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Formula 1's cost-cutting changes, including budget cap, approved

Reduced cost-cap from 2021 onwards and new 'aero handicap' system among wide-ranging new rules; "F1 wins today," say McLaren

F1's big and wide-ranging package of cost-cutting measures - headlined by a tighter budget cap - have been approved to make the sport more sustainable and competitive into the future.

Rubber stamped by the World Motor Sport council on Wednesday, F1 will introduce a $145m budget cap from next season and - for the first time - an aero development handicap system for the more successful teams.

"Formula 1 wins today," said McLaren's Zak Brown. "This is a crucially important moment for our sport.

"F1 has been financially unsustainable for some time, and inaction would have risked the future of F1 and its participants, who are to be commended for resolving this issue collectively and determinedly."

The main changes in the regulations are:

  • A reduction of the cost-cap level to $145M for 2021, $140M for 2022 and $135M for 2023-2025, based on a 21-race season
  • An 'aero handicap' for 2021, with teams limited to how much aerodynamic development they can do based on where they finish in the championship
  • A new token system for 2021 so that teams can only make a limited number of modifications to their 2020 cars for next season

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Ted Kravitz explains F1’s incoming new rules to cut costs and help level the playing field, rounds up the latest news from every team, and provides an update on the 2021 driver market

F1 had previously agreed to install the sport's first-ever budget cap from next year with a limit of $175m, as part of a wider package of technical, sporting and financial rule changes designed to improve the spectacle and give more teams a chance of success.

But the coronavirus crisis, which has seen a number of British-based outfits place sections of their staff on furlough and resulted in F1's factory shutdown period being brought forward and extended, has accelerated the need for F1 to slash costs.

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The grid's leading teams are currently spending in excess of $200m per season.

Renault, who have also long pushed for cost reductions, said in a statement that the changes "constitute responsible and appropriate responses to the short and long term challenges of Formula 1".

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What else is changing?

Having previously agreed to defer the sport's car-design overhaul by 12 months to 2022 and continue with the still-unraced 2020 cars for next year, F1's teams and stakeholders have also agreed immediate measures for when this season does begin.

Power unit upgrades will be limited, with test bench use at factories restricted, while all teams will have to adhere to reduced aerodynamic development time.

The FIA also confirmed that a "large list of components" over the 2020-2021 off-season - including the chassis and gearbox - will be frozen, with the token system to only allow for limited modifications.

For 2021, changes to the plan-view trim and simplification of the floor ahead of the rear tyres will be enforced "in order to moderate the increase of downforce" expected between this season and next.

With the early European events of the new season set to take place without fans in attendance, starting with the planned Austrian GP on July 5, F1's Sporting Regulations now differentiate and include provisions for 'open' and 'closed' events.

What will the budget cap mean for teams?

While the budget cap will still preclude some big-ticket items, such as drivers' salaries, the introduction of the $145m limit for team performance for 2021 and subsequent sliding scale is set to prompt significant and long-lasting changes to aspects of teams' operations.

McLaren are expected to make around 70 redundancies in their F1 team as part of wider cost-cutting measures at the Woking group in preparation for the cap and Andreas Seidl, their team principal, said: "It has been clear to everyone for some time that a budget cap would be applied and we pushed for a lower limit to support a financially sustainable sport.

"It is a big challenge ahead of us.

"Adjusting the way we work and right-sizing the team to this new cap over the next months is a massive and painful task and, highlighted by our news earlier this week, will sadly mean losing team members, but our aim is to be the best-sized and most efficient team in the future."

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