The FIA has revealed its regulations for the budget cap set to be introduced with the 2021 Formula 1 season, explaining how teams must report their spending in the sport’s new era.
The budget, which is set at $175 million USD for a 21-race season, is an initiative of the FIA and F1 owners Liberty Media that aims to achieve three primary objectives:
- to promote the competitive balance of the Championship;
- to promote the sporting fairness of the Championship; and
- to ensure the long-term financial stability and sustainability of the F1 Teams
Additionally, the regulatory document, released on Friday after 2020’s first meeting of the World Motorsport Council, promises to preserve “the unique technology and engineering challenge of Formula 1”.
Under the regulations, each team will be expected to report their expenditure — with $1m added or subtracted from the $175m limit for each race more/less than 21 — to the FIA’s Cost Cap Administration (CCA) at intervals throughout the year, with an additional full year report after December 31st.
Expenses not subject to the cap include driver salary, marketing expenses, legal and financial costs, and what the FIA deems “non-F1 activities”.
As with other F1 regulations, teams can lodge a complaint against rivals they believe are breaching the cap, which the CCA will either dismiss or investigate. In the event of a minor breach (less than 5% overspend), a team could enter into an “Accepted Breach Agreement” with the CCA to implement a lighter punishment, or if the offence is more severe, be subjected to loss of points, suspension, limits on testing, exclusion from the championship, or a reduction in next year’s cap.
Finally, any new team entering the sport will be required to comply with the cap for the year immediately before their debut on the grid, although they will only have to submit a single report at year’s end.
If you want to read the regulations for yourself, the full 43-page document can be found here.