Red Bull’s warning F1 teams may miss races due to cost cap “exaggerated”, say rivals

2022 F1 season

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Red Bull’s rivals reacted with scepticism to team principal Christian Horner’s suggestion more than half of the field might have to miss races this year.

Horner claimed seven teams would have to sit out four of the 22 races on the 2022 F1 calendar if nothing was done in response to the high rate of inflation which has made it harder for teams to stay within the sport’s cost cap.

Teams are limited to a maximum expenditure of £111.3 million ($140m) this year with certain additional allowances and exceptions. However rapid increase in the costs of freight, energy and materials since the start of the year, partly as a consequence of Russia’s invasion of Ukraine, have left teams who expected to be close to the limit in danger of exceeding it.

Red Bull was previously one of F1’s top-spending teams. Horner has urged the FIA to offer concessions to the budget cap or risk teams having to miss races.

“We need the FIA to address the inflationary issue because I think basically probably about seven of the teams probably will need to miss the last four races to come within the cap this year from the consensus there has been up and down the paddock,” he said.

Grid, Miami International Autodrome, 2022
Seven of the 10 teams could miss races, Horner claimed
“It’s not just about the big teams now, it’s the teams in the middle of the field that are really struggling with the inflationary rate that we’re seeing that could even get worse in the second half of the year.”

He believes the FIA is “taking it very seriously” and is keen to see them take action. “You’d almost be at the point where I think for certain teams, from numbers that were presented earlier in the week, that they would have to probably miss a few grands prix to even get anywhere near the numbers.

“I think nobody wants to be in that position, which is why I think for the second six months of the year the FIA need to address the issue because things like energy bills and just cost of living,” he added.

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“We see in each of the countries that you guys come from that the costs are going [up] exponentially. And Formula 1 is not exempt. Freight has quadrupled and that’s not something we can control.”

However Aston Martin team principal Mike Krack doubts there is a genuine risk of teams skipping races to save money.

“I think it’s a bit exaggerated to miss races, honestly,” he said. “I don’t think that is going to happen.”

Aston Martin support steps to ease the impact of rising costs
If rival teams do have to miss rounds, “then the other teams have more points”, said Krack. “That’s my answer to this.

“The technical rules, the sporting rules, the financial rules, we try to comply to all three of them. I think now it is the time to make the right choices, if you overspend now, then obviously it will be tight later.

“We have very good cost monitoring, I think we are also quite efficient in terms of how we spend. So from that point of view, we are not in a position where we would say we would not make races. But we are also watching now what we are going to do for Monza, for these special races, you have to make these decisions.”

Krack believes allowances should be made for the increase in costs, but care should be taken to ensure they do not give breaks to teams who have over-spent.

“I think the cost cap should not just be increased because some people are just not having their cost under control. But if the cost with the situation with Russia and Ukraine drove the energy prices extremely high, air freight is very high, and this you could now plan in any budget.

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“So that’s also why we support an increase based on inflation, but not an increase per se.”

Teams are more likely to shelve development plans, such as special low-downforce packages for venues like Monza, than miss races entirely, Krack believes.

“We have constant cost monitoring. We have aerodynamic monitoring or any kind of monitoring that you have. So we have a very good overview week-by-week where we are in terms of what we are spending and what the costs will be.

“Before we decide, for example, a Monza package or a Monza wing, we know what this is costing us and we know how much money we will have if we make it.”

Limiting crash damage will also be important to stay within the spending limits, said Krack. “We have obviously some margin for crashes and stuff like that. If we repeat the Melbourne thing every weekend, then we will not do a Monza [package]!”

He believes the majority of teams are in favour of introducing some form of financial relief, but some see an opportunity to limit their rivals’ development.

“There is not many teams opposing,” said Krack, “I think there has been three opposing.

