Formula E

"If we can't find a solution, we should leave it" - Formula E debates cost cap details for 2024/25 season

Tobias Bluhm

Tobias Bluhm

Since the beginning of the 2023 Formula E season, the annual spending allowance for teams has been limited. Each squad is only permitted to spend a fixed amount of money per year on its on-track operations - regardless of whether it's a top team or a backmarker. Not yet included in the budget are the salaries for their drivers. This was set to change for the 2024/25 season but in the paddock, concern is spreading about how the new rules could be enforced.

After the first half of the 2023 season, the feedback concerning Formula E's new cost cap has been largely positive. With few exceptions, all teams' spending this year is capped at 10.3 million euros. This includes almost all investments into the teams' trackside operations, which includes, for example, travel costs, expenses for salaries, entry fees or spare parts. "It was quite a challenge! Mainly, because the fixed costs make up a large proportion of our expenses," McLaren team principal Ian James tells 'e-Formula.news'.

Overview: The annual Gen3 financial framework for Formula E manufacturers & teams

Season (Year) Cost Cap Teams Cost Cap Manufacturers
Season 8 (2022) unlimited unlimited
Season 9 (2023) €10.3 million €22.5 million
Season 10 (2023/24) €13 million * €25 million *
Season 11 (2024/25)
 
€15 million *
 
TBA *
 

* in case of 12 events per season. Reduction by €250,000 per removed weekend possible.

"There are only a few levers we can pull for the rest of the year to save money. But at the same time, we have to remain flexible with our planning because, for example, expenses for things like crash damage are also capped - right now there are no exceptions for that," said James. "So the two big things we can adjust are just the staff structure and the travel budget."

Taking the metro to the track

The need to save money presented challenges this year, and not just for McLaren. During the Berlin E-Prix weekend, Porsche traveled by taking the underground metro train from the team hotel to the race track. Officially, they did so because the public transportation connection was convenient and uncomplicated. The former Tempelhof Airport is indeed excellently connected to Berlin's public transport network. But the fact that the team saved money by buying metro tickets instead of renting private cab and bus shuttles was probably neither accidental nor undesirable.

Other teams also tried to travel to events as cost-effectively as possible during the first part of the 2023 European season. For a few team employees, this meant: Road trips in minibuses and vans instead of short-haul flights. A positive side effect that should be entirely in line with the electric series' ethos: The climate footprint of the racing teams is also likely to improve as a result.

Plans for driver salary cap from 2024/25: "Implementation will be difficult"

Nonetheless, concern is already spreading among some racing teams that the cost belt could be tightened even further next year. That's because one crucial expense is not to be capped until the eleventh Formula E season (2024/25): driver salaries.

Until now, the FIA has refrained from imposing a salary cap on drivers so that teams do not have to change existing contracts with their drivers or even part with their talents. "I'm a supporter of the idea," James asserts regarding a driver salary cap in Formula E, "but my fear is that it will be difficult to implement."

"It can't be complex and convoluted, and it has to remain monitorable by the FIA. But that could be challenging because many Formula E drivers have programs in other series - and often for the same manufacturer. How this will be sorted out in terms of costs is currently unclear and is being worked out by a working group. My hope is that they will find a solution to this. We need to agree on a way forward that is robust, enforceable and not too complex."

Drivers with multiple programs for same manufacturers at an advantage?

Specifically, James fears that drivers who compete for either of the Stellantis Group teams in Formula E (DS, Maserati), for example, could easily earn larger portions of their salaries for corporate sisters in other series - for example, with Peugeot in WEC, where there's no salary cap for the time being.

To maintain their current level of income, currently said to be around one million euros per season on average in Formula E, they could thus earn just €300,000 in Formula E, with the remaining €700,000 accounted for by the World Endurance Championship. The same applies to the drivers of Porsche/Andretti or ABT, who (could) also earn parts of their money in IMSA/WEC and DTM respectively.

Brain drain as real threat to Formula E

How realistic James' fear is is difficult to judge. 'e-Formula.news' also heard opposing opinions in the Monaco paddock from team bosses who did not see parallel programs for their drivers as a threat to the introduction of the salary cap. "But if it comes down to," says James, "drivers earning 90 percent of their salary in the WEC and 10 percent in Formula E, the cost cap doesn't work. If you can't regulate that, you shouldn't introduce it."

The Brit also acknowledges the danger of a brain drain in the championship. "We have to be careful that we don't lose the phenomenal talent we currently have - and that includes engineers, mechanics or communications staff as well as drivers - to other series. With the current budget cap, it's regulated well. But how we're going to do it with the drivers from Season 11 onwards is still unclear. Let's wait and see what the final set of rules for this looks like."

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