FIA reveal 'concessions' to teams ahead of major F1 rule tweak

The FIA's single-seater financial regulations director has explained how the governing body made "concessions" to F1 teams, with the cost cap set to be increased in 2026.

First introduced in 2021, F1 team have been limited in what they can spend, starting out at $145 million USD, and gradually decreasing year-on-year.

For 2023-2025, the limit has stood at $135 million, although this has been adjusted to reflect global inflation, with the current 10 teams based in three countries: the United Kingdom, which uses Pound Sterling, and Italy and Switzerland, which use the Euro with prize money paid in US dollars.

However, for 2026, F1's new era will be met with a significant rise in the cost cap up to $215 million USD (£159.6 million) to reflect the new regulations, as well as taking into account other associated costs. 

On top of this, Audi, entering F1 for the first time, is set to receive a higher cap as salaries in Switzerland are around 35-45% higher than in the UK and Italy.

As part of the 2026 cost cap rules, exceptions such as driver salaries and those of the three-highest earners in the team are set to continue to be in place, as financial regulations director Federico Lodi explained how the FIA has acted, but how the actual effect on teams will be minimal. 

"There have been some adjustments we have been taking into account with setting the cost cap, based on the [worldwide] inflation since 2021, with the accumulated effect being factored into the cost cap level," Lodi told RacingNews365 in an exclusive interview.

"So the level of $215 million USD (£159.6 million GBP) that was set for the team from 2026 is basically the result of two things. 

"The starting level is the cost cap of today, there is the effect of the accumulated inflation, plus there is the effect of the costs which are currently outside of the perimeter that we have brought in. 

"So all in all, there is not really an increase of capital, it is just a different way to perform the calculation - and that was the main reason behind the decision to introduce a higher cost cap level. 

"It will not consist of higher spending for the teams, because they are simply already incurring the costs, but they simply bring it into the cap, and so the cost cap needs to be higher.

"Framing the rules is quite complicated, drafting them is not an easy task because you have 10, now 11 [with Cadillac] different teams with different agendas, perspectives and priorities. 

"I think it is fair to say that if we had the opportunity to write the regulations by ourselves, probably the regulations would appear slightly different, but obviously, we need to have a consensus.

"So we need to make concessions, and that is why we've ended up with having 20-25 exclusions rather than just five or six, which would be our preference.

"It is complicated, but that is the challenge of having all the teams support a proposal that we make, so there is a lot of work behind the scenes to discuss and convince them, and that takes time."

The article continues below. 

A potential criticism

One criticism of the cost cap has been that the rank-and-file of F1 teams are the personnel to lose out now teams are restricted in their budgets.

However, Lodi firmly believes that the budget is "self-policing" as it places no burdens on what or where teams can spend their money. 

"One of the guiding principles we used in the drafting of the regulations is that we did not want to introduce limitations for specific types of costs, so the teams are free to spend within the cap.

"They have a pot of $215 million, it is their choice if they want to put a lot of resources into the mechanics or the junior employees because they believe that that is more relevant than spending money in another area. 

"But if we take a holistic approach, things should balance by themselves, because if you start putting too much pressure on people, you start to lose them, so it is self-policing. It is a free choice of teams where they decide to spend the money.