Business F1 Magazine has reported an uncanny financial statistic that throws the rationale of introducing the cost-cap right out of the window. According to the report, F1 teams have been spending over and above than ever before. What’s more, the expenditure has been higher than what it was before the cost cap was ever introduced.
The case of Red Bull strikes is an alarming citation to the claims made in the report. As per the records, the Bulls spent $370.2 million in 2020. That year was the final year before the $135-$145 million budget restriction was introduced. Lo and behold, despite the mandate, in 2022, the Milton-Keynes-based outfit reportedly splashed a whopping $443.54 million. A$73.3 million increase since the cost cap was brought into place.
One simple explanation for this fiscal anomaly can be the argument of costs rising in the post-COVID era. Be that as it may, despite this bizarre mismatch of the books, the team, along with all its rivals has been adjudged to be within the cost cap by the governing body of the sport.
The cost cap was introduced to make the sport more competitive. It was also pushed to make the sport more financially sustainable. However, ever since its introduction, all the teams on average have spent 41% more than the pre-cost-cap era. However, there are several spends done by F1 teams that don’t fall under the gaze of the cost cap, and most teams have spent mostly over there only.
Is the cost-cap F1’s biggest failure?
Teams like Mercedes and Ferrari have seen a huge jump in their operational costs. This can be amply substantiated by the report published by Business F1 Magazine. Inexplicably, however, what is more alarming is the fiscal trend apparent at the bottom half of the grid.
The 2nd largest margin of pre and post-cost-cap era expenditure was showcased by Williams. The team has spent 75% more combined in 2021 and 2022 than what they did in 2020. This falls in line with Dorlinton Capital’s acquisition of the team in 2021.
f1 teams earning profits has been the worst outcome of the cost cap https://t.co/c2fDEDN8lf
— 💤 (@destinycopss) November 17, 2023
The question that naturally follows is about the efficacy of the cost cap itself. A lot of hue and cry was floated around the paddock when introducing the mandate. However, in hindsight, the same teams have been dominating the sport that did so before the cost cap. Hence, at that threshold, the rationale of the FIA and F1 has failed.
What’s more, even when Red Bull were found guilty of breaching the cost cap in 2021, the penalty they received hardly affected them as in 2023, with a 10% aero testing time penalty, the Bulls have won every Grand Prix run, except one.
