Lewis Hamilton, Mercedes, Imola, 2020

Hamilton wants GPDA to “work closely with F1” on driver salary cap

2020 F1 season

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Lewis Hamilton says the possible introduction of a cap on drivers’ salaries is a matter the Grand Prix Drivers Association should raise with Formula 1.

Driver salaries caps were discussed by the F1 Commission last week, but several team bosses said during the subsequent Emilia-Romagna Grand Prix that no final plans or timetable for their implementation had been agreed.

Hamilton, who could win a record-equalling seventh world championship title at next week’s Turkish Grand Prix, is Formula 1’s highest-paid driver. The proposed salary cap would allow teams to spend up to $30 million across both drivers’ salaries – less than Hamilton’s pay alone – with any additional spending deducted from the new budget cap which will come into force next year.

The Mercedes driver expressed surprise at reports a salary cap could be introduced as early as 2023. “I didn’t even know that that was being discussed,” he said. “I think from the driver’s point of view it’s a surprise for us.”

He said that the idea had been previously raised but drivers had not been part of recent discussions. “We obviously heard of the idea a while ago, I think it was last year in France, but it’s the first that we heard of it this week.”

Drivers, Circuit de Catalunya, 2020
F1 drivers salaries 2020
Hamilton emphasised that drivers should be part of talks, with the GPDA acting as potential representation for their interests to Formula 1 Management, “It’s something that we think is important, that the GPDA work closely with the Formula 1 to discuss and get into discussions of of how they move forwards,” he said.

With less than two months to go until the end of the year, Hamilton has not yet agreed a contract to drive in Formula 1 next season and has hinted he could choose not to continue as he reconsiders his priorities in and out of the sport. However his Mercedes team principal Toto Wolff believes Hamilton is not ready to go into retirement yet.

Wolff said F1 needs to ensure teams remain able to pay salaries which will allow them to keep top talent in their cars.

“I think the discussion around this topic is a very emotional thing,” he said. “Formula 1 teams, in order to be sustainable long term and attractive as sport franchises, need to show profitability, like any other company out there and I think we we all need to achieve that.

Toto Wolff, Lewis Hamilton, Mercedes, Imola, 2020
Wolff says F1 mustn’t harm drivers earning potential
“On the other side, it’s clear that drivers, the ones that are in Formula 1, are the best in the world, should earn high salaries like all the other top stars in sport.”

Wolff pointed out F1 drivers tend to face greater limitations on securing their own brand partnerships and sponsors than other sportspeople, making their salaries a more significant part of their earnings.

“Those salaries are limited to what they are getting from the team, because the scope of promoting the brand, endorsement deals et cetera and their rights are very limited. That’s why it will be interesting to sit at a table with representatives of the drivers and the drivers themselves to see how can we align ourselves, long term, so that everybody’s benefiting from a growth in Formula 1 and, like American sports have done, without really harming future earnings for the drivers.”

A salary cap, engine freeze and ban on the use of wind tunnels were among the possible rules changes discussed by the F1 Commission last week. Read the new edition of the RacingLines column later today on RaceFans to find out more

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2020 F1 season

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40 comments on “Hamilton wants GPDA to “work closely with F1” on driver salary cap”

  1. Apart from Hamilton, is any other driver affected by this in 2021?

    1. Verstappen might be (I think they have a base salary with win/podium/points bonusses at RBR). And it could be that Vettel will be, and who knows how much Renault will be paying Alonso – I guess Ocon won’t take too much, but still. Ferrari might come close, in (the unlikely) case their drivers start winning races too @knightameer.

      Overall, i do think it makes a lot of sense if the FIA and Liberty do discuss these plans with the drivers representatives. To get their backing for this would help a lot in making the rules work.

      1. @bascb
        I think it was mentioned here at RaceFans that Alonso accepted a pay cut in his new deal with Renault.

        1. Yes, they clearly would have agreed on some lower salary @tifoso1989. But it might be that they have bonuses for wins etc that might push it upwards if they have success. A bit like how RBR does the salaries with Max and with Ricciardo before.

      2. As far as I know, Ocon’s salary is not low, probably it’s induced by Ricciardo’s really well paid contract.
        But I don’t think a nearly 40years old driver will be paid anywhere near 30M$/year in the close future, even without a cost cap, even if he is someone like Alonso. At that age they tend to drive for a rookie-like salary or a bit more and they are happy to be in F1.

        RaceFan’s estimates about salaries from 2020/3/20:

        So I think the Alonso, Ocon pairing at Renault will be well below 30M$/season at these Covid-infested years. I think something in between 2M$ and 10M$ would be realistic for Alonso next year.
        Probably even Ricciardo signed for less than his former salary, and why to pay so much for Vettel now?

    2. According to the link in the article, the only other team which would current be affected is Ferrari as Vettel is on $30m and Leclerc is on $10m, but they won’t have that problem next season assuming Sainz’s $8m salary remains in the same ballpark as it is at McLaren.

