The budget ceiling hurts the stables

The lowered budget cap of $140 million per team makes the task of development challenging for the paddock. These difficulties are even more significant for top teams such as Mercedes, whose expenses were exceeding $400 million per year. Furthermore, the United Kingdom, where Mercedes’ factory is located, is experiencing one of the highest inflation rates of the past thirty years.

The team principal and shareholder of Mercedes, Toto Wolff, has revealed the financial difficulties that the team is facing.

It has been very difficult to structure the company and the organization in a way that respects the budget limit of 140 million dollars. Moreover, in an environment where inflation is high, we are not only reducing by five million, we are in a situation where we cannot really increase costs and payroll. It’s extremely painful, explains Wolff.

« And at the same time, one must decide very carefully where to invest every dollar in research and development. Before, it was a bit easier because one could follow different paths in search of performance. Today, one must decide which one has the highest potential and follow it. It is a completely different way of operating for large teams. » Wolff explains.

Furthermore, the technical innovations of the upcoming season pose a significant challenge for Mercedes, Red Bull, and Ferrari.

Sometimes, we take a path for good. And the added pressure from the budget cap makes it very difficult to make changes at the core, the fundamentals of the car, because everything is planned, every development and its associated costs are accounted for. Therefore, we are much more restricted by the budget cap in our ability to implement the creative process on the car, concludes the team principal of Mercedes.

McLaren has also undergone a budget reorganization.

But the German team is not the only one to suffer from this budget cap. The McLaren team also encounters obstacles, as explained by Andreas Seidl, team principal of McLaren F1: “The big challenge in preparing for this new season was obviously to develop a new car under a completely new technical regulation, starting from scratch, in parallel with the presence of the first budget cap last year,” Seidl explains.

« Consequently, we had to question a lot of things. Many things that we were used to in terms of our approach and the way we produced the parts […], using less expensive materials when possible. » Andreas Seidl stated.

If there are any developments planned for McLaren in Bahrain, Lando Norris finds it nearly impossible to beat Mercedes or Red Bull without having their own wind tunnel.