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Dispute over the budget: inflation high, budget too?

The inflation rate increases. The financial regulations of the FIA ​​provide for an increase in the budget cap, but the deadline was missed. Nevertheless, seven teams are demanding up to seven million dollars extra. The rising costs are beginning to overwhelm teams. Nevertheless, Alpine, Alfa Romeo and Haas are against it.

The budget cap this year is 140 million dollars. Since 23 races exceed the upper limit of 21 set in the regulations, there is a surcharge of 1.2 million dollars per Grand Prix. So that's $142.4 million this season. Now there could be another surcharge. Before that, however, there are still tough negotiations between the teams and the F1 management and the FIA.

The association's financial regulations state that the upper budget limit may be raised if the inflation rate is over three percent in the G7 countries. On the reporting date in September 2021, the average rate was still below three percent. That's why the teams aren't actually entitled to a bonus this season. Now, however, freight and electricity costs have skyrocketed by as much as $6 million per team. Freight costs in particular have exploded and in some cases have doubled.

Bonus can no longer be withdrawn

Seven of the ten teams are of the opinion that these two cost factors cannot be controlled by them and should be compensated immediately in the budget. Otherwise, many teams would exceed the budget cap because most of the costs for development and production have already been budgeted and can no longer be corrected. "It now even affects the teams that are normally below the cost cap," says the paddock.

In their hour of need, teams are demanding an extra $7 million, which would be their due for 2023 if the rate is expected to be above 3 percent next September. Alpine, Alfa Romeo and Haas reject the bid. "Rules are rules," said Sauber team boss Frédéric Vasseur, rejecting the petitioners.

Colleague Guenther Steiner von Haas also sees no reason for an emergency. "If we are above three percent inflation in September, there will automatically be a surcharge in 2023. We don't have to bring that forward." Alpine team boss Otmar Szafnauer has a suspicion as to why the former Budget Cap hardliners McLaren and Aston Martin have defected to other camps: "They have problems with their cars and have to massively rebuild them. They need more money for that."

The FIA ​​and F1 management are also reluctant. They want to squeeze the bonus. What has once been promised cannot be withdrawn. A further inflation surcharge for 2023, which would be due again if inflation rises, would, if made immediately, push the budget cap to $149 instead of $135 million and thwart the intentions of cost control. The last round of negotiations led to no result. The proposal to split the seven million into 2022 and 2023 was also not approved. "As always in such cases, we will meet in the middle," Formula 1 boss Stefano Domenicali is convinced.


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