The Formula 1 financial regulation, which came into force starting from the 2021 season, is the subject of constant evaluations. During the first three years of the ‘budget cap’ regime, some gray areas emerged which were at the center of discussions and controversies between the teams under the constant monitoring of the International Federation.
In the context of the talks that are being held between the representatives of the teams for the launch of the new ‘Concordia Pact’ (which will come into force from 2026), proposals have also been presented to make the financial regulation more efficient, which unlike of the ‘Concorde agreement’ is the responsibility of the FIA.
At the moment the maximum spending limit imposed on the teams is 135 million dollars, a figure that rises to 142.2 (i.e. 130 million euros) including the extras foreseen for a number of Grands Prix exceeding 21 and the sprint races. The proposal supported by several teams is to extend the maximum budget to 220 million dollars (202.2 million euros) but including all expenses relating to ‘Non F1 activities’ which are currently the subject of much controversy.
The Alinghi Red Bull Racing boat with which he will take part in the next America’s Cup.
Photo by: Alinghi Red Bull Racing
The top teams have exploited a gray area of the regulation by launching programs within the company but officially unrelated to the Formula 1 activity. One of the examples are the America’s cup programs (Alinghi for Red Bull, Ineos for Mercedes) which allowed the teams to be able to have within the company a workforce whose costs were charged to the F1 program only in certain periods of the year. After the 2020 controversies triggered by the top teams who complained about the need to fire 15 to 20% of the teams’ staff at the time, in reality over the last three years the number of employees has returned to being the same of 2019, or (in the case of the top teams) close to a thousand.
The FIA has made a notable effort to monitor the transfer of personnel between F1 activities and non-F1 activities, but it remains a gray area. The new proposal in view of 2026 is to significantly widen the maximum spending ceiling, with the constraint, however, of considering every person who works even for a very short period of time as full-time employees of the F1 program (with the full burden of the salary cost). of time on the project. Apparently the budget increase may seem penalizing for the teams that do not have 200 million euros of seasonal budget, but on the other hand it does not create a discrepancy between the top teams (who can afford alternative programs) and the other teams.
Another proposed change to the Financial Regulation, currently on the table, concerns labor costs. There are non-marginal differences between the costs that the teams based in England sustain and those that Ferrari and Sauber have to bear, which are higher also due to different tax systems. The proposal envisages parameterising costs, eliminating from the budget cap the delta recognized at European level which differentiates the cost between the various nations, in order to level the impact of salaries (the first cost item of all teams) on the maximum limit of expense.
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