As reported earlier this week, as part of a planned revamp of the cost cap – which is likely to be expanded to around $220 million – more elements will be brought under its remit that were previously exempt.
One of the considerations was for maternity leave and staff entertainment to be moved inside it – something that not all teams were happy with.
On the maternity leave aspect, it was felt it could have discouraged teams from hiring women.
Then, on the entertainment aspect, there were worries that this could serve to punish employees, as competitors would have to choose between staff fun or saving money for performance.
The FIA has now made it clear that, as expected, with teams not in favour of either of those elements falling inside the cost cap, they will definitely remain exempt from 2026.
The FIA’s head of single-seater financial regulations, Federico Lodi, explained: “During the discussion with teams, a range of exclusions, including maternity/paternity leave and entertainment, were considered for being included in the perimeter of the cost cap.
“This was in exchange for a correspondent increase of cost cap level that would have allowed teams to continue to fund maternity/paternity leave programs and entertainment events without any consequences for cost cap purposes.
“But during the last F1 Commission meeting, it was unanimously agreed that these costs should remain excluded from the perimeter of the cost cap.”
Discussions between teams and the FIA on the cost cap are ongoing, as the governing body works to finalise the regulations – both in terms of how much the cost cap will be and what falls inside and outside it.
One aspect that needs to be settled is where capital expenditure allowances fall, and how depreciation is dealt with.
Lodi added: “It’s currently being assessed an amendment to the treatment of these investments, with the expected inclusion of depreciation and amortization of fixed assets within the perimeter of the cost cap and the removal of the capital expenditure allowance.”
Why the cost cap is going up
The expansion of the cost cap from its current $135m up to an expected level of $215-220m could be interpreted by some as the FIA relaxing spending limits.
However, the change has nothing to do with teams being allowed to have more spending power at their disposal. Instead, the shift in the global figure is purely because it has been felt better to bring more elements inside the cost cap perimeter to help simplify things.
Lodi explained: “The FIA intention is to prevent an overall increase of cost cap level, while considering the change of the perimeter of the exclusions, the increased number of races and the inflation rate in the identification of the new cost cap level.
“All stakeholders have agreed that the existing regulatory framework should be simplified, while retaining its robustness.
“One of the levers identified to achieve simplification is to review the category of costs that may be excluded from the cost cap, with the aim of including more cost in the perimeter, in exchange for a correspondent reassessment of the overall cost cap level.”
