A compromise emerges in the dispute over an inflation allowance. Formula 1 would have to pay extra money to all teams, which then does not count towards the budget cap. However, the support would then be subtracted from the distribution cake.
Fronts have been hardened for a long time. Mercedes, Ferrari, Red Bull, McLaren, Alpha Tauri and Aston Martin have for months been asking the FIA for extraordinary inflation compensation under the budget cap. The FIA financial regulations only provide for something like this if the average inflation rate of the G7 countries in September of the previous year is above three percent. In September 2021, it was 2.9%. Thanks to Japan’s low inflation rate.
Since Russia entered the war against Ukraine, price increases have increased significantly. The United States, Canada, Japan, Great Britain, France, Italy and Germany currently have an average of 6.2%. This will certainly increase the budget cap for 2023. But six of the ten teams already want an increase and plead “force majeure”.
Three million or three percent?
Alpine, Alfa Romeo, Williams and more recently Haas opposed it and blocked the adjustment of the financial rules by their veto. An increase in the cost cap does not help them because they are not reaching the limit at all. “My budget limit is my budget,” says Alfa-Sauber team boss Frederic Vasseur. The FIA now wants to have found the golden compromise that brings all parties around the table. But the management of F1 is not yet in the details.
The following has been disclosed: Rights holder Liberty is expected to pay all teams a certain amount in cash. Some talk about three million dollars, others about three percent of the current cost limit of 140 million. It would be $4.2 million. This money can then be spent without counting against the budget cap. This would also benefit teams that are below the upper limit.
Support comes from the global cake
But support should not be offered for free. Liberty would deduct the inflation surcharge from the total pie. It hits rich teams harder than poor ones. The world champion participates with 14.5% of the total distribution, the tenth only with 7%.
Alpine team boss Otmar Szafnauer can accept this compromise: “If everyone benefits to the same extent, we are okay.” Haas colleague Guenther Steiner says, “That would be a good compromise, as teams that don’t hit the budget limit will also benefit.”
The FIA plan is not yet on Stefano Domenicali’s table. The management of Formula 1 therefore curbs too much optimism: “We are examining the proposal. It is our money that must be distributed there.”