Christian Horner, the Red Bull chief and Toto Wolff, the Mercedes chief have made statements saying that if Formula One introduces cost cap reforms, a large number of employees would have to be kicked out of their jobs.
The chiefs have released their statements after the Liberty Media has announced a cap of $150m from 2021. They have chosen the year as 2021 because the contracts of most of the companies will expire in 2021.
The bosses of leading teams have unanimously agreed to the fact that if Formula One doesn’t proceed carefully with its decision of putting a cap on the expense of teams, a large number of jobs might be at risk. They have also said that a social responsibility has to be taken into account while taking such decisions. It is notable that the drivers alone earn up to $50m per year in the present situation.
“In the UK, you are talking about potentially thousands of jobs. If a local car plant or supermarket shuts, it makes the headline news. The FIA [F1’s governing body] and Liberty are aware of that. Our biggest cost drivers are regulations, sporting and technical. There is a responsibility that needs to be given serious consideration as to how these changes are implemented,” the Red Bull chief Christian Horner has said.
“This was a good point where Liberty recognised that a cost cap cannot be an event but needs to be a process over several years and consider the structures that have been put in place and they are taking our feedback on board. It is clear we will all be protecting our structures and we expressed that [in the meeting].”
On the events of negotiations, Wolff said, “I see some common sense on the table. There are still areas where we are very far away but it is moving forward in a constructive, structured process.”
The teams that are likely to be affected the most by this decision of Liberty Media are Mercedes, Ferrari, Renault, Ferrari, and McLaren. These companies generally spend around $300m at present, which is double the proposed cap.
Certain other proposals have also been made in the recent meeting that concluded in Monaco. The members have agreed on removal of MGU-H from the engines, but negotiations shall continue on matters involving technical guidelines, take prices down, equitable income distribution, etc.
By Harsal Nagarkar