There’s a big F1 pow-wow coming Monday 6th April… Of course due to Covid-19 this will take place by conference call.

The F1 commercial rights holders are taking a pounding as race by race in 2021 falls by the Covid-19 wayside. This has seen Liberty Media’s share price hammered and so naturally they are now keen to reduce their single biggest annual expense. This is the money paid to the teams.

Of course, if the F1 teams were to spend less money, they would need less from the commercial rights holder.

The FIA are also keen to see costs reduced. More simple machinery and less frequent change make its job of policing the regulations easier.

Small teams demand further measures taken for survival

Then there are the smaller teams. In terms of spending power this is pretty much everyone other than Red Bull Racing, Ferrari and Mercedes. These teams would love to see the big boys spending cut as it should improve their competitiveness.

To date, there had been some broad agreement on a team-spending cap around $175m a year. Of course the bigger teams have argued for certain costs to be outside this limit. Driver salaries for one and another idea was to exclude the remuneration of each team’s top 3 paid non-driving individuals.

Red Bull Racing has even indicated they would agree an eventual budget cap of $150m, so long as their list of exemptions is allowed until 2023.

Most of the issues surrounding a budget cap were being discussed prior to the global crisis that is Covid-19, but now F1 has been taking crisis measures to save the sport. These include bringing forward the Summer shutdown to over the Easter break. 

Further, car and engine development has been pretty much banned until February 2021, and the 2020 race calendar is now subject to FIA amendment at fairly short notice. Races can be rescheduled in order to generate funds, which may even include racing through Christmas and into the New Year.

The dominant forces that were once opposed to reducing F1 team costs now appear in retreat. It is even mooted that the Daimler Benz board would be happy to see team costs reduced to even less than Red Bull’s offer of $150m a year.

Ferrari would find it more difficult to reduce it’s manpower and as such appears the last in the room defending a bigger budget. Maranelo argues a budget under $175m, say $150m, makes no difference to the smaller teams as they don’t spend that much anyway.

But the smaller teams are expected to demand a $100m limit and that all exceptions including driver salaries be phased out by 2023.

The seriousness of the race to burn as much cash as possible appears to be finally dawning on F1’s participants. Creative ideas, such as homologating the car on Friday for the whole weekend have been suggested by Ferrari.

Another suggestion to limit the teams to a number of front and rear wing iterations per annum is also on the table. The cash the bigger teams burn in this area is eye-watering.

The big argument has always been about lost employment and the personal cost this brings. Yet Covid-19 has brought a reality check over this issue, given companies globally are being forced to reduce their workforce.

However, the ‘sit down’ goes on Monday, what’s almost certain is that the resistance to change the gazilions spent by F1 teams is now finally at an end.