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Cost capping enforced, set at £40m

The FIA has confirmed it will introduce cost-capping to Formula 1 from 2010, although the budget has been raised from the originally proposed £30million to £40million.

In a move prompted by the ongoing global financial crisis, the FIA revealed they considered further restrictions on technical rules, but favoured cost-capping in order to prevent a 'spending race' and allow 'unfettered technical competition to flourish'

Cost-capping will relate to almost everything in Formula 1, although it does not include marketing, with the FIA keen for teams to promote the sport through various activities away from the race circuit.

It will also encapsulate engine costs in an attempt to attract more engine manufacturers to the sport, although this will only be apparent for 2010. Furthermore, manufacturers are being allowed to honour existing supply arrangement, provided there is no element of subsidy that could have a cartel-like affect on the engine market.

In addition, young driver programmes will also be exempt in a bid to lure a younger generation to the sport.

Teams will be encouraged to sign up to the budget capping in order to receive technical freedoms, including movable front and rear wings and engines with an unlimited rev limit. The teams will also be allowed unlimited out-of-season track testing with no restrictions on the scale and speed of wind tunnel testing.

With this in mind, the FIA is confident all teams will sign up to the scheme and avoid the prospect of a 'two-tier championship system'

As well as cut down on costs, it also hoped the move will attract more teams to the sport and prevent others from following Honda in quitting. Currently down to ten teams and twenty cars, a maximum of three more teams could be poised to join the grid in 2010.

The full FIA transcript is as follows:

Q:
How did the FIA arrive at the £40m figure?

FIA:
We arrived at the figure by analysing both revenues and costs in Formula One. We know what the FOM (Formula One Management) revenue is likely to be in the future, and we have some understanding of realistic sponsorship revenues during the recession. Taken together, it's possible to project total external revenues for all finishing positions in the Championship. At £40m we believe that 70 per cent of the grid can generate a profit. This transforms the business case for owning a Formula One team, for both manufacturers and private investors. The desired net result is to have a very healthy commercial environment for present and new owners.

We also had a good look at costs, and believe that £40m in combination with greater technical freedom will allow engineers to create Formula One cars even more interesting and exciting than today's cars.

Q:
Will the £40m cap for 2010 be changed for future years?

FIA:


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XHannahX

April 30, 2009 7:15 PM

In my opinion this is actually quite a good idea, however I think it will only work if it is compulsary. I mean what if one option turned out to be 100X better than the other leading to a split grid, only one half being able to win because of a huge advantage (either more money or more technical flexibility). I just don't like the idea of a two-tiered F1! :rolleyes: (Originally just) Hannah! :D :)



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