Ferrari Proposes Budget Cap Based on Geographical Location Of Teams

In 2021, F1 introduced a budget cap, and as of 2024, teams are restricted to spending no more than $135 million. This is $5 million less than the 2022 limit, and there are indications F1 could reduce it further. Many teams are unhappy with this change, and Ferrari has proposed an alternative approach. They suggest a cost cap that offers leeway to teams based in Italy, citing the country’s geographical location as a factor.

As per a report from formulacritica.it, Ferrari—based out of Maranello in Italy—has “promoted a proposal to make the budget cap more flexible, adapting it to national specificities in terms of labor costs.” 

“With labor costs and salaries that vary from nation to nation, they would like to introduce a sort of sliding scale that allows the value of the spending cap to be determined in a relative and not absolute manner,” the report added.

However, it was noted that while Ferrari’s proposal may seem reasonable, teams benefiting from tax advantages due to their geographical location are unlikely to give them up. Moreover, these teams are not expected to accept the proposal, especially since it comes from Ferrari.

| Ferrari proposed a ‘weighted budget cap’ which F1 is considering :

‘Ferrari has promoted a proposal aimed at making the budget cap more flexible, adapting it to national specificities in terms of labor costs. With labor costs and salaries that vary from country to country,… pic.twitter.com/chMXUia6Wt

— sim (@sim3744) October 7, 2024

After all, Ferrari receives the highest income from F1 by far, as it is arguably the sport’s most popular brand. Additionally, they benefit from a ‘historic bonus’ due to their status as the oldest constructor in F1.

Where are the different teams located?

Although most F1 teams are based in the UK, some only have their F1 operations there, while the business side is managed from other countries.

Ferrari operates entirely out of Italy. RB, while having most of its headquarters in Italy, has reallocated some of its work to the UK. Meanwhile, Haas primarily operates from Italy but also maintains headquarters in the United States.

Alpine has its operational base in Enstone, UK, but its registered office is in France. Mercedes operates across multiple locations in Europe, including Brackley, Brixworth, and Stuttgart.

Red Bull’s F1 team is based in Milton Keynes, but the rest of its operations take place in Austria. Sauber, meanwhile, currently operates out of Switzerland, but with Audi acquiring it, its base will move to Germany starting in 2026.

Given that many teams do not operate entirely from the UK, Ferrari’s proposal for a modified budget cap does make sense. However, as mentioned earlier, teams benefiting from tax advantages are unlikely to support it.