World Council approves lower F1 budget cap

The FIA World Motor Sport Council has formally approved a wide-ranging raft of changes to the Formula 1 regulations to cover the 2020 World Championship season and beyond.

World Council approves lower F1 budget cap
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The most significant is confirmation of the new cost cap limit that will start in 2021. It will be pegged at $145m for the first year, $140m for 2022, and will then drop to $130m for the next three years, based on a 21-race season.

Provision for “closed” races without fans has been written into the rules, with teams only allowed to bring 80 people, 60 of whom can be operational.

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The following technical regulations have been confirmed:

  • Freezing of a large list of components between 2020 and 2021. The list includes the chassis, gearbox, a number of mechanical components and impact structures. A token system has been devised to permit a very limited number of modifications in accordance to the competitors’ specific needs.
  • For 2020, limitations to Power Unit upgrades.
  • For 2021, changes to the plan-view trim and simplification of the floor ahead of the rear tyres in order to moderate the increase of downforce between 2020 and 2021.
  • For 2021, minimum mass increase to 749kg.
  • The following sporting regulations have also been confirmed:
  • For 2020, provisions for “closed” and “open” events and the relevant regulatory structure for each (e.g. personnel at the paddock), depending on whether such events permit spectators.
  • For 2020, various updates relating to tyre regulations, with provisions to allow for tyre testing during Free Practice 2 should it be necessary to approve a new tyre specification by Pirelli and the extended use of P140 tyres in the case of a wet Free Practice 1 session.
  • For 2020, a reduction in aerodynamic testing (ATR) and the introduction of Power Unit test bench restrictions for cost reasons.
  • For 2021, a further reduction in aerodynamic testing, and the introduction of a bias between championship position and ATR limitations. The ATR bias will be linear between P1 and P10.
  • For 2022, a number of key specific aspects of the regulations have been set out, including curfews, restricted number components (RNCs), scrutineering, and parc fermé prescriptions. These regulations work as a package together with the 2022 Technical Regulations that were approved by the World Council on 30 March 2020 and will be part of an ongoing review and refinement process throughout 2020 and 2021. 

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Aside from the headline cost cap, the following changes have been made to the list of exclusions in the 2021 financial regulations:

  • Increase of Year-End Bonus exclusion cap for exceptional sporting results from $10M to $12M and Social Charges for Year-End Bonus.
  • Threshold for calculation of exclusion for Social Charges on Salary paid to staff lowered from 15% to 13.8%.
  • Costs incurred for staff entertainment (capped at $1M).
  • Wellbeing of employees: exclusion of costs incurred for medical programs (e.g. vaccination, eye tests, hearing tests) made available to all relevant employees.
  • Sustainability costs incurred for environmental initiatives.
  • Maternity/paternity/shared parental/adoption leave, exclusion for Salary costs.
  • Sick leave and long term sick leave: exclusion for Salary costs.
  • Projects undertaken to assist the FIA.

In addition, the FIA has addressed the controversial issue of teams that supply components to partners.

The FIA notes: Concurrently with these regulation changes, the Notional Values for Transferable Components (TRCs) have been defined by the FIA for 2021, which is of increased importance considering the reduced Cost Cap level. It has been reaffirmed that the concept of the Notional Values (subject to their correct and fair setting), achieves the following:

  • Enables smaller teams to avoid the necessity to establish and maintain a capability to design, develop and manufacture the parts that have been designated as TRCs (Transferable Components)
  • Prevents project “flipping” (a small team supplying a big one to circumvent the Cost Cap restrictions).
  • Enables small teams to make genuine savings
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