  2. The proposed salary cap would allow teams to spend up to $30 million across both drivers’ salaries – less than Hamilton’s pay alone – with any additional spending deducted from the new budget cap which will come into force next year.

    Is it legal for employers to collude to reduce the wages of their employees? Isn’t this a variation on price fixing? Besides, drivers wages are outside of the budget cap. How much money is going to be left for Valtteri or Alex (or his replacement) after Lewis and Max have taken their “half” of the $30M? I can see Valtteri and Alex (or replacement) being paid meagre amounts.
    From what I’d heard on our local sports radio show, it seems it isn’t hard to get around a budget cap, e.g. paying someone to do a talk once a week on a radio station.

    1. I see I was slightly hasty and didn’t read the fine print. It seems the proposal is to actually increase the Budget Cap by $30M and to include the drivers wages within it.

      1. From what i read is that they don’t raise the budgetcap. They have a limit of 30M for both driver, which the can exceed. But everything above that 30M is included in the budget cap. So if merc were to pay Hamilton 35M and Bottas 10M, that 15M they would go over the limit comes out of the budgetcap. So then they only have 130M left.

        1. Which in effect raises the budget cap, but at the same time limits the currently open ended number a team can spend on driver salaries/renumerations.

          1. No, it doesn’t. If a team spends only 10M on driver salaries, it’s my understanding that they don’t get to spend the remaining 20M on the car. Current budget cap stays the same, and any driver salaries above 30M come out of the budget cap.

    2. @drycrust
      Honestly, talking of “price fixing” when teams are trying to normalize multimillion pounds salaries is outrageous.
      As if this was something immoral or unethical.

      1. So 10 of the 30 people not included in the salary cap have a behind doors meeting and decide the 20 not at the meeting should be capped. Way to take the moral high ground.

      2. @fantomius i know right, i nearly swerve my Bentley off the road when i learned of this outrage

    3. There are already many sports that do have such limits on player salaries @drycrust. So i presume it is indeed legal for a sports competition to make such a limit part of their rules package.

      1. Pat Ruadh (@fullcoursecaution)
        4th November 2020, 12:50

        Yeah NFL has the salary cap but they can earn more from endorsements. I don’t see what’s stopping “Mercedes” paying Hamilton £20m, and “Petronas” paying him £20m for an ad campaign.

        1. Yeah, that probably will be one point they should go and talk about how to define and limit loopholes @fullcoursecaution

        2. That’s pretty much already happened with Vettel’s new contract. Picks up some money from the racing team then a much bigger cheque from the car company for being an ambassador to the brand.

          Won’t be long until Max is on 10m a commercial while picking up peanut’s for his weekend gig.

        3. Can’t be stopped. Unless they instruct Hilfiger for example that they are not to employ Ham to design them a clothing range each year. Or Monster to pay him for the Hamilton energy drink. And why should they. Seb is now a share holder in the company he drives for next year. Why should they not utilise his talents and pulling power across the brand and pay him accordingly? Although by the time they have untangled all the different employment laws and protections all the big earners will have gone.

  3. So less than £24 million across two drivers. Pretty much insures teams at the front will have a star plus pay driver/cheapy. Given this will probably affect Max more than anyone else, it would be in his interest to always have a rookie in the other seat,
    Might be in the interest of the drivers to do what the top MotoGP guys did a few years ago; get all their contract dates aligned. That way if the teams want them they are going to have to start a bidding war to get/retain them.

    1. Having a rookie or a semi-rookie in the seat next to him is what Verstappen had always tried to work for.
      He often succeeded, and when not, the other driver was simply treated like a second fiddle by the team, eventually forcing him to leave.

      1. Sure pumkin…

      2. @liko41
        “Having a rookie or a semi-rookie in the seat next to him is what Verstappen had always tried to work for.”
        And you know this based on your intricate knowledge of the contract negotiations between Max and Red Bull?
        Could you please enlighten us, and give us access to that information? And can you also explain why Daniel (who wasn’t a rookie and got completely trashed by Max the rookie) and Carlos (who had far more experience but was completely trashed by Max the rookie) and Pierre (who’s proven to be so much better than Bottas) and Alex keep telling us there are no politics with Max? Does that mean they’re all lying?
        Besides that, I am very curious why someone who seems to be highly involved in F1 and has a deep understanding of how the machinations work, spends his time posting comments on a free website; could you give me an insight in that to?

  4. I think the driver salary cap should be per each driver, not driver pairing. How does the salary cap for example handle situations like prost or raikkonen when they get paid for a year but don’t drive? 15 mil per driver sounds better than 30mil for three if you count the test or 3rd driver in. Not to mention look at a team like red bull. They could easily pay max 29 mil per year and then that leaves just 1 mil for the second driver. Just one million salary, never thought I’d say that. That salary cap could seriously lock down the driver market which is already a bit too locked down.

