Budgetcap has little effect for Racing Point and Haas next year

23-06-2020 15:28
by GPblog.com
Budgetcap has little effect for Racing Point and Haas next year

The corona pandemic has put several teams under financial pressure. Williams seems to be in the worst shape, but McLaren is not doing well either. Liberty Media already made an advance payment to the teams earlier this year to give them financial security, but it will have to be seen if it is enough. In that context, the question whether the budget cap really helps the small teams is also relevant.

Fifteen races

It is important for all parties involved that a minimum of fifteen races can be held, so that all television stations are contractually obliged to pay the full amount. Part of the proceeds will go to the teams, but that is by no means all that can be earned in Formula 1.

Other sources of income, such as entry fees and the Paddock Club are missing and so there are many more factors that disappear or generate reduced revenues. The expectation is that next year the income will go back to a normal level, when Formula 1 will experience a regular season.

In the end Liberty Media will - based on forecasts - earn 40 percent less than normal for this year. That also has an effect on the teams, who are expected to see their revenues decrease by 60 to 65 percent. The payment to the teams from Liberty Media is based on the expected income for the entire season and that is now considerably lower.

State aid

Auto, Motor und Sport writes that where a team that normally receives six million dollars a month in a season with 22 races, will now receive 3.6 million. In February 2021, the deficit will be corrected again, but that will depend on how it runs. So that is a problem for those teams that have little or no financial buffer, also because State aid is only available for a limited period of time.

"The state only pays for three months and only up to a maximum of £2,500 per employee. We have to cover the rest", notes AMuS from the mouth of Otmar Szafnauer of Racing Point. The downside of the medal is that the teams also spend less, so they will have to travel a lot less in 15 races. The development of new parts is also lower in terms of expenditure, as the time span is shorter.

In the end, the teams will have to take into account a minus of 20 percent compared to last year. That could be compensated with a full season in 2021, so the future perspective is pretty rosy. What also helps is that this year's car will last. Haas team boss Steiner: "We don't need to build a new car and we don't need as many parts as usual."

In conclusion, Szafnauer expects the total loss to reach ten percent in two years' time, due to limitations in developments, wind tunnel and other rules. The budget cap could also play a role in this, but that does not apply to Racing Point and Haas. Both Szafnauer and Steiner indicate at AMuS that they will not use their entire budget for 2021, which is already under the $145 million budget cap.

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