Formula 1’s managing director of motorsports Ross Brawn says new financial regulations including a cost cap will mark “a dramatic change” within the sport.
The 2021 regulations were approved on Thursday and presented in full at Circuit of the Americas ahead of the Untied States Grand Prix. As well as technical and sporting regulations, new financial regulations were published, including a cost cap of $175 million per season. Key exclusions from that figure are driver costs, the salaries of the three highest paid employees, marketing costs and non-F1 activities, and Brawn says they are the standout new aspect of F1’s direction.
“Financial regulations are the big change, a dramatic change in Formula 1,” Brawn said. “We’ve tried for these in the past, and we’ve not been successful.
“I think the crucial thing about the financial regulations now is that they’re part of the FIA regulations. So the sanctions from breaching financial regulations will be sporting penalties of some sort, depending on the severity of the breach. Whereas before we had the Resource Restriction Agreement, which was a gentleman’s agreement between teams. Well, there’s not many gentlemen in the paddock I’m afraid, and that was a failure. But this has teeth.
“If you fraudulently breach the financial regulations, you will be losing your championship. So it has serious consequences if teams breach these regulations. They’ve been pretty well thought-out, but they will need development, like any new regulation. Even the current regulations, as you know, the current sporting and technical regulations are constantly in discussion, and this won’t be any different.
“So I fully expect that we’re going to have challenges in the future to implement this, but it’s absolutely essential for the good of Formula 1 that we have a control on the finances, and how much we spend in Formula 1.
“I won’t go through the details, but there’s a number of exclusions. We’re excluding marketing, for instance. Non-Formula 1 activities aren’t in there. We’ve tried to capture really the things that make the competitive difference between the teams, and the areas where they can spend money and gain a competitive advantage, we’ve tried to control those areas.”
Brawn says the details F1 has gone into should not be overlooked, employing external expertise to help develop and implement the new regulations.
“We’ve got a very strong team of financial experts within the FIA and within Formula 1, and we’ve sought outside support on this,” he said.
“Deloitte have been involved – Deloitte are one of the experts in sports finances, they’ve been very involved with the football world, and you can see the effect that is now starting to have on football, the positive effect it is starting to have.
“So we have had a very strong group of experts, and that will continue. We’re not going to stand those people down, they’re going to continue to help introduce these regulations and develop them.”.