Teams may not produce low-drag aero kits to save money
“I think it is mainly to limit others’ development. That for me is a strategic choice because they also have higher costs, everybody has higher costs, and probably if the cost cap is increased they don’t have the budget that is required and they probably, but this is only an assumption, probably it’s a strategic [plan].”

Alpine is one of the teams which does not support making changes to the financial restrictions due to the rise in inflation.

“We’ve set our budgets out early,” said team principal Otmar Szafnauer. “We kind of anticipated a little bit of the inflation – inflation just didn’t creep up on us..

“If you look back in December the RPI [retail price index] was already at 7% and most teams do their budgets between November and December for the following year. So for us, it wasn’t a surprise, therefore, we planned for it.

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“We’re still under the cap, even though we didn’t plan for as high a freight cost as we are now experiencing. But we’re still under. If we can do it, for sure others can do it too. So I’m not for just increasing the cap.”

Teams which are at risk of exceeding the limit can make savings by reducing how much they spend on development, said Szafnauer.

Sharp inflation rise “didn’t creep up” on Alpine
“I know what our budget is and I know budgets that I’ve experienced in the past,” he said. “There’s a significant amount of money in the development budget for a year, especially in a year where the regulations are all-new. You put in a lot of money for development because ultimately this year’s a development race.

“So when freight costs go up by two and a half million, three and a half million, but your development budget is 20, say, can you not make your development budget 17 and still be under the cap? You can.

“But what that then does, is it limits your development here in a development race. So it’s a lot easier, if you have the money, to go to the FIA and lobby to raise the cap and keep your development budget the same.”

Following the Miami Grand Prix, Ferrari team principal Mattia Binotto questioned whether Red Bull would be able to sustain the rate of development they had maintained early in the season.

Szafnauer questioned whether Horner seriously believes teams are in danger of missing races.

“That would be really good,” he said. “It’ll move us up in the championship and I welcome that. Should we plan for that? Or is he just being facetious?”

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Keith Collantine
Lifelong motor sport fan Keith set up RaceFans in 2005 - when it was originally called F1 Fanatic. Having previously worked as a motoring...
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42 comments on “Red Bull’s warning F1 teams may miss races due to cost cap “exaggerated”, say rivals”

  1. Gotta collect enough points to win anyway, then.

  2. Yeah, i do get the vibe that many teams are having to think about where to spend their money (wasn’t that planned from the start though?). Off course they need to work on some form of inflation correction anyway, since they will have to find a modus operandi for future years as well.

    But why does a team like Red Bull always go for the completely obvious overhyped nonsense? Don’t they understand that people have long ago started to discount most of these things especially when they come from the likes of Horner or even worse Marko, because we know they keep doing this?

    1. @bascb I think with Horner it’s a combination of “the squeaky cog gets the grease” and Bernie’s negotiating tactic of “start from an unrealistic position, and retreat to the one you wanted in the first place”. His modus operandi has always been makes lots of noise and this is just another example of it. Seems to have worked pretty well for him and his team.

    2. Off course they need to work on some form of inflation correction anyway, since they will have to find a modus operandi for future years as well.

      They don’t have to have any ‘inflation correction’ at all. The plan for the future can quite easily be “spend less on something else.”
      Isn’t that what most people and businesses are doing anyway? Everyone I know is.
      Why should F1 be exempt from reality any more than it already is? It won’t make it any more popular, entertaining or sustainable to just raise the budget again.

      1. @S Precisely. Otherwise, we might as well just scrap all caps & limits.

      2. Well, I don’t think that keeping the targeted 135 million EUR for another decade is going to fly, especially since in 2-3 years you’d be buying about 20-25% less with that budget S.

        1. Yeah, that was the point of introducing the budget cap, @bascb – to make F1 more sustainable in the long term, so that it isn’t all about survival of the wealthiest.

          Raising the cap goes in the opposite direction.

