Jean Todt, Hockenheimring, 2019

Todt admits 2021 budget cap will have “no influence” on most F1 teams

2019 F1 season

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Formula 1’s new budget cap for the 2021 season will have no effect on most of the teams on the grid, FIA president Jean Todt has admitted.

The sport will introduce new financial regulations capping teams’ budgets at $175 million, with several exceptions.

Todt said agreeing the cap had been “a lengthy and difficult process” but believes the cap needs to be lowered to have a full effect.

“The most important thing [is] that finally we agreed on the principle,” he said. “Still it’s something I’ve been mentioning already [the] budget cap I feel is too high.

“For about seven out of 10 teams it will have no influence. It will have only influence on three teams. But still it will diminish the gap between those seven teams and the three others. So it’s a good thing.”

Among the exceptions to the caps are salaries for drivers and top team staff, $15m for power unit costs, plus marketing, hospitality, travel and accommodation.

“Some parts have been excluded,” Todt continued. “But I think the important thing is that it’s a first step. It was to initiate the principle. Then once it is initiated it will allow us to move after that to the second step.”

The budget cap is intended to bring the F1 field closer together and make the racing more competitive, which many drivers have urged the sport to do. Haas team principal Guenther Steiner said those drivers should encourage their teams to lower the budget cap further.

“The drivers, obviously they are right to say that the field is not close together enough,” said Steiner. “We know that.

“What can we do about that? The budget cap. In the moment the budget cap is still too big. So if the front drivers are not happy with that, they need to tell their teams to get the budget cap down.”

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Dieter Rencken
Dieter Rencken has held full FIA Formula 1 media accreditation since 2000, during which period he has reported from over 300 grands prix, plus...
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28 comments on “Todt admits 2021 budget cap will have “no influence” on most F1 teams”

  1. What a ringing endorsement of the cap… from Haas. Self-interest for the win. LOL!

    Wonder if Steiner is keen to take a salary cut. Or have Netflix pay his salary directly. Or work in hospitality when not on the pit wall or giving sound bites to the internet. He can barely control his own drivers, but is happy to tell the top drivers what they need to do as well.

  2. I wonder if the cap will have a concentrating effect on the teams’ budgets—that the available budgets of the seven teams under the cap will rise until they meet the cap. If teams know that $175 million is the number they need to hit to be on a financial par with Mercedes, Ferrari, and Red Bull (minus the exclusions, of course), it should become a more viable and attractive proposition to owners and sponsors to raise that amount of funds.

    1. @markzastrow I’m curious about this too. For me I’m wondering how much of the money that no longer needs to be spent will be coming directly from Mercedes/Ferrari/RB and how much from sponsors.

      Ideally it would be nice if some of the sponsorship money ultimately migrated to the smaller teams and helped boost them upwards towards parity. As you say, it’s now going to be known that that investment isn’t such a waste of time, as reaching their spending power is now more feasible.

    2. @markzastrow It’s more likely the budgets for the smaller teams will go down to a level where they can still compete somewhat with the top teams (stay well within 107%)

  3. How many of us are worried about the spending differential between those seven teams? Compared to the difference between the top 3 and bottom 7?

    I see what he’s getting at. But for me the other teams having basically zero chance of touching the podium is the main concern.

    The bottom seven have varying budgets by much smaller degrees. And their variation in performance seems nicely mixed.

    1. I feel like 175million per season is not at all unreasonable, but how long until Ferrari has Gearbox from ‘Abarth’, Suspension from ‘Lancia’ and Brakes from ‘Maserati’?

  4. This quote by Todt sounds even more ominous than I thought possible. Nobody wants F1 teams to operate using a RallyCross budget!

    Don’t get me wrong, I like the idea of budget caps. Top three spending 600mil per season, while the rest have around 150mil (or in some cases under 100mil per season) is an absurdly skewed powerbalance and it absolutely needs to be reigned in.

    Todt’s quote, however, makes it sound like “The noose is on! We convinced them to wear it, now we can start to pull it tighter.”

    1. That’s exactly how it should work. Right now the noose is so loose it will have no effect, but once the noose is proven to work, they can start tightening it and actually get the desired effect.

  5. Ultimately if that financial ‘noose’ gets too tight the top teams will quit. They are in it to win it on track and off. If the image they can project is damaged they will have no motivation to continue. They won’t do it for the sake of F1 that is for sure. An endless promotional budget won’t compensate for the technical and performance loss. Without the manufacturers what will be left? A retro 1960’s series with straw bales marking the track?

    The hardest hit will be Ferrari as they only advertise through racing and a shrunken presence won’t suit and being “just one of the cars on track” would be bad for business.

    F1 seems intent on tripping itself up and handing the racing crown to electric cars with their budget caps, silly qualifying races, poor implementation of basic racing rules, daft helmet rules, leaving Ferrari with a veto………..Todt seems to be more concerned with becoming the road safety Tzar than making the series successful. Everything seems to be skewed to that ambition.

    Liberty and the FIA between them seem intent on making F1 more a Barnum event than a real racing series.

    Where is the ring master? We know where the clowns are.

    1. If top teams feel they can only win by outspending the competition, I’ll be happy to see them leave.

      Without manufacturers we’d get independend teams again, just like in the golden age of the sport. You don’t seem to realise that F1’s audience has been shrinking and that keeping it as it is won’t fix that.

  6. But still it will diminish the gap between those seven teams and the three others. So it’s a good thing.

    But will it? Given the exclusions there will be a neglible effect on the actual budget and the current 3 big teams have already spent their huge amounts of cash and will reap the benefits of that spend for years to come.

