Update III | Wolff happy with inflation correction outcome: “Nobody is really happy, so that’s good”

The FIA ​​seems to have found a solution to the ongoing complaints about the consequences of inflation for Formula 1 teams. Red Bull Racing team boss Christian Horner in particular has regularly spoken out in recent weeks about the fact that various business processes are becoming more and more expensive. He stated that the teams would run into problems if they were not compensated for the high global price increase.

The FIA ​​heard the Red Bull chief’s story and is considering it, according to Auto, Motor und Sport a solution. For example, it is prepared to compensate all teams for the price increases, but this compensated amount is deducted from the prize money at the end of the year. Thus, the teams do not benefit, but it does allow them to more or less absolutely make use of that 140 million dollars (132 million euros, ed.), even after inflation.

According to the German medium, Red Bull was not the only team to ask the FIA ​​for help. Mercedes, Ferrari, McLaren, AlphaTauri and Aston Martin have already knocked on the door of the motorsport body to indicate that the current financial situation was not sustainable. Horner expects a record price increase of 11 percent for the United Kingdom this year.

Why the FIA ​​hasn’t intervened yet

Enough reason to offer the teams a little more financial freedom, you would think, but not according to the FIA ​​regulations. This is because these regulations state that inflation can only be compensated for if it is more than three percent over the G7 countries in September of the previous year. In September 2021, this average was 2.9 percent, partly due to low inflation in Japan. As a result, the FIA ​​refused to take any regulatory action.

The average is now 6.2 percent, which means that action will be taken before 2023 in any case. However, various teams already want to see changes in 2022 under the guise force majeureoutside influences that are beyond the control of the parties involved. Technically, this certainly includes high inflation.

The solution

The FIA’s solution now is to compensate all teams for inflation through prize money. There is talk of three million dollars (2.84 million euros, ed.) or three percent of the budget ceiling of 140 million, which comes down to 4.2 million dollars (3.98 million euros, ed.) per team. This money can then be spent without falling under the budget ceiling.

Alpine, Alfa Romeo, Williams and Haas were initially against compensation for inflation, but can live with the proposed solution. The reason for this is that they receive relatively less prize money, and therefore also lose relatively less prize money when this money is used to compensate the teams. The teams that will be hit hardest by this will be the teams at the top of the grid.

In this way it offers the teams that are not within that budget cap a relative advantage compared to the larger players. Günther Steiner, among others, has indicated that he is therefore satisfied with this solution. Formula 1 CEO Stefano Domenicali has yet to be persuaded, but it seems for the time being that a solution has been found to the inflation problem that all teams can live with.

Update 14.50h (08/07) | FIA grants Red Bull request: 3.1 percent inflation compensation

After weeks of lobbying and discussion, the time has finally come: the FIA ​​has intervened regarding the budget cap and concerns about global inflation. Christian Horner has said several times that the budget cap had to be raised to compensate for the skyrocketing inflation the teams are dealing with, and the FIA ​​has listened.

During summit meetings in Austria, a decision was made about the issue. The FIA ​​considers it reasonable to grant the request of, among others, Red Bull, and has decided that 3.1 percent will be added to the budget cap that the teams can use to compensate for high global inflation. This is about 4 million dollars, which is about 3.95 million euros at the current exchange rate.

Update II 19.40 (08/07) | Horner: ‘Adjustment for inflation is not big enough’

Red Bull Racing team principal Christian Horner believes the inflation correction introduced by the FIA ​​in Austria is not big enough. An agreement was reached to give the teams 3.1 percent more budget to compensate for the increasing rate of inflation worldwide. According to Horner, that 3.1 percent is not enough for the top teams to completely eliminate the problem.

‘Is it enough? Not if you compare it to the inflation we are dealing with today,” the team boss said. Motorsport† “For us it’s not enough and for the smaller teams it’s too much. So it’s a compromise. In the end we came to a consensus’, he emphasizes.

Horner indicated earlier this year that without an inflation adjustment it was no longer feasible for Red Bull to stay below the budget ceiling. The British medium asked him whether this was possible with the correction that had been made. ‘We will do everything we can’, the Englishman suggested.

Update III 10.50 am (10/07) | Wolff happy with inflation correction outcome: “Nobody is really happy, so that’s good”

Toto Wolff and Mattia Binotto are happy that a decision has finally been made on the inflation correction. The teams have talked a lot about the subject in recent months, but a choice was never made by the FIA. This one is there now, but it doesn’t satisfy everyone. According to Wolff, no one is happy with the compromise that has been found.

“Last time we talked a lot without deciding anything, so it’s good that at least a decision has now been made,” Binotto is quoted as saying by Motorsport.com† Wolff agrees with this view, but he is dissatisfied with the decision. “For the big teams it’s too little and for the small teams it’s too much. We are dealing with inflation, high energy prices and freight costs. Nobody is really happy with the decision, but that’s a good outcome.’

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