The case has polarized teams, with Alpine and Alfa Romeo being the most vocal in an attempt to ensure there is no change from the overall figure of $140m for 2022, plus $1.2m additional dollars for the 22nd race. Meanwhile, Red Bull, Ferrari and Mercedes are leading the campaign for a raise, and their pleas have grown increasingly frantic as the weather continues to turn and they see where their costs are heading amid inflation. world comes into play.
All teams agreed to a reduction of $175 million to current levels at the height of the global COVID lockdown in 2020, at a time when it was unclear what kind of season we would ultimately have, and therefore how many revenue would arrive A few years later, we have a packed schedule, huge crowds are back at venues and sponsors are lining up to get in. The teams are arguably in a healthier state than ever.
Against this backdrop, it’s perhaps unsurprising that the big players are frustrated that they can’t devote more of their substantial funding to getting their cars running faster while balancing these rising costs. Red Bull boss Christian Horner suggested to Barcelona that several teams would have to miss four races to stay under the cap, although in Monaco he clarified he was just trying to give us an idea of the number of teams who are currently expecting to break the cork by.
There is clearly some logic to the argument for an allowance for inflation. But how important it should be, how it should be applied, and what kind of precedent it would set in terms of further hikes in the years to come are all questions that remain unanswered.
The bigger picture is the cap principle. It should be remembered that several teams and their owners have committed to a long-term future in Grand Prix racing on the basis that expenses would be contained and it would no longer be a bottomless pit of investment. Instead, F1 would be all about spending efficiently and using your resources efficiently, potentially giving former midfield teams a chance to take on traditional favourites.
Renault bosses committed to the Alpine project on this basis, while individual owners like Sauber/Alfa Romeo’s Gene Haas and Finn Rausing might justify staying involved knowing that in theory they could compete with the big guys. It is therefore completely understandable that these teams are now trying to limit the current cap and fear that any changes will be followed by further increases.
The two camps have very different views on the impact of inflation and how it should be viewed, with some saying we knew it was coming and others blaming the unforeseen conflict in Ukraine.
“Obviously there are a few teams that are against it,” said Horner. “And I think the voting process under in-season changes in the budget cap obviously requires a certain threshold, which currently doesn’t exist.
Red Bull boss Horner and Ferrari counterpart Binotto both say the current situation constitutes force majeure, but Vasseur disagrees
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“But of course you have to look at the big picture – is it a force majeure event? I would say an act of war that caused inflation will be classed as a force majeure event.
Alfa’s Fred Vasseur replies: “It is absolutely not a case of force majeure, because inflation is not a case of force majeure. We knew perfectly well in November or October when we made the budget which will have inflation. And now it’s up to the teams to decide if they want to develop the car all season and miss four events or if they want to slow down now and do the full season.
“Honestly, I think at some point we have to agree that we’re not going to try to change the rule. It was the exact same story with the weight, the way it was clear, some teams didn’t make it, they wanted to change the minimum weight, and the number of teams couldn’t reach the objective. It’s not a matter that if you have eight cars under weight after qualifying, all eight cars will be disqualified.”
Vasseur’s argument is that teams can always hold back development.
“The difference is that we are not talking about a budget ceiling, we are talking about the budget, on our side”, he specifies. “That means I won’t be able to spend what I have. And if we have an increase and I can understand their situation, but if we have an increase in energy or freight, the best solution is to turn off the wind tunnel to stop bringing updates every weekend.
“We are in this situation and sooner or later we will have to stop the development of the car, because we will be at the limit of our budget. And I think everyone can do the same.
Alpine boss Otmar Szafnauer has fiercely defended his team’s position, and like Vasseur he says inflation could be factored in well ahead of the season.
“Most teams prepare their budgets in November, December for the following year, and we are no different,” he says. “And at that time, inflation was already at 7% and above. The RPI [retail price index] in England was 7.1, 7.2%. We took that into consideration when we set our budgets and defined all the development work we were going to do.
Szafnauer and Vasseur both argue that it wouldn’t be fair to change what the F1 teams agreed when the teams signed the cost cap.
Photo by: FIA Pool
“And we are still within the limits, even if the freight was a little more expensive than we thought, we are still below the ceiling. And we plan to be there at the end of the year. And we’ll adjust development accordingly, just like Fred said, so I think it can be done. Where there is a will, there is a way, and we set a budget cap and we have to stick to it.
Szafnauer is convinced that the regulations must be respected.
“We all sat around for a long time trying to get the ceiling up to the right level,” he says. “We discussed inflationary pressures. There’s a mechanism in the cap itself to deal with inflationary pressures, and I think we have to stick to the rules that we have, which we’ve been debating for a long time. The big teams had a different view of where the cap should be, the smaller teams wanted it at $100 million, I remember.
“And we came to a compromise, including inflation, what we do with inflation, and the first time we face inflation, it’s a little over two and a half percent, we want to change it. I think that’s wrong. I think we should stick to the rules as they were written and go all the way. And I don’t think that’s opportunistic for teams to say ‘don’t change the rules mid-season’.”
Some adjustments that do not involve the overall budget cap are also being discussed. One is to remove some or all of the transportation costs from the cap, freeing up the amounts that would have been included in the $141.2 million for other purposes. With the six-race flyaway race at the end of the year still to come, and teams not yet knowing what it will cost them, this represents a useful saving.
Teams that buy gearboxes and other components from competitors must declare a theoretical value for them, in effect what it would have cost them to develop and build them in-house. While that won’t help big players like Red Bull, Horner suggested adjusting some of these values would reduce the pressure on teams buying away.
“For smaller teams, there are levers available to the FIA,” he noted. “Components that are transferred, for example, gearboxes, suspension, old listed parts components that are subject to a substantial tax – a cost cap tax, not a real money tax, but a cost cap tax.
“Maybe it’s something that the FIA could consider, reassessing them, because the teams that are even P7 in the championship are considering going over the budget cap at the moment because of some of this effective taxation. .”
Horner believes that a reduction in the rate applied when client teams acquire certain items would help them
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As noted, such adjustments won’t help the top three players as they try to stay under the cap. In reality, the only solution will be an agreement between all the teams on a title number change, presumably brokered by F1 CEO Stefano Domenicali and FIA President Mohammed Ben Sulayem. However, that still seems a long way off as opponents sink.
Ferrari boss Mattia Binotto is clearly frustrated, suggesting those teams now blocking change are not playing fair after big players made concessions when deemed necessary.
“I would like, once again, to emphasize whatever the situation, the smaller teams, the better teams that it is a sense of responsibility that we all have towards the regulations and F1,” he said. “Like I think we had back then, 2020, when we were downsized [from] 175 to 145 [for 2021]. It was certainly not in the interest of the top teams to cut back to 145. It would have been so easy for us to just quit and keep 175, and today there will be no more discussion.
“I think we made an effort, because we understood the importance of it. We understood the importance of trying to balance the ceiling and the financial situations within the teams a little more. But I think like we did then, now we live the regulations, we know where the limits are, what needs to be improved.
“And I think as a whole community, all teams should understand that and be responsible. If a team is just looking at its own individual interest, we’ll never go any further. The thing that as Ferrari we accepted, even in 2020, to freeze the regulations when we knew that our car was very bad [and] put all the criticism on our shoulder for an entire season.
“But we did it out of a simple sense of responsibility. If someone doesn’t do it today when there is such a situation, which is a case of force majeure, which is obvious, that everyone can understand, I just wouldn’t understand it.
Binotto wasn’t shy about expressing his dissatisfaction with the current stalemate
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