F1 teams get indexed budget cap increase to stem inflation

Formula One Management, the FIA and the sport's teams have agreed on a marginal increase of this year's $140 million budget cap to help stem inflation pressures.

This year's cost cap decreased from $145 million in 2021 to $140 million, but rampant inflation, higher energy and freight costs and global supply chain issues have put a significant financial burden on all teams this season.

F1's top teams all warned that it would be near impossible for them to not overrun this year's $140 million threshold due to global inflation pressures.

Despite F1's smaller outfits operating under the cost cap, the bigger teams urged the FIA to take action, which it has done along with F1 in a meeting on Friday in Austria of the Formula 1 Commission.

The governing body and FOM issued a statement in which it revealed an indexation measure supported by nine of the sport's ten teams that will apply to all outfits to help deal with inflation pressures.

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"Following consultation with the Financial Advisory Committee over recent weeks, the FIA brought a proposals to the Commission that was approved by the required majority with support from the FIA, Formula 1 and nine of the teams," the statement read.

"The proposal recognises the unexpected increase of costs incurred by teams in 2022 thereby permitting indexation at a limited rate of 3.1% (which takes into account the original 3% inflation threshold already set out in the regulations) and permitting compounding of this rate as from 2023.

"This will preserve the long-term integrity of the financial regulations."

Red Bull, Ferrari and McLaren had all warned of their inability to meet this year's cost limit, while Alfa Romeo team boss Fred Vasseur was opposed to lifting the budget cap, insisting the bigger teams simply "switch off their wind tunnels" and rein in their costs.

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