F1 agrees to cost cap but will $175M bring new teams?

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I was reading an article over at Autosport today about the proposed cost cap in Formula 1. The article also has a nice video conversation with the staff about the cost cap and what it is aimed at. Namely, luring more teams to F1.

First, the F1 boss, Chase Carey, says that it has been agreed that for 2021 there will be a cost cap of $175 million. This won’t include marketing expenses, driver salaries and engine expenses. The cap will be in place through 2025.

now that this has been agreed to, it takes the issue off the table so F1 and the teams can get on with the process of hammering out the rest fo the regulations for 2021. That will include discussions over prize money payouts and more.

“Clearly one of the goals in terms of the cost cap is to create a healthier sport,” Carey said in a call with Wall Street analysts. “We’ve talked about the competitive goals, but it is equally important that the cost cap creates a business model that is healthy and growing and positive for our existing teams, and potential new teams coming into it.

“That has been enforced as we’ve had discussions with potential new teams.

“All have looked at steps in terms of cost discipline, and probably a more balanced revenue distribution, as being cornerstones to creating what they think is an exciting opportunity.”

The teams and F1 will engage in a dry run in 2020 with the accounting details and information being shared with F1 in order to see how the cost cap would work. Clearly one of the biggest questions is how would it work and wouldn’t teams be able to cheat. Carey says no.

“We wouldn’t have done it if we didn’t think it was enforceable,” said Carey.

“There’s no reason to [not] head down a path. You can account for everything, what you really need to make sure is that you have access to the right information to do the accounting, and that’s just about us being disciplined and firm about what we need.

“We’ve addressed that. We’re going to use 2020, all the teams will participate in what I guess you could call effectively a dry run.

“The cost cap won’t actually be enforced with consequences until 2021, but, in 2020, what we really are actually going to go through is shaking out the bugs of accounting for the costs.”

The video commentary is an interesting view as Glenn Freeman and Scott Mitchell ponder the bait, the cost cap, on the proverbial hook, Formula 1, and which teams might be interested in joining. Chase said that potential new entrants made it very clear that they would only entertain going the sport if it was a healthy business model. Something Gene Haas has probably pondered for the last three years.

One candidate, and Scott makes a good case for it, is Audi. With Porsche going Formula E and Audi’s e-tron essentially a hybrid engine, this could make sense. They discuss the junior teams joining like Prema or Carlin and the thought here is that they would join as potential B teams to larger existing teams.

I won’t parse every word but some of it I agree with and some of it I don’t. Funding Prema in a brand new team when Ferrari already have Alfa Romeo may not make much sense unless Prema bought Alfa and all the assets.

Where it might get interesting is who McLaren might partner with because right now, they are being outclassed by Red Bull, Ferrari, Mercedes and some may argue they themselves seem like a B team for Renault. It gets cloudy in this murky water of who is white whom. Mitchell and Freeman seem to think Andretti Autosport might make a great B team for McLaren and there is some merit to that.

One though I have is Williams. Would they be ripe for acquisition from Audi or another team? Is $175M and equal prize money distribution enough to lure Mazda or Toyota back? Check out the link below and you can watch the video and give me your opinions on if the cost cap will work and who it might lure to the sport.

Hat tip: Autosport

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Fabio

Not convinced it’s going to make the slightest difference, perhaps if there weren’t any exclusions then maybe, but with them, it will be too easy to hide costs.
Let’s face it, every F1 team cheats to a degree, it’s just not getting caught that’s the hard bit.

subcritical71

I don’t think policing will be that big a deal IF, and that’s a big if, the penalty for running afoul of the cap is high enough, like exclusion from the years championship. If its like the $5K for an unsafe release, well, all bets are off.

photogcw

$175million just to be a mid-pack team? No team or manufacturer will want to play in that sandbox. If they want to go racing, there are much better and more competitive alternatives for equal or less amounts.

MIE

This level of cost cap will only really impact the top teams (Ferrari, Mercedes, Red Bull, McLaren and possibly Renault) no-one else comes close to having that sort of budget. The key is the redistribution of the prize money, if the top teams no longer need as much to go racing (due to the cost cap) then the disproportionate amounts paid to the ‘historic’ teams can stop. After all every team bar Haas has been on the grid for well over 25 years (and at that time McLaren and Williams were at the front, so times have certainly changed). If… Read more »