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F1 seeking agreement on $145m budget cap

NEWS STORY
04/05/2020

F1 MD, Ross Brawn, has revealed that following discussions with the sport's bosses and the FIA, the teams are to be presented with the proposal that the budget cap planned for introduction next season be set at $145m (131m).

Though this is lower than the originally intended $175m, it is still well above the $100m (90m) - $120m (109m) limit the likes of McLaren were seeking.

"Today's meeting was the FIA and Formula 1," Brawn told Sky F1. "The details will be going out to the teams in the next few days.

"There has been a lot of consultation," he added, "and I think we're now at the very final stages. It will all become clear shortly.

"The budget cap's initial objectives were a more competitive field," he continued, "and I think with the situation we have now the economic sustainability of Formula 1 is the priority. I think that counts as much for the big teams as it does for the small teams.

"It has become very clear from the people who stand above some of the team principals and management of these teams that the message is clear... we've got to cut costs. And therefore, another big step is the reduction of the cost cap.

"We started at 175, that was a long battle to get it there, and with the current crisis we are now going to start at 145 and the discussion really is how much further down we can drive the next few years."

While McLaren led the call for a lower limit, Ferrari and Red Bull have argued for a higher cap. Indeed, because they develop parts used by rival teams they suggested a two-tier budget limit. Mercedes, meanwhile, has pretty much remained silent.

The lack of racing is hitting the sport hard financially, and while it is understood F1 is to pay the teams roughly the same amount of money for this season as they earned in 2019 this has meant essentially transferring in $1.4bn from another arm of the Liberty empire.

"We'll judge on what level we should support the prize fund in the next 6-12 months," says Brawn, "because obviously, we want to keep it alive.

"If we lose some teams in this period, it will be a tragedy," he admits. "So we're working very hard in a fair and equitable way amongst the teams.

"I think Liberty have shown their strength, and created this fighting fund, and we just need to see how things now develop. We need to look at what the calendar looks like, look at what the income is like for the rest of the season. And then sit down with the teams and see how we can find a way of making sure we all continue on this journey, because the future looks so good. We've got ten very good teams in F1, let's keep it that way."

Indeed, looking ahead, he says: "I think there's going to be a much more equitable prize fund in the new agreement", referring to the new Concorde Agreement to which none of the teams has currently signed, while the current agreement runs out this year. "So the midfield teams in particular are going to be much better off in terms of their portion of the prize money.

"It's being balanced in every direction, we reduce the amount of money that could be spent in F1, and we're in improving the distribution of the prize fund more evenly amongst the teams.

"A good middle field team should be able to score podiums, maybe a win, and it should make a small profit. And if we can achieve that then we're got a very sustainable future."

While the budget cap is to be introduced as originally planned in 2021, the much-anticipated technical overhaul has been deferred until 2022, and while there has been talk of delaying it until 2023, Brawn insists this isn't going to happen.

"They will definitely be '22," he says, "though I think some teams have pushed to delay them a further year.

"I think there's a justifiable need to carry these cars over into next year, because we're in the middle of it," he adds.

"The initiatives that we're bringing with these new regulations are to make the sport more economically viable in terms of the complexity, where the money is spent.

"With the cars we have now, they're so complex… the more you spend, the quicker you'll go. And we need to level off that slope and create a situation where money is not the only criterion in terms of how competitive you'll be.

"We still want the great teams to win. We have to maintain the integrity of F1. It's a sport, it still has to have the best people winning. We can have a competitive form of racing in the future with the new regulations with these new cars. And they've been deferred a year but they're definitely coming in in '22."

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1. Posted by mickl, 04/05/2020 18:38

"How do engine manufacturers and engine development figure into this? Does Honda have a cost cap too for development? Same with Ferrari's argument I suppose for a 2 tier cap as they also manufacture the engine. If it's the same amount as say for Racing Point I get that they'd be miffed at having to factor engine development into it, although they would get some money back from the customer teams purchasing.

Also, how does the prize money figure into this. Is that to be part of the $145m for the following year?"

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2. Posted by elsiebc, 04/05/2020 17:04

"This budget cap is F1's version of a universal guaranteed income. If a team can be assured of enough money from the kitty to fund it's capped expenses, there is no pressure to excel. Once you're in the club, you're safe and you'll never lose your spot. Yes, we'll have twelve teams. Mostly made up of the likes of Minardi, Arrows, HRT, Virgin...
And remember, the team that is pushing for that $100M cap brought in $230M last year. If you think it's two tiered now..."

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