FIA approves Formula One's lowered $145m budget cap

Formula One's lowered budget cap of $145m has been approved by the FIA. In addition to that, the governing body has also introduced a new sliding scale rule for aero testing in order to create a level-playing field.

F1's lowered budget cap of $145m has been approved by FIA. In addition to that, the governing body has also introduced a new sliding scale rule for aero testing.

Formula One’s $145m budget cap for teams has finally been approved as F1’s governing body, FIA, has passed the reduced budget regulations in view of the financial crisis that looms after the Coronavirus pandemic.

A cost cap of $175m beginning 2021 had already been approved by all F1 teams and FIA earlier in order to have a level playing field. At the moment, big teams like Mercedes, Ferrari and Red Bull have an estimated budget of over $400m each, as compared to smaller teams like Williams and Alfa Romeo, which have a budget of below $200m. As a result of this huge budget gap, there’s a disparity in the performance of big teams vs small teams. In order to bridge this gap, F1 came up with a set of technical and financial regulations from 2021.

However, given the current circumstances, thanks to the novel Coronavirus, half of the races this year have already been cancelled and that has resulted in a huge revenue loss for the teams as well as the organisers. This, in turn, has forced F1 to reduce the budget cap by another $30m. It’s also understood that the budget cap will be lowered even further in the following years.

Apart from the reduced budget cap, FIA has made another big announcement – a brand-new sliding scale of development, which will be in place from 202. Under this new rule, the lower a team finishes in the constructors’ championship over a season, the more wind tunnel time for the development of the car will be allowed to them. The aim of this move is to bunch up the field together, which would result in close racing between all 10 teams.

Downforce on the 2021 cars is also set to be reduced. Since it’s already decided that the chassis and suspension are going to be unchanged in 2021 cars from 2020, teams will have to trim part of the floor in order to reduce the downforce created. Other technical regulations have been pushed to 2022 though.