Andreas Seidl, McLaren, Circuit de Catalunya, 2020

F1 warned crisis is its “final wake-up call” and budget cap must be lowered

2021 F1 season

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Formula 1 must significantly reduce its budget cap to help teams survive the financial crisis, says McLaren team principal Andreas Seidl.

Speaking in a media conference call on Wednesday Seidl said “the crisis we are now in is the final wake-up call that a sport which was unhealthy before and not sustainable has now reached a point where we need big changes, drastic changes as well.”

Teams are in discussions with the FIA over a potential reduction in the $175 million limit, which is due to come into force next year. However Seidl acknowledged some teams have “different interests” in their negotiations with Jean Todt, the president of the sport’s governing body.

Seidl warned the financial consequences of the delay to the start of the 2020 F1 season could be very serious for some teams.

“There’s a big risk that we could lose teams through this crisis,” he said. “So far we don’t know what the income will be this year, we don’t know when we’ll get back to racing again. Of course we all hope that we still can do as many races as possible.”

Seidl said McLaren “appreciate the leadership here from Jean Todt” in the negotiations over the budget cap.

Start, Paul Ricard, 2019
The F1 season won’t begin until June at the earliest
“It’s important to make now big decisions, to make another big step in terms of the level of the budget cap of the future.”

Lowering the budget cap further “doesn’t help us for this year”, Seidl admitted, “for this year we need other short-term measures like discussed before like freezing the cars, et cetera, in order to save costs.

“But at least it gives then an outlook to everyone taking part in Formula 1 that the sport will actually be a lot more healthy and more sustainable in the future which hopefully then let all the teams survive this crisis.”

Ferrari has proposed introducing a two-tier cap, with a higher spending limit for manufacturer teams. Asked whether he was concerned F1’s larger teams could resist a reduction in the budget cap, Seidl said: “I think it’s normal what’s happening at the moment. Jean Todt is having a lot of individual discussions also with the different teams, also I think understandable as they have different interests in this discussion.

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Teams have already agreed to delay the new 2021 cars
“But at the same time, I clearly see a commitment from everyone understanding that we are in a big crisis and that we have to make big decisions in order to make sure we protect the teams and protect Formula 1.

“So I still hope we make a big step now on the budget cap in the next days and make some bold decisions because it will be in the best interest, not just for us, but for everyone in the pit lane.”

F1 has already agreed to postpone new technical regulations, originally due for introduction next year, to 2022. Seidl said he is confident this will not create an opportunity for the new rules to be ‘watered down’.

“It’s not a secret that as McLaren we were pushing a lot in order to get these new regulations in place for ’21,” he said. “At the same time we have to face reality with this crisis now.

“We were fully supporting a delay by another year of these new regulations because these are realities at the moment. We don’t know what the financial situation will be this year. So far we still don’t know when and if there’s any race happening this year. So it absolutely made sense to make this decision because it gives everyone the possibility, depending on the financial situation, to show up, worst case, with the same car, as we had it ready in Melbourne.

“Regarding some decisions getting watered down by the delay, I don’t see that risk because the FIA and Formula 1 were pretty clear that they’re going to have these new regulations in place for ’22 and because we all agreed that we are still convinced that it’s the better regulations.

“They encourage better racing, the cars are getting a bit less complex, so those make sense from the financial side in order to be, let’s say, in line also with a low budget cap. That’s what we are planning for.”

RaceFans understands discussions between the team principals will continue in a conference call tomorrow.

This article will be updated.

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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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16 comments on “F1 warned crisis is its “final wake-up call” and budget cap must be lowered”

  1. The teams shouldn’t be a part of this decision. They’ve pushed back for years against a budget cap, and now are arguing about it finally. The concept of spending what you have is apparently alien to them, and a cap won’t help that. The last ten years has shown that F1 needs to get teams out of the rule making process to get the process going.

    1. The teams shouldn’t be a part of this decision.

      Interestingly, the only rule where I would like to see input (and ideally full agreement) from the teams is on the issue of a budget cap.

  2. Maybe it can suffice to have a single lowish budget cap (low enough for small teams to survive, high enough to keep most of the current staff employed in the industry).
    But teams who want to spend more can do so if they fund an equal amount to the remaining teams (for them to spend). Thus if Firrera spends €45M more, then they also have to pay €5M to each of the other teams.

    1. that is an interesting idea there @coldfly. Could also be a nice way to police a cost cap – go over it, and you owe the other teams the amount by which you overdid it!

