Major Formula 1 teams have already cut spending as the budget cap for the 2022 season has been set at around € 127m, after being cut by around €4.5m .
But its finances are facing additional pressure, caused by rising inflation, as well as expenses stemming from the pandemic and the war in Ukraine.
All this means that transport and electricity costs will increase, as well as the pressure to increase the salaries of your staff, in order to keep them in line with real living expenses.
When Formula 1’s budget cap was set, the world economy was in better shape and inflation was not too far from where it is now, so there is little room for maneuver in the regulations to deal with the difficulties that the equipment.
Red Bull boss Christian Horner says the matter needs an urgent response. “I think it’s a very real problem because we’re already seeing extremely high inflation,” he said.
“We have to remember that when the budget cap was set in the middle of the pandemic, in the middle of 2020, no one could have foreseen the current circumstances of the world.”
“Of course, what we see happening around the world is only going to push prices in one direction and it looks like inflation could hit record highs. We’re already seeing this impact on things like air travel.”
“I think this is a very serious problem that we need to study and address, because this has a direct impact on people’s jobs and livelihoods.”
Although there is currently no universal agreement between the teams on how to respond to this problem, Horner thinks the FIA has an obligation to step in and help with this issue. “I think looking at this is the duty of the regulatory body,” he said. “There is a degree of urgency to make sure that [economic] relief is put in place to take into account everything that is going on in the world, with the rising cost of living that we are all going to see.”
Williams team boss Jost Capito said teams were already facing difficulties with their expenses as transport costs had risen sharply due to rising oil prices.
“When you see logistics costs go up, around 40% to 50%, this has a very, very important impact,” Capito said. “If you have to spend millions more on logistics, that means you have to cut spending in other areas.”
“You have your development planned for the whole year, so if things appear that are completely out of control, the situation becomes very difficult.”
Andreas Seidl , McLaren boss, believes the global situation warrants having some talks with the FIA, to see what can be done.
“It’s always important to apply common sense,” he said. “We are absolutely willing to talk about it.”
“We have had more conversations with other teams, also together with the FIA, because we have the same challenge of complying with the limit. And now, having these unexpected additional expenses, we are open to discussion on the subject, as well as solutions and possible adjustments, as long as everything happens within reason”.
