Formula 1 is about to set a new precedent, as it introduces the first ever set of financial regulations for the 2021 season. The move seeks to establish a level playing ground when it comes to team finances, and overall create a much more competitive championship as a result. The new cost cap will be $145 million per year for each team, slowly reducing to $125 million by 2024.
The financial regulations are potentially an exciting development for the championship, as this could spark a catalyst for independent teams to gain notable success now other teams are capped with spend.
It was most common for F1 teams to spend excessive funds, attempting to improve their vehicle performances throughout the season, and alongside this they were able to hire extensive experts to ensure their chances of winning were greatly enhanced.
The new cost cutting regulations will see the big teams such as Mercedes, Ferrari and Red Bull having to re-evaluate their options with regards to their staggering spend. Their large workforces will have to be re-considered, as they look to comply with regulations, and this will undoubtedly require an incredibly impactful restructure and overhaul.
This change could certainly open the doors to smaller independent automotive companies looking to return to the F1 scene. The old days of F1 were strongly dominated by independent teams, however, over the past two decades, their involvement has decreased enormously, perhaps due to the massive budgets opposing teams had and partly due to resourcing.
Either way, they now have a platform to return to F1 and potentially excel. The new regulations will be managed and enforced by the cost cap regulation team that will be created in the wake of the 2021 season. Over the course of 3 years, teams will be given the opportunity to create a sustainable platform that still improves performance.
Again, as is so commonly seen within the modern world, companies, leagues, corporations and many more are seeking to find new, alternative ways of creating sustainable entertainment. It’s abundantly clear that F1 is not the most environmentally friendly or sustainable sport, but this move could help get more fans on board.
Ultimately, with the new changes being introduced, we’ve already seen car giant Honda withdraw from the new season and we could potentially see more teams do this. The re-jig of their systems will inevitably be problematic, and could arguably cause more stress than they feel is worth. Clearly Honda felt this way about the new changes and opted out.
It’s certain that the new cost cap will create a more competitive playing field, which should in turn improve fans enjoyment which is always a positive, but ultimately to see some staple teams leave is a sad sight. F1 has always been performance based, and the improvements through the years have been incredibly interesting. Let’s just hope we continue to see progress, but perhaps on a more sustainable and financially fair playing field.