We don’t often talk about Formula One in this space but that was before Autosport reported that Scuderia Ferrari believes the pinnacle of motorsports needs stricter finance and spending regulations to be implemented. The Italian racing team said this move was necessary in ensuring F1’s continuity and economic viability.
For those unfamiliar with the sport, Formula One’s governing body, the FIA, has implemented new financial and sporting rules ranging from how the car looks to how much each team can spend per season, starting from 2021. A budget cap of USD $175 million will come into effect but will not apply to engine development, driver salaries and a few other exceptions.
Ferrari CEO Louis Camilleri told Autosport “We have been in favour of this because we think it is good for the economic sustainability of Formula 1. Over time, this limit should also cover cars, driving units, drivers and many other things. Because ultimately, if the sport is not economically viable, it will die. Therefore, we consider it our responsibility to ensure that it is economically viable.”
It’s also noteworthy that Camilleri is pleased at the progress shown by teams in negotiating the details of their Concorde Agreement. As a quick refresh, the Concorde Agreement is an agreement between the FIA, Formula One Teams and the Formula One Group which dictates several details including prize money payouts. Ferrari, who receives a substantial 'heritage bonus' payout every season, will be receiving less as part of the new arrangement.
"This year was critical in terms of trying to finalise the Concorde Agreement and the various chapters of the financial regulations and technical regulations," said Camilleri. "We as Ferrari have taken very much a leadership role because of our history, because of the importance of Formula 1 to Ferrari" he continued.
In an interview with Sportsmail, Ross Brawn, F1’s managing director of motorsports and technical director said, “F1 is a victim of its own success. If you win, it is so valuable in terms of the rewards it brings, therefore you can justify increasing the budgets to succeed because the rewards are so high. Suddenly you can’t afford to fail and you have to keep ploughing money in. You’d imagine budgets would stabilise at some point but they haven’t. I have seen budgets escalate on a yearly basis. It takes an economic crisis for those things to be redressed but we don’t want to wait for an economic crisis.”
“I don’t see what the options are, if we throw it open again Formula One will crash and burn, it will be a victim of its own success” continued Brawn. He also pointed that teams who do not heed the cost cap will be severely punished and even excluded from the championship.
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