    1. I think the salaries were already going to stay at a lower level for the forseeable future @socksolid. Off course the 30 million is a number much like how the budget cap was once formulated at a 100 million (and then went up to about 200, then 170 before they agreed on the current number after Covid-19 started showing the limits of the world)

  5. People believe this is about Hamilton who will leave the sport in a few years time.
    Setting an arbitrary value as driver salary cap doesn’t make sense. Nothing stopping teams for searching for the cheapest drivers because it doesn’t mean because drivers are cheaper Williams or Haas can automatically get an Alonso or Ricciardo.

  6. They could allow drivers more freedom to seek sponsorship separate from the team.

  7. Does Hamilton have rights to sell the space on his hat to sponsors?

    1. Not the deals Ham tends to do. For example the Hilfiger deal he was instrumental in landing was in the region of $8 million for him, and $50 million for the team. So although it’s officially a team sponsor Ham gets a large sum as well. He has similar personal deals with Monster, Puma and Bose. So although he is plastered with team sponsors he is separately making big bucks out of it; unlike most of the other drivers.
      In addition he has a high visibility outside the sport which is worth a fair bit to sponsors; other drivers not so much. Its basically a sliding scale on social media which gives an indication of their worth. I think the last time I looked up instagam drivers were averaging $3,000-$3,5000 a promotional post. Whereas Ham’s are worth in excess of $50,000. The only one near that figure is Ricciardo.
      As someone else said. this doesn’t really affect Hamilton. His next and probably last deal wont be capped, he is a sponsors dream and he makes the cover of GQ because of who he is, not because he races cars.

      1. Fairly sure ham’s PlayStation Gran Tourismo sponsorship is his own, and not merc’s

  8. Rich lives matter.

    1. Billionaire’s keeping Millionaire’s in their place…

  9. I don’t like this idea. I just think it could be worked around too easily. What could stop Mercedes paying Hamilton another $10 million for an “ambassador” role, where technically the team isn’t paying him, but the actual Mercedes brand is. That’s just my concern…

  10. Is this target set specifically to affect Hamilton?

    Not sure what the point is anyway. I guess the remainder will be paid by the sponsor directly instead?

    1. I think more to stop the Max’s becoming the Hamilton of the future. Can you imagine Max dominating F1 as he racks up his 4th, 5th and 6th WDC earning millions for his team in WCC prize money, putting bums on seats at the tracks, yet earning a million or two more than the guy in the team next door.
      Although I imagine as in the case of Senna, Rossi, Hamilton, Marquez, etc. when the next box office star appears on the scene a number of these rules will find their way to the back of the drawer and be quietly forgotten about.

  11. The notion of a salary cap is a good idea, but I think the figures they’re discussing are WAY too low. Given that we are probably about to go into a period of inflation (see Money Printer goes brrr) they would be better off putting this at a figure that is somewhere above the current highest salary (I guess about $45m) and make sure the figure rises with inflation.

    If they don’t do this, we will probably see all the top talent (Ham, Ver, Lec, Alo, Ric & Vet to name six) moving to another category where drivers are paid what they feel they’re worth and F1 will be left with a second tier of drivers. I completely support trying to restrict wage inflation but it needs to be done in a way that’s sustainable long term.

    Ultimately F1 drivers are what make the sport entertaining and this needs to be taken into account.

  12. And now, we knew why the contract renewal is in delay. :)

  13. Can’t be stopped. Unless they instruct Hilfiger for example that they are not to employ Ham to design them a clothing range each year. Or Monster to pay him for the Hamilton energy drink. And why should they. Seb is now a share holder in the company he drives for next year. Why should they not utilise his talents and pulling power across the brand and pay him accordingly? Although by the time they have untangled all the different employment laws and protections all the big earners will have gone.

  14. Could you imagine? A life where getting paid 10-15 million isn’t enough?

    How inflated would your head have to be to ask for more? It’s crazy what marketers can do, relating people to products, building this narrative that one person is worth that much. Meanwhile hordes of minimum wage earners are told their value is not even one thousandth of that.

    Not even in 10 lifetimes will they be worth what these drivers are worth for just one year of their time. And then we wonder why mental health rates are so high, and people feel so worthless. Then blame it on social media, and screens. Bit of a tangent but you get my point.

    In my opinion? Yes, a 30 million dollar cap on driver salaries is more than enough. Will it get them on the worlds richest lists? Perhaps not, but that’s a seperate problem.

    1. Have you really thought this through.
      First of all what is the purpose of a salary cap?

      For one thing it is unlikely to diminish the revenues generated by the sport, so this will mean the teams or the ‘owners’ of the sport get more.

      A better policy would be to distribute those revenues by doubling salaries of pit crews etc even paying volunteers and reducing cost of going to a GP.

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