  3. I don’t see why lowering the budget cap even more will help save the smaller team. It is a maximum, not a minimum. So teams are not required to spend as much as the budget cap.
    The budget cap is intended to reign in the spending of the bigger teams, not boisting the spending of the smaller teams.

    So imho I see more in freezing some of the development on the cars for next year. That will bring costs down. Not lowering the budget cap.

    1. I agree with your thoughts. How can forcing the big teams to spend less save the smaller teams from bankruptcy? Unless the un-spent cash from the big teams goes directly into the smaller teams (which it won’t) it is a long way off from a solution to the immediate problem of businesses closing down.

    2. I agree as well. I think McLaren are also trying to capitalize on the current pandemic situation to get the numbers more favorable to them.

      If they really want every team to have a $100 million dollar cap then do it. Of course each team will be required to design and build their complete car each season. No more buying a chassis, transmission or suspension parts. Everything must be made in house. And everything includes they design and build their own engine too.

      Is it realistic? Probably not, but it sure would be interesting and the most fair scenario I could imagine.

    3. @silfen, @sfrank15, @Robert, it will help a great deal. Look at what Seidl says:

      But at least it gives then an outlook to everyone taking part in Formula 1 that the sport will actually be a lot more healthy and more sustainable in the future which hopefully then let all the teams survive this crisis.”

      On the one hand it means that budgets will get closer, making it more realistic to expect closer results in the future. But most importantly for an owner like Haas, or Aston Martin (Stroll) and the financiers owning “Alfa Romeo”, but certainly for Manufacturers who face pressure to cut cost in an after Corona crisis in the next few years. Instead of being willing to commit to a more or less open ended spend, with a strict budget cap they can see more clearly how much it is going to cost, and set that off against the PR value of F1. It could help all of them from pulling out. And it could help get new parties interested as well.

      1. @BasCB: A budget cap, yes, I agree.

        But whether it is $150 million (generally agreed upon) or $100 million, which Seidl wants, doesn’t make a lot of difference for the small teams imho, as they can choose to spend only $100 million. It will bring the field closer anyway as the big teams get to spend only half or less of their previous budgets.

        1. Remember though, the budget cap doesn’t cover some of the more expensive things. Choosing to spend less money isn’t really an option when you want to achieve somethign in F1 though @silfen, something the likes of Renault, Aston Martin (Stroll) or Haas, well and manufacturers as well, clearly expect from their F1 efforts though.

          Sure, you might survive, which might be an option for the likes of Williams or Alfa Romeo/Sauber. But you won’t be luring in new investors with that prospect.

  4. Money, money, money. F1 has been capitalism over sport for far too long. I am hoping the sport changes its financial attitude as a result of this covid period.lower spending caps please

    1. I would actually love to see a F1 where the budget cap is more like 50M, something considerably less than currently proposed. Maybe 1M per race on the calendar plus 25m? If someone wanted to invest more than that they could have multiple teams. With a solid set of safety and sporting regulations (the part that FIA should care about) the technical side could be completely opened up again and actually promote innovation, something I am sure will also automatically lead to visually interesting cars. With a few limits on things like for example energy usage (nothing said about which form of energy) those innovations could be really beneficial for the rest of the world as well. With many sponsors sure to be interested as a result. With a budget cap low enough there is absolutely no need for probably 80-90% of the current rule book, all that was put in place bit by bit over decades to try and limit costs that still just kept going up.

  5. Say that the majority of the teams get on the same page and decide to reduce the cap. Can Ferrari use their infamous veto to prevent the lower cap from being decided on?

  6. I’m still in 2 minds concerning that budget cap. On one hand it seems an obvious move to control spending, leverage the F1 field and split the potential sponsors (so the incomes) among the team. The perfect situation: your have 20 (or better 23) even and perfectly healthy teams.

    But on the other hand, how to you control and police that ? In this world it seems that the wealthiest is always able to invest / spend / develop more.

    So, is this a real debate ? Or just a manner of putting more pressure on big teams to give som’ back or review the money distribution system ?

    And if the real opportunity was now to review more profoundly the regs ? Ban more of those driver supports ? Decrease the amount of electronics ? Ban telemetry ? Allow re-use of other teams chassis / equipment ? Customer teams ? I don’t like all those ideas, are these not more the real question ?

    All that coming from John Doe on his computer

  7. Have spending inversely linked to prize money. You spend double the average, you get half the prize fund.

    Smaller teams spending less then get better rewards and thus can start to compete more readily next season, the teams that can always overspend and outperform get brought back to reality. A natural swinging handicap mechanism! Why not, we want fun racing and not the same rich teams always dominating, don’t we???

    1. Very interesting idea, there is definitely something in there that could be done with good effect.

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