Six teams are demanding surcharges for inflation, facing opposition from Alpine, Alfa Romeo and Williams. They do not see inflation as a force majeure and advise teams operating at the limit to simply stop developing.
It’s an unforgiving topic on which there are good arguments for and against. For Alfa-Sauber team boss Frederic Vasseur, this is an issue that could define the world championship. In the front, middle and back of the field. There will be teams carrying the Joker in their hands from the middle of the season. You’ll still have a development budget left over, while others won’t have more money to spend on new parts. Although full plowing.
There are of course concerns that some teams, in their plight, will risk going over budget. Anything less than five percent is considered a “minor” violation of financial regulations. In this case, the sport’s commissioners determine the penalty. It is a game of risk with unknown outcomes. “If the penalty is low, whoever passes the ball has a huge advantage. Imagine if that would give you three more upgrades for that,” Vasser warns.
What is force majeure?
The budget cap is a very special challenge this season. Not just because the limit has fallen from $145 to $140 million. Much more because there were no acquisitions from the previous season because of the new cars. In the regular season, that saves $30 million.
Then there is inflation, which escalated dramatically with Russia’s war against Ukraine. In September 2021 it was still 2.9 percent despite Corona. Now it’s 6.1 percent, and there’s no end in sight.
Freight, electricity, petrol, and material purchase costs have doubled in some cases. The teams expect an increase in spending of eight to nine million dollars. Ferrari, Mercedes and Red Bull are talking about superpowers. Nobody can count on swells like this.
Wasser disagrees: “A pandemic is a force majeure. Inflation is a natural process that happens from time to time. You have to include that in your planning. Shipping, electricity and materials are also becoming more expensive for us. We still manage in some way.” “Budget plans for a season are always made in November and December of the previous year. Inflation was already expected to rise,” adds fellow Alpine fellow Otmar Szafnauer.
Is the Monza package still available?
According to the internal accounts of the competition, many teams have already approached the limit. Accordingly, there should be no more new parts from the Canadian GP onwards for those who fully exploit the budget cap. A four million dollar inflation premium would be a treat for the wounds.
Vasseur has a recipe for this: “Just turn off the wind tunnel. We are 10 percent below the cost limit. I also have to find solutions to the fact that the cost of living has gone up. Then the new parts can no longer come into every sweat.”
Red Bull boss Christian Horner has warned that seven teams can no longer compete in the last four races if there is no rest. “That’s cool. Then we can move up the world championship standings. Can we really plan to fail or was he just kidding?” Szafnauer replies with stinging mockery.
Mike Krake, Aston Martin Team Principal, sees the whole thing pragmatically: “If they don’t compete, there are more points for other teams. We follow the rules exactly. Now is the time when you have to think about how to spend the money. Our team is used to working efficiently. We are not. At the point where racing is at risk, but we also have to think, for example, whether the Monza package is still possible.”
Risk on the cost cap principle
Distinguished Formula 1 Technical Director Pat Symonds. Veteran engineers do not sympathize with teams that complain of a high budget. “The big teams are now facing what I’ve faced for most of my career. Even at Renault, the new parts were usually finished after Monza. In case of big accidents, even before that.”
But Symonds also acknowledges that current inflation justifies an exception rule: “No one expected this increase. You can justify it as retractable support and then move forward according to regulations again starting in 2023.”
Wasser sees the current dispute as a general test for setting the budget ceiling. “There are teams that cry for more money on every occasion. When the sun shines longer or the winds blow stronger. There is a risk that we will always give up. When setting a budget, there must be rules and they must be observed. If we relax the principle, so will the principle The end of the cost cap idea.