Formula 1 set to introduce driver salary cap
By Mat Coch
Thursday 29th October, 2020 - 12:19pm
Formula 1 teams have agreed in principle to introduce a cap on driver’s salaries from 2023.
A meeting between team bosses on Monday saw a range of topics discussed, with one of the topics the introduction of a USD 30 million (AUD 42.5 million) cap for drivers.
That concept was agreed in principle by all 10 teams and is now set to be ratified by the FIA World Motorsport Council in December.
Contracts agreed prior to the cap’s introduction date but extend beyond it would be honoured.
Should a team not spend the full USD 30 million on drivers, that money cannot be used as part of the USD 145 million racing cost cap.
F1 will introduce a cost cap into the sport for the first time in its history next year.
A glide path will see that reduce to USD 130 million in coming seasons, a figure less than half of what is currently being spent by leading operations such as Mercedes.
There are, however, exceptions to that figure with marketing and hospitality not falling under the cost cap.
Driver and key staff also do not fall underneath it, meaning the actual spend by teams could be far higher.
It’s understood a provision will exist for teams to spend above the driver salary cap, though the difference would come out of their racing budget.
The impact of a driver salary cap would be felt most at the top teams, with Mercedes believed to foot the biggest bill for its pairing of Lewis Hamilton and Valtteri Bottas.
“The salary cap is something that we have supported,” said Mercedes boss Toto Wolff in July.
“I believe similar to the leagues in the US, if you cap the team at $145m with a downward slope, you need at a certain stage to also cap high salaries.
“We have said we don’t want to lose the superstars out of this sport, so it needs to be a gradual introduction.
“I think it would be good for the sport. They need to be inspirational, the drivers, and as you can see in the US, the top football players and the top basketball players are still very inspirational.
“I think high salaries are what they deserve, because they are global superstars and they are the best of their league.”
Currencies were converted at the rate of 1:1.42