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F1 approves $145m team budget cap as returning Dutch GP set for 2021

McLaren's Carlos Sainz leads Daniel Ricciardo of Renault during the 2019 Abu Dhabi GP (by Clive Mason/Getty Images)

The International Automobile Federation (FIA) has approved a package of cost-cutting measures for Formula 1 that will include a $145m (€131.7m) team budget cap from the 2021 season, while the Dutch Grand Prix, scheduled to return for the 2020 campaign, has been postponed by a year.

The FIA’s World Motor Sport Council (WMSC) has approved by e-vote further changes to the sporting, technical and financial regulations governing F1, primarily due to the ongoing need to reduce costs and safeguard the motor-racing championship in light of the COVID-19 pandemic.

Following the initial agreement to postpone the 2021 technical regulations to 2022, which was approved on March 30, additional amendments to the sporting, technical and financial regulations for 2020, 2021 and 2022 yesterday (Wednesday) received unanimous support amongst the teams and were ratified by the World Council.

The headline element of these regulations is the cost cap, which is designed to encourage greater financial sustainability in the sport while also levelling the playing field between the ‘big three’ teams of Mercedes, Ferrari and Red Bull Racing and the other seven competitors.

With some teams currently spending in excess of $200m per year, this will be limited to $145m for 2021, $140m for 2022 and $135m for 2023-2025, based on a 21-race season.

Earlier this month, Formula 1’s managing director of motorsport, Ross Brawn, said an agreement was close to being reached that would see the proposed team budget cap set at $145m, a reduction of $30m from the originally intended figure.

In October, F1 and the FIA first revealed the set of new regulations that sought to overhaul the championship from the 2021 season, headlined by the introduction of the sport’s first cost cap. The regulations were two years in the making and had been the subject of fierce debate in the F1 paddock. They were ratified by the WMSC and broadly sought to promote closer racing, more balanced competition and ensure greater economic and sporting sustainability.

The cost cap had been set at $175m per year, covering a team’s expenditure which relates directly to the race car’s performance. Last month, teams agreed to reduce the 2021 cap to $150m, but some called for it to scale back even further to $125m.

Reacting to final approval of the cost cap, McLaren Racing chief executive Zak Brown said: “Formula One wins today. This is a crucially important moment for our sport. F1 has been financially unsustainable for some time, and inaction would have risked the future of F1 and its participants.

“A uniform budget cap, in concert with more even distribution of revenue among the teams, will ensure greater competition and more people wanting to watch live and on TV, driving more sustained revenues to underpin the long-term financial health of the teams and the sport.”

Meanwhile, organisers of the Dutch Grand Prix have postponed the race’s return to the F1 calendar to 2021 after deciding that they would prefer fans to be in attendance.

The Zandvoort circuit was scheduled to return F1 to the Netherlands for the first time since 1985, but the May 3 race date had already been postponed due to Covid-19. Last week, Zandvoort wasn’t included in Formula 1’s reported plans for an eight-race European leg to commence its 2020 season.

Today’s news means four races on the 2020 calendar have now been cancelled outright – the Dutch GP joining races in Australia, Monaco and France.

Dutch Grand Prix sports director Jan Lammers said in a statement: “We were completely ready for this first race and we still are.

“We and Formula 1 have investigated the potential to hold a rescheduled race this year without spectators, but we would like to celebrate this moment, the return of Formula One in Zandvoort, together with our racing fans in the Netherlands.

“We ask everyone to be patient. I had to look forward to it for 35 years, so I can wait another year.”