The remuneration of Formula 1 drivers under scrutiny amid talks about the limit

Formula 1 is already reducing the amount teams can spend on developing their cars to win the world series of races. Now, the tens of millions of dollars paid to superstar pilots, like Lewis Hamilton, are under control.

The International Automobile Federation, the Paris-based regulator, is in talks over a possible salary cap with F1 owner Liberty Media, the sports teams and drivers, who will return to the glamorous Monaco Grand Prix after the 2020 race.cancelled due to the pandemic.

“The details of any such regulation are still in the very early stages of discussion and, at this time, no conclusions have been drawn on the specific details or whether we will continue to move forward,” the FIA ​​told the Financial Times.

Discussions come after a team spending limit was agreed last year, along with an agreement to distribute revenue more evenly. A figure discussed by race leaders is the distribution of $ 30 million between two drivers each year, which is an enigma for top riders like Hamilton, whose salary exceeds this amount.

Otmar Szafnauer, team manager at Aston Martin F1 team, said that some form of limit “makes logical sense because what you’re doing is trying to limit the money you spend [racing] performance and the driver are an important part of performance ”. He suggested teams should have the flexibility to pay drivers more if they reduce spending elsewhere.

A further tightening of financial regulations would mark the next step in the transformation of F1 under the ownership of Liberty Media, the investment vehicle of US billionaire John Malone, which acquired F1 for $ 8 billion in 2017.

Of course, when you put it on the table, drivers have a strong negative reaction

This season is the first to feature the recently agreed $ 145 million cost cap, which was agreed last year and aims to limit the extent to which Mercedes, Red Bull and Ferrari can outperform rivals in the search for the victory.

The cap and the widest Concorde Agreement governing the division of F1 revenues was agreed in 2020 after a three-year battle between Liberty Media and the teams. But the cap, which will be slashed by an additional $ 10 million over the next two seasons, excludes salaries paid to pilots and top three employees, where attention has now shifted.

One person close to F1 said the “main reason” for the continued focus on cost control was to “balance the system so that” [the] the best drivers could be attracted to other teams and at the same time reduce overhead in F1 ”.

Zak Brown, chief executive of McLaren Racing, said a limit would not necessarily mean drivers ’salaries would fall. One option, he said, would be to increase the team’s budget limit, for example, by $ 30 million, to include a bonus for driver contracts. Teams would be free to sacrifice spending elsewhere to pay drivers more. Similar measures could be applied to the salaries of senior staff.

“This is something all teams have been debating,” Brown said. “Making sure the sport doesn’t get back into its bad habits is important and so when you have a few key elements that are outside the sports cap and are still related to the sport, it seems like we have some issues. pending “.

Investors have invested money in the sport over the past year, with the Williams team changing hands and McLaren raises £ 185 million from MSP Sports Capital, as the pandemic disrupted the 2020 season and affected team revenues.

But imposing limits on drivers ’salaries in the name of financial sustainability threatens a new rift within F1 after years of negotiating the wider cost cap. “Of course, when this is put on the table, drivers have a strong negative reaction,” said Alejandro Agag, founder of the Formula E and Extreme E electric car racing competitions.

Teams need to balance the need to reduce costs with the risk of driving away star riders that attract sponsors, fans and the media.

“I am not sure if it is fair to take them [drivers] under a cost cap, “Damon Hill, who won the 1996 world championship with Williams, told FT.” A driver’s career is short. “

Hamilton, who this week described F1 as a “multimillion-dollar boys’ club” as he urged sport to be more inclusive and accessible, has expressed concern about the salary cap.

The British star, who has been at the center of Mercedes ‘seven consecutive constructors’ championships, is about to negotiate a new contract. At 36, he is in the final stages of his career.

A person close to Mercedes said a cap would not be relevant, while Hamilton, who has won a joint record in seven F1 world championships, is still running.

While Mercedes supports the introduction of a soft cover, main team Toto Wolff has said any changes should be introduced gradually from 2024 to avoid losing the “superstars” of the sport.

Bets are also high for Red Bull, who have relied on 23-year-old Max Verstappen to win their first championship since 2013.

“We understand the joint responsibility to reduce costs in all areas and are part of the discussions, but this is a decision that requires a balanced approach and agreement between all teams, which has not yet been reached,” Red said Bull. “We also need to consider the athletes involved, as this directly affects them, as well as the teams.”

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Wage limits are complex and difficult to control, according to several important sports figures, who warned that there were many ways to circumvent the rules, such as asking sponsors to cover the driver’s salaries.

Any salary cap is also tricky because team managers often have responsibilities beyond the F1 clothes of their organizations, meaning they can be paid by different parts of a larger core group. “It’s really hard,” Agag said. “There are so many ways to limit the salary cap.”