The purpose of the F1 cost cap is to encourage a much more level racing grid. The cost cap is about ensuring that even the smaller teams can remain competitive with the biggest ones. Some would argue that the cost cap doesn't go far enough there, although that is a story for another day. Here, we will discuss everything you need to know about the F1 cost cap. This includes the amount each team can spend and any exclusions.

So, how much is the F1 cost cap? For the 2022 season, the F1 cost cap is $140-million. The cost cap will fall to $135-million from the 2023 season onwards. The cost cap can increase if F1 decides to add extra races, e.g., anything outside of the 21 race calendar can lead to an increase of $1.1-million  

What Is The F1 Cost Cap?

Formula One is a sport that relies heavily on tech. While the driver is essential, a team's success will hinge heavily on the vehicle they have produced. The development of a car can cost money—lots of it. Without a cost cap, the wealthiest teams would be at an advantage. We know that this is the case with a cost cap, but it is nowhere near as much of a problem as it could be.

The purpose of the F1 cost cap is to place restrictions on teams. When it comes to developing their vehicles and running their teams, they aren't allowed to spend over a certain amount. The team's accounts will be regularly inspected to ensure that they adhere to the cost cap.

How Much Is The F1 Cost Cap?

The F1 cost cap is going through change. In 2021, the maximum amount that a team could spend was $145-million. For the 2022 season, this went down to $140-million. From 2023 onwards, the cap is going to be $135-million.

2021 was the first year the F1 cost cap was introduced, despite being under consideration for several years. This is why the cap has been reduced slowly over several years. It gives teams time to adjust their business. 

The head honchos at F1 believe that the F1 cost cap will increase competition on the track. It is no secret that, over the last few years, the winner's podium has been dominated by certain teams and drivers. The F1 hopes that by the 2023 season, we will start to see some of the smaller teams grabbing trophies and a more significant number of points. This can make F1 much more exciting, particularly nearer the end of the season. 

How Was The F1 Cost Cap Decided? 

The F1 put a lot of effort into ensuring the right cost cap.

In most cases, the team should be able to cover the cost cap from race winnings alone. If they can't cover the whole amount from their winnings, then they should be able to get pretty close. They will be able to make the rest up with sponsorship money. This ensures that every team will dedicate the same amount of cash to developing their vehicles and teams. We doubt that a single team on that grid will not have spent the cap.

F1 will likely adjust the cost cap as time goes on. They have only planned up to the 2023 season. If F1 viewership rises (or falls), the cap will be changed. 

What Does The F1 Cost Cap Exclude?

This is where we start to run into problems with the F1 cost cap.

The F1 cost cap covers vehicle development, and the vast majority of the crew needed to get that vehicle onto the track. It excludes the running of team buildings, e.g., electric and plumbing bills. However, it also excludes some rather important things.

For example, the cost cap does not include driver salaries. This means that we may not see the even playing field that the FIA wants. Considering the driver is incredibly important to a team's success on the grid, this seems like it could be a massive issue. Teams with better drivers will always perform better, even if everybody's vehicle is the same.

The cost cap also excludes the salaries of the three highest-paid people on the team (usually the CEOs and their direct underlings). This is likely to have less of an impact than with the drivers. We suppose the CEOs didn't want to lose money.

What Are The Punishments For Exceeding The F1 Cost Cap?

This is another problem. The FIA has yet to state what the punishments will be. Nobody knows if it will be a heavy fine or whether repeat offenders risk being kicked out of the Championship. Many people suspect that this is by design. If teams do not know how severe their punishment will be, they will be far less likely to overspend.

Many teams believe that this may result in larger and smaller teams allying. After all, larger teams are likely to hit their cost cap quickly. The smaller teams may have a sizeable amount left in their budget. Because of this, the larger team may ask the smaller team to help them with development (sharing ideas). Although, current indications are that this would be something that leads to punishment for both teams. It goes against the spirit of the cost cap. 

Conclusion

The F1 cost cap is a new concept. It was introduced in 2021. In the last season, the cost cap was fixed at $145-million. For the 2022 season, it is $140-million. For every season going forward, it is $135-million. It is likely that the FIA will be tinkering about with the cost cap once they start to receive team feedback. After all, the intention of the cost cap was to ensure that the teams in F1 started to be a bit more level. If certain teams believe that the cost cap is still giving an unfair advantage to the larger teams, then the FIA will come in and deal with the problem. 

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