Formula One, under the command of Stefano Domenicali, is now about to make the most divisive maneuvers in the 2021 Season. According to this season’s calendar, F1 will host 23 consecutive weekend races. Introducing fresh budget cap limitations will be another new thing that will enter the F1 realm. Subsequently, the new set of financial regulations is about 47 pages thick. Consequently, all the ten Formula One team will be under the governing eye of the FIA and the F1 council. This will in turn force them to keep their expenditure under $145 million (actually $147.4m) annually.
Teams now have to “determine and report its relevant costs” to the FIA. Moreover, if any suspicions arise, submissions will be examined and strict investigation will take place for any foul plays.
On the contrary, due to cost limitation and while reallocating resources, teams might have to reduce their number of employees. Although, three of the highest-paid staff members are on the list of exemptions. The Italian Giants, Scuderia Ferrari, for instance, dispatched a few of their staff to their customer team. Further, McLaren had to lay their huge workforce off. Mercedes and Red Bull gave their staff some other responsibilities too. Formula One stands to be one of the most upscale sports in the sporting domain. In last five years itself, three teams have collapsed.
The Mercedes team principal, Toto Wolff commented on the expenses attached to run the team in F1, “$150 million is much too low for the big teams, but if you look into the detail, we need to work with Liberty and find a compromise. That number will not be achievable, but maybe something sensible [can be] – we are all living in the same financial reality.”
The ‘Cost Cap Adjudication Panel’ of independent judges will hear cases of violations of the Formula One financial regulation. The authorities will have more powers in terms of how they would want to handle the infringement scenarios. If the situation arises, they might in fact grant immunity to the whistle-blowers too.
Other penalties like championship points deduction, limitation on aerodynamic testing, team bans or championship ban are also there to keep the offenders in the check.
F1 CEO Stefano Domenicali: financial update.
Liberty Media have confirmed that Stefano Domenicali will take up the role of President and CEO of Formula 1 in January 2021
— Formula 1 (@F1) September 25, 2020
How the early months of 2021 will play out is still not very clear. The 2020 season has been a tough year for Formula One organizers but, despite that, it seems there is more reason to be optimistic as Stefano Domenicali look towards the new season.
“Financially, as we have seen, Covid has hit the balance sheet of our organization because no one would not be hit by what has happened to our business. But it is solid enough. I can already say that what has been the plan in terms of budget this year is already a much better situation than what we had last year.” he told UK based magazine.
“Therefore, unless there is something that is catastrophic that could happen, that we are ready to fight, of course, we have proved in the past that we can recover and the idea is to be back to normal business by the end of the season in terms of turnover.”
Stefano Domenicali also spoke about his views, focusing on the advantages of the Formula One budget cap. Subsequently, he seems to be hopeful for a more competitive midfield due to these new financial regulations.
“I think that with the budget cap. Plus the idea of bringing in a similar approach with the power unit. This will help the factory spend of the teams behind. That means whilst the teams were unsure of how much money was needed to be competitive, it is much clearer now.” he added.