Formula 1’s budget cap will ensure the championship remains sustainable for each team, according to Ferrari, will retaining its status as the premier motorsport category.
Prior to the outbreak of the coronavirus pandemic Formula 1 had signed-off on implementing Financial Regulations for the first time in its history, to be introduced in 2021.
A figure of $175m per annum, excluding some costs relating to engine development, marketing and driver salaries, had been agreed, in a bid to control excessive levels of spending.
But the pandemic has already prompted a re-think and the cap is poised to be reduced to $145m.
“There has been significant progress on numerous measures to freeze various components and hence reduce costs going forward,” said Ferrari CEO Louis Camilleri.
“[There has also been] substantial progress on a cost ceiling and its perimeter effective as of 2021, which will hopefully be put to bed in the near future.
“It remains our hope that such ceiling will render Formula 1 more economically sustainable for all participants while ensuring that it remains the premier racing championship globally and the source of significant advances in automotive innovation and technology.”
Formula 1 had planned to hold 22 grands prix this year but this figure will now not be reached due to the pandemic.
Championship officials remain hopeful that 15-18 races can still be held but have cautioned that the campaign will begin without fans.
It means that sanctioning fees are likely to be renegotiated, which will mean a drop in Formula 1’s overall revenues, and thus a reduction in the prize money distributed to teams.
“Formula 1 is undoubtedly the activity that will adversely affect our results in 2020 in the harshest manner,” said Camilleri.
“It is also the one that is by far the hardest to predict… there will be a maximum of 18 races with many without fans.
“This clearly implies a drastic reduction in the revenues that are generated by the commercial rights holder, as well as sponsorship fees, our two primary sources of revenue.”
