Formula One teams ordered to make significant budget cuts as reality bites

The austere economic future for Formula One beyond Covid-19 was laid bare on Wednesday as teams were ordered to make savage cuts to their budgets in each of the next five seasons. While reigning world champions Mercedes have spent much as £300 million annually on protecting their dominance, this outlay will be cut to a maximum of £117 million next year, falling to £110 million by 2025.

With the limits finally ratified by the FIA, the global governing body, the years of Mercedes supremacy are likely to give way in 2021 to far closer competition. For McLaren, who face losing 70 F1 staff this week after shedding over a quarter of their entire workforce, the move represents a vital response to the sport’s harsh financial realities post-pandemic.

“Formula One wins,” said Zak Brown, McLaren’s chief executive. “This is a crucially important moment for our sport. F1 has been financially unsustainable for some time, and inaction would have risked its future. A uniform budget cap, along with a more even distribution of revenue among the teams, will ensure greater competition, and more people wanting to watch live and on TV.”

Meanwhile, motor racing will resume across the UK on July 4 behind closed doors, with events initially halved in number to reduce the demand on marshals. It brings precious relief to the country’s battered grass-roots motorsport industry, which has had to rely on loans and grants to survive since the suspension of all activities in mid-March.