The budget cap was introduced to the Formula 1 world last season, and it was intended to level the playing field, promising to deliver a more competitive championship battle.
What is the budget cap? In simple words, the budget cap limits (and decides) the maximum amount of money a team (or a constructor) can spend on developing their car, during a calendar year. The budget cap was introduced as 145 million USD for last season, and this season it has been cut down by 5 million, now amounting to 140 million.
This figure will reduce by a further 5 million from the 2023 season when it is supposed to settle. But the regulations allow for an increase in the budget cap to take into account the general cost inflation from 2024 onwards if inflation is over 3 percent. This is basically how the cost cap functions.
Red Bull and Max Verstappen currently lead both championships, having taken the lead from Ferrari and Charles Leclerc during the last round of the championship in Spain. Ferrari could not keep the lead in the championship despite introducing their first major upgrades of the season, mostly due to a power unit failure in Charles Leclerc’s car while he was comfortably in the lead of the race.
Red Bull seem to be ahead in the development battle with Ferrari and had brought their first major upgrades before the ‘Prancing Horses’ had. Right now, all seems to be going well for Red Bull, but the budget cap can possibly throw a spanner into the works.
As should be expected, as the Milton Keynes-based outfit have been ahead in the car development battle with Ferrari, they would likely have spent more money developing the car than Ferrari have, at least before the last round of the championship. This means they will have less to spend during the rest of the championship. Moreover, even Mercedes seem to be getting closer in performance to the two frontrunners.
Christian Horner feels teams will need to miss races to accommodate the cost cap
On the subject of Red Bull’s development, and the cost cap, Ferrari team principal Mattia Binotto had earlier said:
“The budget cap situation, there is a cap, I don’t think they [Red Bull] can develop so much, and I’m hoping that will not be the case for the rest of the season.”
Earlier, Christian Horner had in fact expressed some concern over the budget cap when talking to Motorsport: “You have to be very careful about where you put the upgrades in. That’s because of the budget cap. So we have to be sure the things we take with us are really worth the money.”
Once again, Christian Horner expressed concerns over the ramifications of the budget cap on the different teams on the grid. According to ESPN, Horner said that all teams will be suffering from the effects of inflation, and said that transportation costs have ‘quadrupled’ due to rising fuel prices. Horner had said:
“We need the FIA to address the inflationary issue because I think basically probably about seven teams will need to miss the last four races to come within the cap this year.”
Alpine team boss, Otmar Szafnauer disagreed with Horner’s assessment of the budget cap situation. He clearly found the idea of teams missing races particularly amusing. On the subject, Szafnauer had said:
“It will move us up in the championship. I welcome that. Should we plan for that or was he just being facetious?”
Red Bull currently lead the championship, after a superb 1-2 finish at the Spanish Grand Prix. Alpine are currently 6th, but they will be hoping to move up in the table during the next few races on the back of a strong weekend, where Fernando Alonso came back to finish 9th after starting from the utmost back of the grid (due to a power unit change) and Esteban Ocon also drove through the field to finish 7th, after starting 9th.