Mercedes Ferrari Red Bull to ALL breach F1 budget cap this season

Binotto, Horner, Shovlin, Ferrari, Red Bull, Mercedes, Monaco, 2022 — Photo: © LAT Images

Formula 1

Mercedes Ferrari Red Bull to ALL breach F1 budget cap this season

Teams face an "insurmountable" challenge

Ewan Gale

Saturday 28 May 2022 12:30

Ferrari, Red Bull and Mercedes are all set to exceed the budget cap this season if F1 and the FIA do not make concessions to the $140million limit.

The financial regulation was introduced last season - initially at $145m but reduced by $5m for this year - in a bid to kerb excessive spending and create a more level playing field.

But all teams have hit trouble due to record inflation and rising freight costs which have left the heavyweights in Mercedes, Ferrari and Red Bull, in particular, facing the near-certainty of a cap breach.

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Ferrari team principal Mattia Binotto delivered a stark warning ahead of Saturday's running at the Monaco Grand Prix. He said: "I think there will simply be no way for us to stay below. At some stage, we will go over.

"In the regulations, there is a threshold which is five per cent. If you do not exceed the five per cent on top of the budget cap threshold, it will be considered a minor breach.

"What is a minor breach in case of force majeure? The stewards and the FIA will decide on that but in terms of penalties, no idea."

Dismissing further redundancies as a possibility to reduce cost expenditure, Binotto added: "I don't think there is any way for us, and for many teams, to stay within.

"Laying off people, I don't think that's a good or right choice. It is already summertime by the time you organise it and if do it, the benefit you can have is not sufficient to cope with the excess of prices and costs we have got.

"What will be the implications? For me, the most important is many teams will breach it and that will simply be bad for the financial regulations because if we come to the point where we are breaching them, then we are debating its value.

"We will start to debate if the financial regulation is worthwhile, is it working and putting everything back into a discussion.

"We need to avoid that because it is important to have a cap somehow. The only way is to give some more breath [room to breathe], take some more time and try to do a better and proper job for next year."

Horner clears up 'miss races' comments

At the Spanish Grand Prix, Red Bull team principal Christian Horner suggested teams would miss races at the end of the season if a change was not made to the budget cap.

Horner has been the leading voice on the subject across the opening stages of the season and clearing up his comments, he explained: "What I was trying to point out was it would be the equivalent of missing numerous races to get the costs anywhere near under the cap.

"All the major teams are going to breach that $140million cap this year."

On whether the objections so far were on the side of the smaller teams, Horner replied: Obviously, there are a couple of teams against and the voting process on in-season changes in the budget cap requires a certain threshold which currently there isn't.

"But you have got to look at the bigger picture. Is this a force majeure event? I would say an act of war [Russia invading Ukraine] that has driven inflation is a force majeure event.

"What we really want is clarity because what none of us wants at the end of the season is us all rushing to the courts of appeal in Paris saying 'He spent $1million more than we did' or so on. So we have got to come to a sensible threshold.

"For the smaller teams, there are levers the FIA have. The components that are transferred for example, the gearboxes, suspension, the listed parts that carry a substantial tax - a cost cap tax, not a real money tax but a cost cap tax - maybe that is something the FIA can look at in revaluing those.

"Teams that are even P7 [currently AlphaTauri] are looking at breaching the budget cap at the moment due to some of that effective taxation."

Mercedes - Budget cap challenge becoming "insurmountable"

Mercedes completes the trio of heavyweight teams struggling to stay within the budget cap threshold in a season where it is trying to develop its way out of its aerodynamic issues with the new car.

Detailing the team's situation financially, director of trackside engineering Andrew Shovlin said: "Early on, we had a plan to land on the budget cap and work within it, as everybody did.

"As costs, like the freight, were coming in at being multiples of that, or energy and the effect of inflation, that has gone from being looking at ways to peg it back to stay within, to a point where the challenge becomes insurmountable.

"We have got levers that you can push and pull your spending with but the impact of those are not immediate and the effect of those are not all-powerful and that is the situation we are getting in now.

"I know Toto [Wolff] is very well aligned with Christian and Mattia on this. Everyone is facing a position where, even with the best will in the world, it is almost impossible to bring the teams in."

Shovlin also set out why teams are unable to simply take money from the stash set aside for development and use that in other departments.

"People have talked about development budget, but the development budget also goes to providing the parts you are racing with," he outlined.

"It is not just this huge stash of money that you are only spending on wind tunnel parts or go-faster bits.

"We as a team are racing parts that are more worn out, we are carrying a lot fewer spares than we used to. Every weekend we are in situations where serious incidents could see us being unable to field a car or you are really cobbling together a car.

"If we are not constantly replacing parts with faster ones, we would just be spending a considerable amount of money on the same parts.

"So when you look at it, the challenge our team faces - and we are not the only one, it is a majority - is a difficult challenge and there are one or two if you were targeting to be below, things have fallen in your favour.

"But it is an area where everyone is working together and hopefully we will find a solution."