Mark Hughes on the Budget Controversy

The global economy and the European sector are suffering from rising inflation and other adverse factors affecting all areas, including motorsport.

Formula 1 teams have been operating on tight budgets since last year, but the voices of those pushing for the set limits to be revised to raise them are getting louder. The expert of British magazine The Race, Mark Hughes, writes that the FIA ​​and Liberty Media are ready to support this, but it is not so easy to make such adjustments.

To do this now, a simple majority is not enough – the sporting regulations require at least 8 teams to vote for any urgent changes to the current rules. To adjust the budget limit for the following year, it is enough to collect more than 50% of the votes.

But right now, only six, seven at most, teams are ready to support such amendments. The second tier teams are against, expecting to take full advantage of the discomfort the leaders found themselves in: it seemed that until recently they could afford to spend as much money as they saw fit; then Formula 1 went on tight budgets, and now inflation is melting them.

At the same time, smaller teams are actually operating in the usual conditions, as they have never had such financial opportunities as Mercedes, Ferrari and Red Bull. Nothing has changed for them with the introduction of the budget cap – besides, they are a bit short of it. Williams, Alpine, Haas and Alfa Romeo are rumored to be against the limit adjustment.

Inflation in Europe has surpassed 6% – with budgets capped at $140 million this year, each team is effectively $8.4 million less. In reality, this difference is probably even more noticeable, as different types of energy carriers have increased in price by tens of percent, sometimes by 50%.

Teams facing serious sporting challenges this year are having a hard time. Rumor has it that Ferrari, Mercedes and Red Bull are already close to the budget cap, at just five of the 22 stages. If the general price increase continues and the financial capabilities of the teams remain the same, then the upgrade race, which always brings extra intrigue in the championship, will soon end.

But this is just a theory, and in real life the top teams will have to do something to keep refining the cars in some way. The stakes are too high, with Ferrari and Red Bull Racing vying for the lead, and Mercedes trying to fix the inherent flaws of its troubled W13. In addition, reliable information about how much the opponents spend, the teams will learn only at the end of the year.

At one time, a gradual reduction of the budget ceiling was established, starting from the level of $175 million, then it was lowered to 170, then to 165 million. But when the pandemic broke out, it became $145/140/135 million – then there was no other exit.

Now the following argument is advanced: it would be unfair to penalize the championship participants if, due to unforeseen force majeure, one of them exceeds the budget limit. After all, it turns out that the top teams are forced to reduce their costs, while the rest remain at the usual level.

At first glance, that’s not so bad, as it contributes to interesting changes in the balance of power, but in reality there is little fairness in the current situation, as the transition to limited budgets increases the chances of the teams, but this does not happen under the influence of external conditions.