Ferrari, Sauber and Haas want to adjust their budgets based on higher labor costs outside of Great Britain

This month, Formula 1’s engines may be off, but the system is in full swing, thinking not only about the present but also the future. Discussions are ongoing to define the new Concorde Agreement, which will regulate the sport with the introduction of the new 2026 regulations, as the current agreement expires next year.

One of the topics on the table is the budget cap. Rumors have circulated about a possible relaxation of cost controls, which have made F1 more sustainable, even for smaller teams. Let’s not forget that just a few years ago, there was a risk that some teams could go bankrupt.

Liberty Media’s approach has changed the landscape: thanks to the work of Stefano Domenicali, President and CEO of F1, the American promoter has brought the Grands Prix back to the top of the global sports scene, with broader visibility to a new generation of fans, cultivated by the Netflix series “Drive to Survive,” and a massive effort on social networks.

At the same time, the paddock has become a desirable place for VIPs, and the decade-long agreement F1 signed with LVMH, the French luxury conglomerate, speaks volumes about the repositioning of the GPs, combining record attendance at each circuit with the exclusivity of the event for those who have the privilege of experiencing the Paddock Club. In this context, where all the indicators are on the rise, the future challenge needs to be fought on equal footing. The financial regulations, a third element in a framework that was previously only technical and sporting, have contributed to performance leveling among the cars (with four different teams winning races this year: Red Bull, Ferrari, McLaren, and Mercedes). However, the strict budget cap rules can create significant disparities in team management.

For example, labor costs can heavily impact a team’s organization. In Switzerland, where Sauber is based (currently transforming into Audi), and in Italy, where Ferrari is located, staff costs are 20–30% higher than in Great Britain, where most other teams are based, except for Haas and Racing Bulls.

Haas has its headquarters in the United States in Kannapolis (North Carolina) and three operational sites (two in Italy: in Maranello with Ferrari and in Varano de’ Melegari with Dallara, and one in Banbury, UK), while Racing Bulls is split between Faenza and Milton Keynes, and Alpine combines Enstone with Renault’s engine facility in Viry Chatillon. However, Alpine’s Paris headquarters will be abandoned as the F1 team plans to use Mercedes customer engines.

Clearly, based on the numbers cited, there’s a significant disparity: Ferrari, Sauber, and to a lesser extent, Racing Bulls and Haas, despite having the same spending capacity, are limited to hiring far fewer staff than the British teams. To fill the necessary positions for a modern F1 team (around 1,000 people for top teams), some expand their workforce with lower salaries, making it more challenging to compete in the market.

The proposal, therefore, would be to increase spending capacity based on a parameter that not only reflects inflation (there’s already an annual adjustment for purchasing power) but also considers labor costs.

This would be a fair choice that would rebalance values, along with the idea of eliminating the ambiguity of splitting the cost of an employee who would theoretically work part-time for the team and part-time in other F1 activities (like boats for the America’s Cup or developing Hypercars or road supercars). With a significant annual increase in spending capacity, all roles would fall under the F1 team, avoiding potential loopholes.

The suggestions that have emerged are very rational. It will be interesting to see if a true equalization of spending can be achieved.