Audi to be granted increased budget cap on entering F1

Audi announced it would enter Formula 1 in 2022

Formula 1 is to adjust its budget cap from 2026 to offset the costs of teams that operate in countries with higher salary levels, BBC Sport has learned.

The move will help Audi’s attempts to become competitive when it enters F1 officially in just over a year’s time.

Audi has bought the Sauber team, who are based in Switzerland where salaries are in the range of 35-45% higher than in the UK or Italy - where the other nine teams have headquarters.

The decision has been under discussion for at least two years but was confirmed at the world motorsport council of governing body the FIA on Thursday.

Although it means Audi will operate to a higher headline budget-cap figure than rivals, the FIA believes the change will ensure that all teams are operating on a level playing field financially within the cap, given their specific circumstances.

The decision, confirmed by a number of high-level sources within F1, comes as part of a restructure of the budget cap aimed at streamlining its operation nearly four years after it was first introduced in 2021.

Among other changes, the cap will be lifted from $135m a year per team this year to $215m in 2026.

Although this appears as though the limit has been raised substantially, the net effect in real terms is to raise the cap only a small amount more than the level of inflation.

This is because a number of recalculations and rebalances have been made within the operation of the cap.

Among these are the the removal of the ability of UK-based teams to gain a tax rebate for research and development costs, and the effect of changes to exchange rates in the period since the cap was introduced in 2021.

The actual budget cap number to which Audi will operate compared to the other teams has not yet been calculated.

This will depend on the specific proportion of Audi’s budget that is spent on salaries, to which the higher cost of these in relation to those of other teams will be applied according to the FIA’s formula.

The basis for the calculations are figures from the Organisation for Economic Co-Operation and Development (OECD) on average salaries in countries around the world, as well as the salary figures of teams in F1.

The top three teams in F1 have an average salary level of £90,000, while the same number for Sauber, who are last in the world championship this season, is £125,000.

Salaries make up approximately 35-40% of a team’s budget, which means Sauber/Audi are in effect working to a lower budget cap than any other team.

Mattia Binotto, who was last month appointed as chief operating and chief technical officer of Audi, told BBC Sport that it would not be possible for Audi to be competitive in F1 without this adjustment.

He said that Audi had accepted that, as a consequence of changes in exchange rates being reflected in the 2026 recalculation, they would be at a $20m disadvantage.

The other nine teams are opposed to the budget-cap offset being introduced in 2026.

But they are powerless to be able to prevent it happening because none have signed up to their F1 contracts for 2026 and so there is no governance structure in place for them to affect the decision.

However, there will be further discussions on the issue in the next two months, after the teams have studied the figures supplied to them by the FIA, before a final decision is made at the next world council meeting in December.