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FORMULA ONE TEAMS IN DANGER WITH NEW UPDATED COST CAP

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Sports

A year ago

F1 fans can get confused when team bosses argue about a few million dollars. The goal of racing should be to see driving skills in action, not who has the best accountants. 

 

F1 is in a healthy situation at the moment, because of a cost cap that caps spending. Without it, more than one team could have disappeared in the last few years. Instead, many investors are competing to get involved in the sport.

 

It is an accepted truth that financial regulations now carry as much weight as sporting and technical equivalents, and violation of these rules must result in punishment. The big difference is the time lag. Assuming that nothing unexpected happens on track, the Abu Dhabi GP, and therefore the 2022 world championship, should be sorted on the evening November 20 – at least when it comes to sporting and technical matters.

 

Possible penalties for teams involved in a data breach could include retroactively changing the world championship standings and/or taking legal action if the team disagrees with the consequences. One precedent in F1 history occurred when they made a significant change to the season's outcome. Michael Schumacher lost his second place in the world championship following his clash with Jacques Villeneuve during the 1997 European GP.

 

Have you ever heard of a late change in the winner in other sports? There was an instance of this happening in high-profile events such as the Olympic Games and the Tour de France when a drug cheat has been exposed. If the original cost cap figure was not modified, several racing teams would have had to close their doors. The 3.1% increase has helped the teams with their spending, giving them some breathing room.

 

In 2022, teams admitted to the FIA that they would not be able to make up $141.2 million in race costs for the season, which came from inflation and increased utility bills because of natural disasters. The FIA can let things go over 5% if it is only a minor increase and if the money used does not exceed their financial regulations. 

 

The FIA has strict penalties for teams that overspend, like excluding them from the World Championships. There was a 3.1% inflation boost in May, which created a revised total target total of $145.5m. Above that 5%, there's a material breach. The big teams in F1 want more and the small teams want less, based on the outcome of the F1 Commission in Austria. Compromise was a word involved in any discussion. 

 

The three companies who spend the most were happy to see a moderate increase in numbers at 3.1%. Toto Wolff, of the big three teams, was perhaps the least enthusiastic. Wolff admitted that Mercedes will have a hard time meeting the new limit. If a team is exceeding the total budget by too much, even if it is only because of some overspend, then those teams might be in trouble. It was thought that up to seven teams who broke the original limit would not face any serious consequences, and even if these penalties were applied in mid-2023, it would be laughable. If only one or two teams exceed the new limit, and the others play and prove that it is possible to stay under, the authorities might not be very sympathetic. That's the risk big players now face.

 

 

 

 

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