      3. spend less on something else

        Let me translate that into something more plainly understood:

        “Fire a bunch more people”

        Not because you cannot afford to employ them. Not because you don’t value their input. Not because you do not want to employ them. Because “S” thinks increasing energy prices should mean you do not deserve to keep your job.

        1. “Fire a bunch more people”

          It doesn’t have to mean that at all, @proesterchen.
          There are many ways in which a business can reduce its expenditure without reducing their HR.

        2. It’s very common in business (I always run it like this) to target each budget-holder to increase efficiency to beat inflation.
          Yes that typically means less people. But you can hire more people if you run your business well and grow (more teams in F1, other ventures for successful teams, etc).

    3. Apologies I reported your comment by mistake

  3. It’s always like this, when teams want something done, they create a whirlwind of havoc in the media, scream blood and murder, but in the end, if push comes to shovel, the FIA will crank the budget cap limit up, just about to the level the teams say they need, because the show must go on, right?

  4. At least Otmar knows what a budget is, and how to stay within it and how to plan for the unexpected – even if the main reason is because Renault have told him they won’t give him any more money this year…

  5. Horner’s statement that seven teams might have to miss races due to the budget cap undermines his argument, because that means three teams will be able to stay within it and prove it is perfectly possible to run a Formula 1 team within the budget cap.

    I would not like to see teams tactically missing races on a regular basis in seasons to come because it is worth it for the extra car performance at the rest of the tracks for spending money on development, but in this one-off season it would be far fairer to allow that to happen than to bail out the teams that have made the mistake of spending too much money, and thus penalise the teams that have stayed within the rules.

    1. Nobody will be missing any races, @f1frog. Dropping races would be financial suicide for a modern F1 team.
      With modern F1 cars being little more than mobile billboards, they have almost no value at all if they aren’t visible.

    2. I think he is pointing the finger at 7 teams, saying these teams are certainly going to break the cap and if we don’t hear about it then probably there is some foul play.

      1. Red bull is included in those 7 teams.

        1. exactly

  6. Taking away from development is precisely what I’ve been pointing out, & besides, compromising development would be better than, for instance, something safety-related.
    I also doubt Horner’s prediction would come true if the 140m base limit got kept until the year’s end as planned.

  7. How about the FIA taking transport costs out of the budget and reduce the limit accordingly.
    The FIA could possibly pay the transport costs, specifying the amount each team can transport, then reduce the prize monies accordingly.

    They could also factor in the fuel costs as well, by stating a quantity of fuel the teams are expected to buy. Then converting the value of the fuel at the season start and putting that figure into the budget. And then the budget can be increased or decreased based on the average fuel price at each race.

    1. @w-k You’re mixing up the two halves here – FIA write the rules and police the financial cap, whilst FOM (i.e. Liberty) are the ones who dish out the money at year end and organise the transportation.

      The FIA need to dig in their heels and say ‘no, this is the agreed cap’. They already have silly exclusions, such as driver & management salaries – if teams like Red Bull and Mercedes have burnt through their budgets either chasing performance (or just making their car work), that’s on them if they can’t afford to compete in all the races at the end of the season.

  8. Andy (@andyfromsandy)
    26th May 2022, 12:40

    For the teams that had any kind of incline about inflation would be the ones who haven’t spent big just yet I would suspect and would not want those that are close to the cap to benefit.

    It suggests ORBR have spent big and are now wondering how they are going to make ends meet if they want to carry on spending at the rate they are now.

  9. Blown the budget already eh Christian.

  10. Tim (@tsgoodchild)
    26th May 2022, 13:02

    Not a great advert by F1 teams’ accounts departments that they cannot build in a variability risk from outside sources that could impact on how much a company has to spend. Surely it’s basic accounting to do such a thing. If teams have to miss races, thats their issue not those who know how to work a balance sheet.

