The difficulty of creating a level playing field for sporting competitions in a world where teams teams are sold for billions has been highlighted by recent developments in the English football Premier League.
Multiple champions Manchester City were found guilty of cheating the league’s Financial Fair Play rules using sham contracts to hide funding of over £830 million. The league is yet to confirm their penalty and the club intends to appeal.F1 introduced its equivalent rules, the budget cap, five years ago. No teams has committed a breach on anything like the same scale as that seen in the Premier League. When Red Bull was found to have overspent in the first year under the budget cap, but their £1.864m overspend amounts to just 0.2% of Manchester City’s breach. What’s more, Red Bull’s error was not found to be deliberate, unlike Manchester City’s.
Other breaches have occured, including in the recently-introduced engine cost cap. But these have usually been relatively minor procedural matters, nothing on the scale of Manchester City case, which spanned nine seasons.
But while F1’s budget cap appears to have been enforced effectively, is it having a positive effect on the championship?
Some of F1’s smaller teams said they would not have been able to continue without it. However others have expressed concerns the spending limit has created a “cost cap trap”.
Williams team principal James Vowles described the problem recently. “When we did the cost cap, this is way back [during] Covid, when we had a phone call about it, there were three key tasks that we wanted out of it,” he explained.
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“We wanted long-term financial sustainability, and I think in that goal, not just have we achieved it, but we’ve exceeded it. This business now has good investment that allows us to go on, and they’re businesses. They weren’t businesses before 2021 at all.
Vowles said the data shows the leading four teams are in a strong position under the cost cap. “If I take the last five years of the sport, the five that we’ve been in as cost cap right now, currently the top four teams score 83% of the points. Before that it was in the seventies, just to be clear about it.
“In other words, we have made the situation worse, where the top four are the top four and all the rest of us are fighting over, ballpark, 17% of the points.”
According to Vowles, the chasing teams can’t catch up because the cost cap effectively cements their disadvantage. “When you’re in a cost cap, I’m not spending money on the car. I’m spending millions, tens of millions actually, just on basic systems, so you just know where a part is in the factory. So that’s not going to the car, it’s not going to a front wing, it’s not going to an upgrade. It’s going on systems that I need to do just to do the very basics.
“So, we’re caught in a cost cap trap, because if I do anything short-term – and I always talk about investing in the future, now you understand why – if I do anything that’s about this year, I will slow myself down in the future, and I can’t do that.
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“We have a two-tier championship. That’s not me telling you that. That is just what is on the table right now in terms of points score.”
FIA president Mohammed Ben Sulayem indicated his dissatisfaction with the cost cap last year. “I’m looking at the cost cap and it’s just giving the FIA a headache,” he said. “So what’s the point of it? I don’t see the point.”
Does F1’s cost cap still have a point? Is it protecting the smaller teams from collapse or holding them back from competing with the front runners? And could what happened with Manchester City ever happen in F1?
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