Is cost cap now hurting F1?

CIRCUIT OF THE AMERICAS, UNITED STATES OF AMERICA - OCTOBER 22: Sir Lewis Hamilton, Mercedes F1 W14 during the United States GP at Circuit of the Americas on Sunday October 22, 2023 in Austin, United States of America. (Photo by Zak Mauger / LAT Images)

How can an F1 team, on their back foot, invest enough in R&D to close the gap with today’s cost cap? That what an article over at Autosport by Jonathan Noble discusses and it’s yet another regulation that F1ushered into the sport that has now revealed the reality of its impact.

F1 has a log history of issuing regulations that, when pushed to their logical conclusion or exploited to their maximum degree, end up having an unwanted impact on the sport. The cost cap was always going to be complicated given its scope and difficulty in managing/regulating.

From Catering overspend to hurried R&D expenses, the cost cap seemed to be a real challenge but perhaps the easiest thing to predict would be the lack of funds available to close the gap to teams much quicker than your team.

As the article points out, that’s exactly what is happening. FIA director of single-seat racing, Nikolas Tombazi, said:

“The problem with the financial regulations is, on the one hand, they do mean that somebody can’t spend three times more than somebody else, which is good,” he said.

“But on the other hand, they do also mean that if you’re behind somebody, you can’t just throw everything at it and make an upgrade.

“In older times, some teams would occasionally start a season and be in a really quite bad place, because they would have maybe messed up the project or concept or whatever. They arrive and are humiliated for the first few races.

“I’ve been involved in such a situation, but then you just make a massive upgrade package for Barcelona for Canada or something, and you’d virtually redesign the whole car like crazy for three or four months and then be winning races during the season.

“The [current] financial regulations limit the amount of upgrades you can do. So, if somebody is further back, the recovery can be quite long and painful.”

This leaves a gap in which the teams and the FIA must consider how to capitalize on the positives of a cost cap but also allow for the competitive viability or parity amongst competitors to achieve a much closer balance. If, indeed, that is the desire.
How do they assist slower teams the flexibility to catch up without breaking a cost cap? x

Some are comfortable with the notion that F1 is expensive and if you can’t afford to participate and spend what it takes to win, then don’t enter the series. Others would like to see F1 be more competitive to the point of being a spec series similar to NASCAR.

The immediate sense is that perhaps the cost cap has been effective but now that teams can’t spend untold fortunes in development, maybe loosening the regulations to allow for more ingenuity might be the answer.

The good news is that Tombazi is thinking beyond the immediate impact of such a move and trying to force the unintended consequences of opening up the regulations.

“There is a fine line between too much limitation – and clearly this is a technological sport, and has to remain so.

“But on that side, with too much freedom, there is then potentially very big gaps between the cars, and that’s a very difficult line to follow.

“Clearly, if you ask an engineer from a team they will say it’s too much limitation. I’m an engineer myself, I would love it if all cars were a complete technological battle. But we do need to consider that there’s other factors at play that are important for the sport.

“Additionally, compared to the older days, when maybe there was a bit more freedom, we have financial regulations and we have to also try to limit some of the activities that take place.

Otherwise you could have teams building some advantage through an R&D project of some sort, and then having an advantage for a long, long time to come, with no chance of other teams catching up with restrictive regulations.

“So, there’s this line between freedom and having a competitive championship, plus the financial regulations put us in a very small spot. So, I don’t think there’s a perfect answer.”

What become obvious is that it isn’t an easy issue to remedy. Looser technical car design regulations could lead to ingenuity that closes gaps on limited budgets but it could also lead to other unintended consequences. F1 would do well to measure twice and cut once here.

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Paul Kiefer

The problem with a cost cap is that it’s not enough to limit spending on teams. Everyone gets limited in some fashion. That puts you right back where you started. Everyone is still uneven. This is why I believed that a “luxury tax” was the better answer. The leading teams that overspend are forced to help the teams in the lower ranks by paying them money so that they can get a higher resource which will then allow them to catch up on development, staffing, etc. In this way, they get a fair chance to pull closer to the upper… Read more »

Xean Drury

This sounds like an argument made from the top (and wealthiest) teams. ‘How can a team that starts on the back foot see gains?’ Like Williams and McLaren did? It’s such a silly argument. We’ve seen, in the before times, a team with billions make bloated elephants and teams with nothing make amazing products (Force India comes to mind). Fix your effing car, that’s what it still comes down to. More money won’t fix a bad design.