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F1 introduced a budget cap at the start of the 2021 season to limit the spending of big teams like Mercedes, Red Bull, and Ferrari as compared to modest spending made by midfield teams.
Spending a lot more over the course of the season will lead to performance gains, which would make it harder for midfield teams to compete against them. In 2021, teams were allotted $145m in the budget cap which was reduced to $140m last season.
In 2023, F1 teams have to operate at $135m as per the budget cap regulations. However, as per RaceFans, the FIA recently gave a $1.2m allowance to all the teams due to a heavy schedule this season, stating:
“An increase of the cost cap adjustment for additional races above 21 was agreed from $1.2m to $1.8m per race on the basis that the trend of the additional races being added to the calendar has been towards fly-aways, which are more expensive."
The FIA also made some changes to the initial ruling on the budget caps, adding:
“Wording to allow easier access to the factories for the FIA auditing team, in order to police the adherence of the teams and [power unit] manufacturers to the financial regulations, and to the operational limitations of the technical and sporting regulations,"
“I am not sure the budget cap gives you constraints in the position where we are" - Mercedes F1 boss
Mercedes team principal Toto Wolff mentioned that despite wanting to change the concept of their 2023 challenger W14, the budget cap constraints won't allow them to do that.
Speaking to Autosport, he said:
“It is extremely difficult to catch up to such an advantage but it is what we have to do. We have no choice. I am not sure the budget cap gives you constraints in the position where we are but we do need to decide which direction we are going in and put all the resources behind it. We are still developing one car. The question is just which car.”
"We will tackle it straight away because when you look at where we were at the end of the season, where it seemed like we caught up a lot and it was just a matter of which circuits suited us and which not, it seems like we almost doubled if not tripled the gap to Red Bull,"
Earlier, Mercedes F1 would have just thrown money at the problem and fixed the issue to get more competitive. However, under the current budget cap, they will have to reassess their options.
