FIA approves cost cap reduction amid F1 rule changes

The FIA World Motorsport Council (WMSC) has rubber stamped a suite of sporting, technical, and financial regulations changes for Formula 1.

Key among the approved changes is the lowering of the cost cap set to be introduced next year.

That will now come in at USD 145 million before reduced to USD 140 million for the following season, and USD 135 million for 2023-2025.

It had originally been planed for a USD $175 million though teams agreed to reduce that figure before being signed off by the WMSC.

Changes to a number of exceptions and additions have also been made, covering items such as staff entertainment, sick and maternity/paternity leave.

Also approved was the freezing of a number of technical items in line with the sport’s decision to carry over 2020 spec cars into 2021.

Sweeping technical regulations set to come into force next year were delayed in March in an effort to reduce costs and safeguard F1 amid the COVID-19 crisis.

Part of what the WMSC has approved includes a freeze on a large list of components between 2020 and 2021, including chassis, gearbox, and others.

As previously reported, changes to regulations surrounding the floor of the car in an effort to moderate the increase of downforce between 2020 and 2021 have also been made.

Minimum weight has also increased marginally from 746 kilograms to 749.

On the sporting front provisions for tyre testing to occur in Practice 2 should it be necessary, and the extended use of the P140 wet tyre should opening practice be rain affected.

Aerodynamic testing has been reduced while restrictions have been placed on bench testing of power units in another effort to minimise costs.

The 2020 Formula 1 season is set to get underway with the Austrian Grand Prix on July 2-4.

Full details of the approved rules changes

Technical Regulations:

• Freezing of a large list of components between 2020 and 2021. The list includes the chassis, gearbox, a number of mechanical components and impact structures. A token system has been devised to permit a very limited number of modifications in accordance to the competitors’ specific needs.
• From 2020, limitations to Power Unit upgrades.
• For 2021, changes to the plan-view trim and simplification of the floor ahead of the rear tyres in order to moderate the increase of downforce between 2020 and 2021.
• For 2021, minimum mass increase to 749kg.

Sporting Regulations:

• For 2020, provisions for “closed” and “open” events and the relevant regulatory structure for each (e.g. personnel at the paddock), depending on whether such events permit spectators.
• For 2020, various updates relating to tyre regulations, with provisions to allow for tyre testing during Free Practice 2 should it be necessary to approve a new tyre specification by Pirelli and the extended use of P140 tyres in the case of a wet Free Practice 1 session.
• For 2020, a reduction in aerodynamic testing (ATR) and the introduction of Power Unit test bench restrictions for cost reasons.
• For 2021, a further reduction in aerodynamic testing, and the introduction of a bias between championship position and ATR limitations. The ATR bias will be linear between P1 and P10.
• For 2022, a number of key specific aspects of the regulations have been set out, including curfews, restricted number components (RNCs), scrutineering, and parc fermé prescriptions. These regulations work as a package together with the 2022 Technical Regulations that were approved by the World Council on 30 March 2020 and will be part of an ongoing review and refinement process throughout 2020 and 2021.

2021 Financial Regulations:

• Reduction of the Cost Cap level to $145M for 2021, $140M for 2022 and $135M for 2023-2025, based on a 21-Competition season.
• The following amendments/additions will be made to the exclusions currently provided for in the Financial Regulations:

1. Increase of Year-End Bonus exclusion cap for exceptional sporting results from $10M to $12M and Social Charges for Year-End Bonus.
2. Threshold for calculation of exclusion for Social Charges on Salary paid to staff lowered from 15% to 13.8%.
3. Costs incurred for staff entertainment (capped at $1M).
4. Wellbeing of employees: exclusion of costs incurred for medical programs (e.g. vaccination, eye tests, hearing tests) made available to all relevant employees.
5. Sustainability costs incurred for environmental initiatives.
6. Maternity/paternity/shared parental/adoption leave, exclusion for Salary costs.
7. Sick leave and long term sick leave: exclusion for Salary costs.
8. Projects undertaken to assist the FIA.

• Concurrently with these regulation changes, the Notional Values for Transferable Components (TRCs) have been defined by the FIA for 2021, which is of increased importance considering the reduced Cost Cap level. It has been reaffirmed that the concept of the Notional Values (subject to their correct and fair setting), achieves the following:

1. Enables smaller teams to avoid the necessity to establish and maintain a capability to design, develop and manufacture the parts that have been designated as TRCs (Transferable Components)
2. Prevents project “flipping” (a small team supplying a big one to circumvent the Cost Cap restrictions).
3. Enables small teams to make genuine savings.