Mercedes recently, if you think of the closer integration with Racing Point.
The manufacturers require special treatment from the FIA. They develop and build a considerable number of components such as gearboxes, suspensions, wheel carriers or hydraulics for their customer teams. This ties up personnel, development costs and infrastructure for which the customer does not have to pay. He only pays a price.
Ferrari and Red Bull therefore want to ensure that manufacturers and customers are classified differently when it comes to budget cap. “This is only fair,” it says from the camp of the big ones. You therefore propose to set an average cost cap. A sum that everyone can live with.
In an extreme case, that would be $ 120 million. The budget limit for the manufacturer is then 120 plus x, that for the customer 120 minus x. How high the “x” is could be calculated from the numbers already determined by the FIA auditors during their tax audits of the individual teams. The difference between small and large would still total $ 40 million, according to the top teams.
McLaren and Renault would be among the manufacturers according to this model because they build all the parts themselves and do not buy anything from a competitor. The customer teams naturally resist this. They demand absolute equality of opportunity to give their owners a perspective. The billionaires no longer just want to be cannon fodder in the realm of the three top teams.
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