Out of the ten teams racing in F1 at the moment, six of them are based out of the UK. As a result, the country has often been labeled as the home of F1. However, according to Business F1, Britain’s national debt which is as high as $3.25 trillion, could lead to repercussions that would affect the teams operating out of the nation. This includes the likes of Mercedes, Red Bull and McLaren.
F1 teams operate at a very strictly controlled budget, which was introduced in 2021. This budget cap ensures that all the teams have a level playing field, and the bigger outfits cannot spend tens of millions of dollars more, to buy their way to success. However, this cost cap ($145 million) in addition to the dismal financial condition in the UK, could have severe effects on the teams based in the country.
Britain’s financial condition and debt mean that the inflation that the locals are dealing with at the moment, will not go away anytime soon. FIA’s financial regulations allow teams to make certain adjustments when it comes to inflation. Unfortunately, these regulations won’t help them cope with the inflation that is currently raging in Britain.
F1 cost cap should increase by $30 million to help them cope
As per Business F1, if the FIA wants to help the teams cope with inflation in the UK, the budget cap has to be increased. In fact, this increase cannot be small. The current limit of spending is capped at $145 million. But for the F1 teams to adjust, the new cap has to be around $171 million.
However, the magazine also reports that there are no signs pointing toward the FIA making any adjustments. This could potentially lead to a rift between the FIA and all the Britain-based teams, later this year. This is because it’s almost a certainty that inflation in the UK isn’t going away.
Admittedly, the UK’s condition has worsened over the last few months, because of multiple factors. First Brexit, followed by the Covid 19 pandemic and then the Russian war on Ukraine. They’ve all contributed to the ever increasing inflation. To highlight the severity of the matter, it is pertinent to note that the debt to GDP ratio as risen to 100%. This has happened for the first time in 60 years.
Worrying signs for Mercedes, Red Bull and Co.
Six out of ten existing F1 teams are based out of the UK. They are Mercedes (Brackley), Red Bull (Milton-Keynes), McLaren (Woking), Alpine (Enstone), Aston Martin (Silverstone) and Williams (Grove). Since they operate out of the UK, they are heavily reliant on the prices of commodities in the country.
F1 is not a cheap sport, and requires tens of millions of dollars of year-long investment, in order to sustain. For the teams, it would not have been a problem had the budget cap not existed. Unfortunately, because of its introduction in 2021, they are forced to comply with it.
This means that Mercedes, Red Bull and Co. have to make do with the current cost cap, despite the rising prices of commodities and services within the United Kingdom.
