As part of the ongoing efforts to frame a new Concorde Agreement, with documents having been recently distributed to teams, talks have begun about where the cost cap will fit into the bigger picture.
The current system, which has a limit of $135 million and runs until 2026, appears to be working as well as possible despite the controversy over Red Bull’s spending breach in 2021.
However, there have been issues relating to the scope of it – with Williams having successfully led a push to increase capital expenditure limits for the less successful squads.
As part of the new 2026 Concorde Agreement discussions, there looks set to be a revised approach where, in exchange for giving teams an increased limit of $220 million, more will be included in the cost cap and the list of exemptions is reduced.
So, for example, some of the external capital expenditure limits will be removed and it pushed into the overall bigger cost cap, to give teams a greater opportunity to invest there if they fancy it.
However, Autosport has learned that one of the key annoyances that has emerged from the first 2026 cost cap proposal is a shifting of some previous exemptions relating to personnel into its realms.
In particular, the inclusion of maternity leave has caused some alarm amid concerns that, with teams being so laser-focused on ensuring no money is wasted that could go to car performance, it could discourage competitors from wanting to employ women.
That is because if staff did take paid maternity leave, then teams would have to hire replacements in the interim – which would trigger extra costs overall.
Currently, one of the key exemptions in F1’s financial regulations states: “All costs of Consideration provided to employees in respect of maternity leave, paternity leave, shared parental leave or adoption leave (together with associated employer’s social security contributions) in each case pursuant to a bona fide formal written policy that applies substantially equally to all employees of all Reporting Group Entities.”
Another issue being debated relates to employee entertainment, such as summer or Christmas parties. If this was brought under the cost cap, then teams could think twice about holding them - which would be a negative to hard-working staff.
Currently the regulations say teams are allowed to spend: “All costs Directly Attributable to entertainment provided for the benefit of all employees of all Reporting Group Entities on a substantially equal basis, subject to a maximum amount of US Dollars 1,000,000, adjusted (if applicable) for Indexation.”
It has been suggested that there is enough concern about the above exemptions being included in the cost cap that they will almost certainly be moved outside its scope as teams push for changes from the original proposal.
One source who was familiar with the matter reckoned that the end result would be a trimming back of the cost cap to around $215 million, with items like maternity leave and parties left outside it.
While not going into details, Mercedes boss Toto Wolff said in Imola last weekend that there were obvious points that needed changing from the proposals put forward.
"I think we got the basic terms, and how Formula 1 sees the next five-year term panning out,” he said.
“There is some good news in there, there are a few things in there we will discuss - pros and cons. And, of course, there will be some negotiations.
“But we want to achieve the same, to grow the sport. That means the bottom line grows and if the bottom line grows, the teams benefit and the sport [too]."
Red Bull boss Christian Horner added: “It is the usual discussion of the teams want more and the promoter wants more. But what we have works relatively well and I think the basics of it are all relatively sound.
“I think as the sport continues to develop and evolve and grow, there are areas that we can tune the agreement in. But I think the fundamental basis of it is going to be tuning rather than revolution.”
