Adrian Newey has raised concerns regarding an unintended consequence stemming from Formula 1’s cost cap. Implemented to rein in expenses and foster parity among the 10 teams, the 2021 season saw the introduction of a budget limit, allotting $145 million for each team’s expenditure.
Exceptions to this limit include marketing expenses and the salaries of the three highest earners within a team. Moreover, the cap is adjusted annually to account for inflation and external factors like global energy costs.
To comply with the cost cap, larger teams such as Mercedes and Red Bull, where Newey serves as Chief Technical Officer, were compelled to downsize their workforce or transition personnel away from the F1 program.
The FIA responded to potential loopholes by issuing TD45, aimed at preventing F1 teams from capitalizing on the work conducted by their applied engineering divisions. The anticipated leveling of the playing field among teams has not materialized as expected.
Despite efforts, Newey and his design team have engineered cars that clinched victory in 41 out of 48 ground effects races since the implementation of new technical regulations at the outset of 2022. Nevertheless, the seasoned CTO believes that the cost cap has had adverse ramifications on F1 itself.
“I think the hidden danger of the cost cap, which none of us probably really thought about when it first came in, is that Formula 1 used to be the best-paid engineering discipline in the world,” Newey stated.
“Therefore, we would be able to hire and attract from universities, the brightest young graduates, and now with the cost cap, with the amount of inflation and the cost cap not rising with inflation, that is no longer the case.
“At the same time, it is a double-edged sword as we also have start-up tech companies offering very high salaries and so now when we go to the universities, trying to attract graduates, we’re no longer the best.
“Equally with our existing staff, we are losing people to tech companies and that is a real problem because it makes it difficult for us, as an industry, and not just our team, to attract the best engineers in the world.
“We are then trying to attract them on the basis of passion rather than purely because of the best salaries.”
At present, there are no significant alterations on the horizon for the structure of the cost cap, although ongoing communication and discussions persist between the teams and the FIA.
It is worth noting that the stability provided by the cap has facilitated a remarkable surge in the value of teams, positioning most on a trajectory toward profitability.
