Formula 1’s governing body hailed a major step forward on Wednesday after approving a package of cost-cutting measures including a $145 million budget cap from next year.
The measures, rubber-stamped by the FIA’s World Motor Sport Council by an online vote, aim to create a more level playing field for the 10 teams and a more sustainable future.
FIA president Jean Todt thanked the teams and hailed “a major step forward for F1 and motorsport’s sustainability”.
The budget cap will be reduced to $140 million for 2022 and $135 million for 2023-2025, based on a 21-race season, the FIA said in a statement. Some top teams spend well over $200 million a year at present.
A list of components will be frozen between 2020 and 2021, including the chassis and gearbox, and there will also be a further reduction in aerodynamic testing.
This will be according to championship position, with more restrictions for the more successful teams in a development handicap system.
The current season has yet to start due to the COVID-19 pandemic and when it does, likely in July, it will be without spectators.
Sweeping new regulations are due to come into effect in 2022 after being postponed from 2021.
The World Motor Sport Council has approved by e-vote further changes to the Sporting, Technical and Financial Regulations governing the FIA Formula One World Championship primarily due to the ongoing need to reduce costs and safeguard the sport in light of the COVID-19 pandemic.
Following the initial agreement to postpone the 2021 Technical Regulations to 2022 (which was approved by the World Council on 30 March 2020), additional amendments to the Sporting, Technical and Financial Regulations for 2020, 2021 and 2022 have received unanimous support amongst the Formula 1 teams and were ratified today by the World Council.
The following is a summary of these changes:
- Freezing of a large list of components between 2020 and 2021. The list includes the chassis, gearbox, a number of mechanical components and impact structures. A token system has been devised to permit a very limited number of modifications in accordance to the competitors’ specific needs.
- For 2020, limitations to Power Unit upgrades.
- For 2021, changes to the plan-view trim and simplification of the floor ahead of the rear tyres in order to moderate the increase of downforce between 2020 and 2021.
- For 2021, minimum mass increase to 749kg.
- For 2020, provisions for “closed” and “open” events and the relevant regulatory structure for each (e.g. personnel at the paddock), depending on whether such events permit spectators.
- For 2020, various updates relating to tyre regulations, with provisions to allow for tyre testing during Free Practice 2 should it be necessary to approve a new tyre specification by Pirelli and the extended use of P140 tyres in the case of a wet Free Practice 1 session.
- For 2020, a reduction in aerodynamic testing (ATR) and the introduction of Power Unit test bench restrictions for cost reasons.
- For 2021, a further reduction in aerodynamic testing, and the introduction of a bias between championship position and ATR limitations. The ATR bias will be linear between P1 and P10.
- For 2022, a number of key specific aspects of the regulations have been set out, including curfews, restricted number components (RNCs), scrutineering, and parc fermé prescriptions. These regulations work as a package together with the 2022 Technical Regulations that were approved by the World Council on 30 March 2020 and will be part of an ongoing review and refinement process throughout 2020 and 2021.
2021 Financial Regulations:
- Reduction of the Cost Cap level to $145M for 2021, $140M for 2022 and $135M for 2023-2025, based on a 21-Competition season.
- The following amendments/additions will be made to the exclusions currently provided for in the Financial Regulations:
- Increase of Year-End Bonus exclusion cap for exceptional sporting results from $10M to $12M and Social Charges for Year-End Bonus.
- Threshold for calculation of exclusion for Social Charges on Salary paid to staff lowered from 15% to 13.8%.
- Costs incurred for staff entertainment (capped at $1M).
- Wellbeing of employees: exclusion of costs incurred for medical programs (e.g. vaccination, eye tests, hearing tests) made available to all relevant employees.
- Sustainability costs incurred for environmental initiatives.
- Maternity/paternity/shared parental/adoption leave, exclusion for Salary costs.
- Sick leave and long term sick leave: exclusion for Salary costs.
- Projects undertaken to assist the FIA.
- Concurrently with these regulation changes, the Notional Values for Transferable Components (TRCs) have been defined by the FIA for 2021, which is of increased importance considering the reduced Cost Cap level. It has been reaffirmed that the concept of the Notional Values (subject to their correct and fair setting), achieves the following:
- Enables smaller teams to avoid the necessity to establish and maintain a capability to design, develop and manufacture the parts that have been designated as TRCs (Transferable Components)
- Prevents project “flipping” (a small team supplying a big one to circumvent the Cost Cap restrictions).
- Enables small teams to make genuine savings.