Formula 1’s budget cap has been reduced for the 2021 season following a unanimous agreement between all 10 teams, the FIA’s World Motor Sport Council confirmed on Wednesday.
After years of negotiations it was announced last October that a cap of $175m per team would be implemented annually from 2021, in a bid to reduce spiralling costs in the championship.
But the coronavirus pandemic prompted a push from some quarters to reduce the cap even further, and a limit of $145m for 2021 has now been agreed and ratified.
This will be reduced by $5m, to $140m, for the 2022 season, and then by another $5m, to $135m, for the 2023 to 2025 period.
An extra $1.2m will be added to the cap for each race per season that brings the calendar above 21 events, with the figure reduced by the same amount in case of a smaller schedule.
Amendments have also been made to the Financial Regulations outlining further exemptions from the cap costs, such as staff medical programs, costs incurred for staff entertainment – capped at $1m – and projects undertaken to assist the FIA.
Some of these tweaks have been made in order to prevent what the FIA has termed “project flipping”, whereby a small team would supply a big team in order to circumvent the cost cap restrictions.