Since 2021, Formula 1 teams must adhere to financial regulations. The most important part of this is the budget cap, which stipulates that teams cannot spend more than $145 million this year. This excludes drivers’ salaries, key executives and things like marketing. That amount will decrease further in the coming years. On the motor level, the manufacturers can still spend money to their heart’s content on the development of their power unit, but that also seems to be coming to an end.
Auto, Motor und Sport reports that there would be broad agreement on a budget cap for engine suppliers, which may have to come into effect during the current engine cycle. Under the latest proposal – details of which have yet to be completed – current manufacturers would be allowed to spend up to $100 million a year until the new engine regulations are introduced. With the completely new engines, that amount would rise to 130 million dollars in 2026, before gradually declining again. However, it would still be unclear which expenditure does and does not fall under that budget ceiling.
There would also be discussions about possible concessions for new manufacturers. The Volkswagen Group in particular – with Audi, Porsche or both brands – is expressly interested in participating in F1 with the new engine formula. An important concession has already been made by the current manufacturers with the scrapping of the complex MGU-H, but more measures are being discussed to enable the new entrants to be competitive quickly. One of the ideas is to allow newcomers to spend an extra ten percent in the first year, which would mean that they would be allowed to spend $143 million by 2026. Another idea is to allocate extra hours on the test bench, although not all current manufacturers are eager to give such benefits to interested parties.
The arrival of a budget ceiling in the engine area could be an extra incentive for new entrants to give Formula 1 a definitive yes. Such a limitation means that spending can no longer run indefinitely and that could even mean that an F1 adventure could eventually become a profitable venture. There is a good chance that it will be clear in the relatively short term whether Audi, Porsche or both brands will make the step to Formula 1 in 2026. The FIA’s World Motor Sport Council aims to approve the new engine regulations on December 15 and it is likely that the VW Group will have made a decision by then.