A final offer to introduce a much-reduced budget cap of $145m at the start of 2021 has been formally proposed to F1 teams with a sliding scale that would reduce it to $130m over the next three years.

The much-discussed budget cap has been the bedrock of F1’s new commercial agreement to be put in place at the end of this year, though it was originally set to begin at a maximum of $175m.

However, this has been revised down to $145m as a direct consequence of the coronavirus crisis, which could put a number of the smaller teams at risk of collapse without drastic action.

As such, the agreement now proposes the $145m cap for 2021, reducing to $140m in 2022 – when the new technical regulations come into force - and then down to $135m for 2023-2025.

Teams now have the option of providing feedback, which will determine whether there will need to be a meeting of the team bosses or whether it could go to a vote.

The new commercial agreement is primarily designed to help cut overall costs to teams but negotiations have often faltered on the methods in which to make it fairer. The new deal includes a more even distribution of the prize money revenue, allowing for aerodynamic research and the value of supplying customer parts.

In terms of aerodynamic research, teams will be allowed a sliding scale of wind-tunnel time and data depending on where they finished in the previous championship. By establishing a benchmark, top three teams will get only 70% of that permitted aerodynamic research, with the fourth-place team having 80%, followed by increments of 5% (fifth place equals 85% and so on). The team that finished tenth overall are allowed 110% of that total, allowing them more aerodynamic research.

The FIA will also value customer parts from manufacturers, such as gearboxes and suspension, and have their defined value taken off a team’s budget cap figure.

Could Ferrari block the new rules?

Ferrari has long been a vocal opponent of any budget cap even at 175$m so the new reduced figure is unlikely to go down well. The Italian marque argues it would lead to redundancies in its fold.

The team has previously retained a veto but a ‘safeguard clause’ has been added into the International Sporting Code in view of the ‘unparalleled COVID-19 crisis’ to make quicker decisions.

This means it needs only five teams to agree to the proposals for them to pass, even if F1 is pushing to have a unanimous agreement.

It remains to be seen, however, whether the new rules will go far enough for some teams with McLaren arguing the cap should be as low as $100m.

As it stands, F1 is hoping to get back to racing on July 3-5 with the Austrian Grand Prix provided it can meet strict criteria to assure the safety of team members. It has proposed to create a ‘biosphere environment’ with regular testing to ensure it goes ahead safely.