Salaries of Formula One drivers are subject to strict scrutiny

Formula One has already been cutting the team’s research and development costs drastically in order to win the global racing series. Now, tens of millions of dollars paid to superstar drivers such as Lewis Hamilton are under scrutiny.

The Paris-based regulator, the Federation Internationale de l’Automobile, is negotiating with Liberty Media’s F1, the sport’s teams and drivers on possible salary caps, and they will return to fascinating after the 2020 Olympics The Monaco Grand Prix. Cancelled due to the pandemic.

The FIA ​​told the Financial Times: “The details of any such regulations are still in the early stages of discussion, and no conclusions have been reached on the specific details or whether we will further pursue this conclusion.”

The discussion took place after the team’s spending ceiling was agreed last year and an agreement was reached to distribute revenue more evenly. One figure that the head of motorsport is discussing is that two drivers allocate $30 million a year, which poses a problem for top drivers like Hamilton, because Hamilton’s salary exceeds this amount.

Otmar Szafnauer, head of the team Aston Martin F1 TeamExpressing some form of cap “is logical because what you are doing is trying to limit the money you spend on it [racing] Performance, and the driver is an important part of performance”. He suggested that if the team cuts spending elsewhere, they should have more flexibility to pay drivers more.

Further tightening of financial regulations will mark the next step in F1’s transformation. Under the control of Liberty Media, the investment tool of American billionaire John Malone, the company acquired F1 for $8 billion in 2017.

Of course, when you put it on the table, the driver will have a strong negative reaction

This season is the first to be characterized by a newly agreed cost cap of $145 million, an agreement reached last year to limit the extent to which Mercedes, Red Bull and Ferrari can outperform their competitors in the pursuit of victory.

Hat and wider The Concord Agreement that controls how F1 distributes revenue After three years of fighting between Liberty Media and the team, the two sides reached an agreement in 2020. But this limit will be further reduced by US$10 million in the next two seasons, excluding salaries paid to drivers and the first three staff members, and attention has now shifted.

A person close to F1 said that the “driving reason” for continuing to focus on cost control is the “balance system, so [the] The best drivers may be attracted to other teams, while also reducing the total expenditure of F1. “

McLaren CEO Zach Brown said that the cap does not necessarily mean that the driver’s salary will drop. He said one option is to increase the fleet budget limit, such as an increase of $30 million, to include allowances for the driver’s contract. The fleet is free to sacrifice expenditure elsewhere to pay more to the driver. Similar measures can be taken for the salaries of senior staff.

“This is something that all the teams have discussed,” Brown said. “It is important to ensure that this sport does not return to its bad habits. Therefore, when you set some key sports-related elements outside the sports cap, it seems that our business has not yet been completed.”

In the past year, investors have invested cash in the sport, Williams Change hands and McLaren raises £185 million from MSP Sports Capital, The pandemic interrupted the 2020 season and hit the team’s revenue.

However, imposing restrictions on drivers’ salaries in the name of financial sustainability may threaten a new rift in F1, which is the result of years of negotiating broader cost caps. “Of course, when you put it on the table, it will have a strong negative reaction to the driver,” said Alejandro Agag, the founder of Formula E and Extreme E electric racing competitions.

The team must strike a balance between the need to cut costs and the risk of expelling celebrity drivers who attract sponsors, fans and the media.

“I’m not sure if it’s fair to take them [drivers] Damon Hill, who won the world championship with Williams in 1996, told the Financial Times. “The driver’s career is very short.”

Hamilton called F1 this week the “Billionaire Boys Club.” He urged the sport to become more inclusive and accessible, and he expressed concern about the salary cap.

The British superstar has been Mercedes’ seven consecutive championship titles, and he will negotiate a new contract with him. At the age of 36, he is in the latter part of his career.

A person close to Mercedes said that the upper limit is irrelevant, and Hamilton is still participating in the race, and Hamilton has won the combined record of seven F1 World Championships.

Although Mercedes supports the introduction of a soft top cover, Home team Toto Wolff (Toto Wolff) He said that any changes should be gradually introduced from 2024 to avoid losing the sport’s “superstar”.

The stakes for Red Bull are also high. It has confidence in 23-year-old Max Verstappen to win its first championship since 2013.

Red Bull said: “We understand the shared responsibility of reducing costs in all areas and are part of the discussion, but this is a decision that requires a balanced approach and agreement among all teams, but it has not yet been reached.” “We also need to consider. The athletes involved, because it directly affects them and the team.”

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Several veterans of the sport said that salary caps are complicated and difficult to monitor. He warned that there are many ways to circumvent these rules, such as requiring sponsors to pay drivers.

Any salary limit is also complicated, because team leaders usually have responsibilities that are beyond the F1 responsibilities of their organization, which means that salaries can be paid by different departments of the larger parent team. “It’s really difficult,” Agag said. “There are many ways around the salary cap.”