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Formula 1 budget cap: How would it affect the sport?

By Rahul Bharadwaj

MELBOURNE, AUSTRALIA - MARCH 23: Ferrari Team Principal Maurizio Arrivabene, Mercedes GP Executive Director Toto Wolff and Red Bull Racing Team Principal Christian Horner in the Team Principals Press Conference during practice for the Australian Formula One Grand Prix at Albert Park on March 23, 2018 in Melbourne, Australia. (Photo by Mark Thompson/Getty Images)
MELBOURNE, AUSTRALIA - MARCH 23: Ferrari Team Principal Maurizio Arrivabene, Mercedes GP Executive Director Toto Wolff and Red Bull Racing Team Principal Christian Horner in the Team Principals Press Conference during practice for the Australian Formula One Grand Prix at Albert Park on March 23, 2018 in Melbourne, Australia. (Photo by Mark Thompson/Getty Images) /
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SAO PAULO, BRAZIL – NOVEMBER 09: Sergey Sirotkin of Russia driving the (35) Williams Martini Racing FW41 Mercedes (Photo by Charles Coates/Getty Images)
SAO PAULO, BRAZIL – NOVEMBER 09: Sergey Sirotkin of Russia driving the (35) Williams Martini Racing FW41 Mercedes (Photo by Charles Coates/Getty Images) /

4. Risk of losing teams

The whole idea of Formula 1 losing teams as a result of the establishment of a budget cap comes from the fact that Ferrari threatened to leave the sport and race elsewhere if a budget cap is enforced.

This would be a huge setback for Formula 1 given the fact Ferrari hold a huge stake in the sport’s fanbase and merchandise sales. Ferrari, without admission, are the single most important team for Formula 1 in terms of profits. They are so important that they are paid a huge bonus (nearly $100 million) for being a “Long Standing Team”.

According to Reuters, Mercedes team principal Toto Wolff has backed the Italian team by saying that “the perspective of doing something else is a realistic one, and it could happen if we don’t achieve to align our vision.”

Losing two of the biggest teams in the sport is something that Formula 1 and Liberty Media don’t want to do. Another key factor to these threats is the $150 million figure that Liberty Media have decided to maintain as the budget cap. They have not given an explicit explanation of how they arrived at this particular amount.

It seems a bit illogical to think that teams that have used almost thrice this amount would agree to this and be comfortable with it. It’s near impossible. After all, money difference is equal to time difference. If the sport’s owners explain their arrival at this amount, only then will it open a window for negotiation between teams and the governing body.

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