Formula One is entering dark times as the budget cap bites before race 8 of the 22 race season. The financial cap on teams spending was introduced to level the playing field and stop big teams throwing endless sums of money at upgrades each race.
The global cost of living crisis with inflation pushing 10% in many western countries means the teams have been spending more than they budgeted for.
Toto Wolff reveals Mercedes have already made some “painful” redundancies as the energy bill to run the team factory in Brackley has risen by £4 million.
Mercedes have suffered incremental spend also trying to fix their W13 car’s porpoising by introducing a completely redesigned floor which is now more compliant.
Ferrari team Boss Mattia Binotto agrees with Wolff that the cost cap is cutting deeper and earlier than expected.
“I think the budget cap is dictating somehow what we can do,” commented Binotto.
“We need to certainly have a close look at it and not wasting our money, because we cannot simply do that.”
Mattia admits that planned upgrades to the cars are being delayed. “I think we’ll bring upgrades when we have got a significant one. It will not come every single race that we will be bringing pieces.”
Ferrari’s next major changes to the car are now planned for 3 races times at the British GP in Silverstone and he believes Ferrari have little to no chance of hitting the $140m budget target set by the FIA.
“I think that there will be no way for us simply to, to stay below so, I’m pretty sure that at some stage we will go over,” said Binotto.“In the regulations, there is a threshold, which is a 5%.
If teams breach the $140m budget cap by no more than 5%, this will be considered a ‘minor breach’ by the FIA, though no one is clear what the penalties will be. There is scope for such sanctions to be applied as sporting breaches resulting in grid place drops or even points deductions for the teams and drivers.
Binotto believes there is a “force majuere’ argument that should be applied by the FIA. Put simply unforeseen circumstances beyond the teams control will lead to them breaching the cost cap.
Ferrari have yet to make staff redundant and Binotto is adamant he will attempt to prevent this at all costs.
When asked how Ferrari will cope, he replied, “No idea – but I don’t think there is any way for us – and for many teams – simply to stay within [the cost cap], and even laying off people, I don’t think that’s a good and right choice.”
A number of the teams are pressing the FIA to increase the cap due to inflationary pressures however this would require the agreement of all the teams for the regulation to be changed during the current season.
Alpine team boss Otmar Szafnauer argues against any FIA intervention stating that Renault-owned Alpine’s predicted spending remained inside the annual cap and saw no reason to go beyond the current $140 million.
“We’ve set our budgets early, we kind of anticipated a little bit of the inflation. Inflation didn’t just creep up on us,” said the American
“If we can do it, for sure others can do it too. I’m not for just increasing the cap.”
Szafnauer believes the teams have added a significant amount to the in season car development budget due to the biggest change in car design regulations since the turn of the millennium
He believes this development programme can simply be cut to offset the other cost inflationary rises.
”When freight costs go up by 2.5 million or 3.5 million but your development budget is 20, can you not make your development budget 17 and still be under the cap? You can,” he said.
The problem is that F1 is not a specification series like IndyCar, where the cars are mostly the same and remain so throughout the season.
F1 is about the different design concepts each team makes and the race throughout the season for this caught on the back foot with their original car designs, to catch up by bringing regular upgrades.
How this matter will be resolves is anyone’s guess, but Ferrari have laid out their stall stating they will not be staying within the $140 million cost cap in 2022.
The question will be. “What’s the penalty” the FIA chose to administer.
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If the budget cap is stopping innovation and holding the sport back yes it needs the cap raised. If not F1 will become stale and people will lose interest, I’m not saying go back to the older day but 5 or 10%