Formula 1 needs a serious rethink of its financial regulations because teams are effectively spending up to $600 million despite the official limits, as Motorsport.com reports.
Since 2021, the championship has operated under a budget cap that started at $145 million and currently sits at $215 million. But that figure doesn't cover everything. Driver contracts, travel costs, marketing spend, and the salaries of the top three non-driver earners are all excluded. There is also a separate $190 million power unit budget cap, keeping costs astonishingly high while team values surge.
Christian Horner points out that while the cap sits at just over $200 million, actual spending reaches $500 million or $600 million year on year. He argues that more needs to be included within the cap, comparing Formula 1 spending to a balloon with not enough air: squeeze one end, and the air goes somewhere else. Driver retainers are now far healthier than they were before the cap.
Horner recalls how the sport used to be like having a bucket full of money with a hole in the bottom, where teams would spend until it ran out. He remembers warehouses full of unused floors, wings, and suspension parts worth tens of millions of pounds that had never seen a racing car. Now, the financial rules are just as important as the sporting or technical rules, with accounting departments growing as big as drawing offices.
Not everyone agrees on the current system's fairness. Williams boss James Vowles claimed this month that frontrunners benefit more from the cap than the rest of the grid. Vowles reckons his squad is limited on car and personnel spending because it must direct money toward capital expenditure under the cap. Meanwhile, teams like Red Bull, Mercedes, and Ferrari had already heavily invested in world-class facilities before the rules came in.
Despite the friction, the financial regulations have undeniably brought stability. Force India remains the last constructor to have entered administration back in 2018, and even the smallest teams on the grid now carry multi-billion dollar valuations.