    1. I think the responsibility lies with the team’s accounting department.

  11. It look like the budget cap (with a little help from inflation) is having the intended effect is was designed for: Equalize. Horner, one of the most vocal proponent of it, just didn’t expect it to work that well and is now back paddling frantically.
    I hope they do miss races, I love to see an AR, AM, Hass or Alpine on the podium, a stretch, I know, but one can hope.

  12. Horner’s a real stand up guy. He genuinely cares about how midfield teams are overshooting their budget and how they might not be able to maximise their season’s results. He’s fulfilling his role of protecting the weak, and being the spokesperson of the entire grid with flying colours.

    I’m pretty sure this has nothing to do with the fact that Red Bull has been spending more on upgrades than anticipated and has overshot it’s budget already. Let’s see what Mattia has to say about this.

      1. Exactly, @todfod!

        Horner must invoke inflationary language to comfort the paddock in these inflationary times.

  13. I hope they don’t budge an inch on budget, the teams need to learn they can’t cheat the system. We need to also see what will happen when someone breaches the budget or is found to be cheating it. I expect expulsion from the WCC at the least for the year and points deductions as a percentage of overspend for WDC too. This needs to happen to maintain the future of the sport as not being pay to win.

    1. Sadly, with the ‘excuse’ of the current inflation, I doubt there would be much of a penalty this year @slowmo.
      Actually, with how F1 works now, I wouldn’t be surprised if they never punished it properly.

  14. Whenever I read ‘top three non-driver salaries are excluded’ (directors essentially), I sigh a little inside. In some ways F1 looks to have changed dramatically, it’s now more about the ‘long term health of the sport’, but in others it seems the same. I’m sure untangling all of someone like Toto’s business interests and bonuses would be long, time-consuming, and ultimately would probably be inaccurate anyway.

    But considering every F1 team employs several hundred people, tens of thousands of people up and down the grid, the ones complaining are the ones who exempted their salaries from the cost cap. I wouldn’t mind if Christian burnt his hand a little on a hop when cooking this winter.

    I like the idea that society needs to walk as fast as the slowest walker. and F1 is an escape from that, but it also needs to live in the real world sometimes, and stops just playing what is good for me means I win!

    It getting boring.

    1. Goodness I wish there was an edit button, I’ve never edited a comment on Racefans but ‘reported’ more people than the Stasi.

      I understand why the edit button isn’t there, and I love this site, and hopefully I appreciate the work that goes into it. I should just read before posting.

  15. Stupid question: why not just adjust the budget cap for inflation? In theory, the teams would not be spending more money, because the purchasing power would be the same.. right?

    1. Andy (@andyfromsandy)
      26th May 2022, 19:02

      Has your salary gone up at the rate of inflation?

      Most peoples haven’t and they just have to cut down.

      1. No, but I’m not a Formula One team.. I mean, it’s not the most unusual provision to think about, otherwise the cap will become smaller every year..

  16. Christian Horner making a huge deal over nothing? Say it isn’t so!

  17. Hiland (@flyingferrarim)
    26th May 2022, 15:09

    So maybe Ferrari was right about RBR spending 75% of their budget already? lol. Looks like the cap is working as intended. I don’t buy the fact that teams are at risk of missing races as that is budgeted before the season.

  18. Wasn’t Redbull in favour of the budget cap and the restrictions on tech. Fairdinkum they’re a bunch of whingers.

  19. Halfwit Marko was farting in the opposite way just 4 days ago.

  20. I bet the budget cap goes down as one of the worst idwas in the history of F1, The once great pinnacle of the sport that has now been reduced to a boring gimmick ridden budget Series that is F1 only in name.

    1. Allowing teams to only spend a limited amount of money is quite possibly the best thing F1 has ever done. Ideas are free.
      These ‘gimmicks’ you speak of have nothing to do with how much each teams can spend, and F1 has always been pretty boring.
      And really, $140m is still a huge load of money.

      The only real problem with all of this, is that the opportunity to open up the technical regs under the budget cap was completely wasted.

Comments are closed.