  7. Well, the most important thing is that it will help new teams enter the sport and help lure investors to F1, because now you can calculate exactly what amount is needed to be competitive. I for one don’t expect a cost cap to suddenly create parity all over the place, but that’s not why it is so sorely needed. It is needed to make the sport sustainable at last, to not be as ridiculously dependent on car manufacturer goodwill as it currently is.

  8. I don’t think the financial cap will have any impact on what takes place on track and I don’t see why people think a budget cap will close up the field. The big three don’t spend hundreds of millions of dollars to finish ahead of Racing Point, the same way Barcelona don’t spend hundreds of millions to finish ahead of Mallorca. They spend that money to be competitive with the other teams in their class.
    Mercedes, Ferrari and Red Bull are simply smarter and better at making a race car than the other teams and that’s not going to change because there is a budget cap. Less money does not equate to less smart.

    1. “Mercedes, Ferrari and Red Bull are simply smarter and better at making a race car” – how delightfully naive. It’s not because they can headhunt the best people from all the other teams and because they have twice as many people working on aero, it’s because they’re just smarter!

      1. @krommenaas You made my point. They’re smarter and better at building race cars because they have the best and the brightest on staff and cutting spending isn’t going to make them less smart so why would people think the field will close up? You’re going to ask a group of geniuses to build a car for ‘X’ amount of money and ask a group of regular folk to build a car for the same amount. Who’s going to produce the better car? As for headhunting, if there was a choice between working for Racing Point or Mercedes for the the same salary and position, most people would select Mercedes, which means the spending cap will have no impact on the allocation of human resources.
        Add to that the fact that the top three already have the infrastructure in place to allow for a better product to be created and again, why would the field be closed up?
        My understanding is the budget cap is to make F1 sustainable over the long term and not to hamstring the big teams or give a sudden boost to the smaller teams.

        1. They have the best and brightest because they had the money to headhunt them from other teams. If a budget cap would make budgets more equal, lesser teams could hire some of those best and brightest. Because even for the same money, some will prefer a higher position at another team than a lesser position at a top team. Actually a lesser team may now be able to offer someone who is now, say, the #3 aerodynamicist at Mercedes a #1 position AND more money.

          The field wouldn’t close up immediately with a budget cap, of course, but there would be an evolution towards talent being spread more evenly and the quality of infrastructure converging due to similar levels of investment (stuff gets old and needs replacing, you know).

    2. @velocityboy

      They spend that money to be competitive with the other teams in their class.

      Yes and in doing so, you think there is no edge they keep on widening to the teams in the F1.5 class?

      That last line makes even less sense.

      1. @f1osaurus If the top three did nothing to their cars after the first race, do you think they’d be mired in the mid field? Please!! The teams in the F1.5 class as you call it, can’t build a car as well as the top three period. Stop trying to give them an orange slice and a trophy for showing up. They’re not as good and a spending cap is not going to change that because the knowledge and experience are already at the top three so even if some people leave for smaller teams, that knowledge will still be in place. It’s not like other sports where a top talent leaving will have a significant impact on the field for the team that loses the talent and the team that gains the talent.

        1. @velocityboy Just try to think it through for a bit. WHY can’t these F1.5 teams build cars as well as the top three? Or alternatively what makes the top three the top three?

          Just that they are “better”?

          Would it perhaps have something to do with the fact that they have $500 million dollar budgets versus $125 million budgets for the F1.5 teams?

          So what if that budget gap is narrowed and the top three get less money to spent on developing their cars. Might that have a tiny influence on the quality of their cars? Just a smidgen perhaps?

  9. I could be wrong of course but I honestly don’t expect the cap to have the impact people are hoping it will in terms of bringing the field closer together… At least not in the long term.

    The 2021 changes are clearly going to mix up the order a bit as all big rule changes tend to & I think that is going to have a bigger impact than the cap. And from there the top teams are still going to have the best people, The best facilities & are still going to be where the best drivers aim to be so long term I don’t really expect things to change that much.

    There has always been a gap between the top teams of the time & the rest. Sometimes it’s been smaller & sometimes larger but it’s always been there & I think always will be regardless of what they do with budgets or regulations.

    And BTW i’m not saying that as a reason to not do anything, Just saying that I think a lot of those who seem to see it as a sort of magic bullet are likely going to be disappointed.

    1. @stefmeister: Good points.

      And currently, the field is far closer than it has been in other times – especially the ‘golden days’.

      1. The difference is that in the golden days, dominance would shift from one season to the next as this or that engineer had a brilliant idea that made a big difference. As it is now, where it all depends on money, we already know who’s going to dominate next season, and it has been like that for years now.

    2. @stefmeister The budget cap will have a much bigger impact than giving the smaller teams a few dozen million extra. Especially in the long term.

      There has always been a gap between the top teams of the time & the rest.

      That gap is there because the big teams spent around 500million versus around 150million for the smaller teams. That makes a massive difference in development.

      What if that gap in budget is substantially reduced? That has no effect?

  10. petebaldwin (@)
    7th October 2019, 15:33

    “For about seven out of 10 teams it will have no influence. It will have only influence on three teams.”

    So… it’s perfect then?

    1. I think he’s still unclear on the objective of the budget cap. Someone should break out a pen and paper and explain it to him.

  11. I think the important thing is that it’s a first step. It was to initiate the principle. Then once it is initiated it will allow us to move after that to the second step.

    It would be better if there was an agreed upon “glide path” between Budget Cap 1 and Budget Cap 2, but I suspect that’s unlikely. Nevertheless, there needs to be some sort of gradual reduction in the Budget Cap so as to rein in the most prolific spenders.

  12. Senna Scherpenzeel
    7th January 2020, 15:13

    Can somebody link the source where Jean Todt said these statements?

    1. You’re looking at it. He said this at an interview we attended.

      If he’d said it to someone else, we’d have said who he said it to.

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