Are Budget Caps Actually Helping Smaller Teams in F1?
The introduction of the budget cap in Formula 1 during the 2021 season marked a bold attempt by the FIA to level the playing field, especially for smaller teams. The cap, initially set at around US $145 million, and now at $135 million per season, aims to curb the stratospheric spending of top outfits like Mercedes AMG, Scuderia Ferrari, and Red Bull Racing. By restraining the ability of elite teams to throw resources at performance gains, it was hoped that smaller outfits such as Williams Racing or Haas might finally close the gap. Yet the question remains: are these caps genuinely helping the underdogs of the grid?
There are positive indicators. For instance, Haas’ former team principal, Guenther Steiner, observed that in seasons following the introduction of the budget cap, the number of teams scoring points had risen, signalling some reduction in the performance spread. Also, the budget cap has helped many teams remain in the sport. Steiner suggested some smaller teams may have been saved from folding thanks to the cap. In terms of sponsorship, the cap has prompted smaller teams to pursue more strategic deals and in-kind sponsorships, making them less reliant on just massive cash injections.
Despite its good intentions, the cost cap has also exposed lingering inequalities within the sport. While spending may be limited, smaller teams continue to face deep-rooted structural disadvantages. As Steiner noted, the bigger teams still hold an edge despite the $135 million equalizer, thanks to “their infrastructure, which is just so much more developed over decades of being in the sport.” Established outfits like Mercedes AMG and Scuderia Ferrari possess vast wind tunnels, state-of-the-art manufacturing facilities, advanced simulation suites, data-analysis systems, and decades of engineering expertise, resources that cannot be replicated overnight by smaller teams.
Additionally, loopholes and uneven effects appear. Some big teams have found clever ways to work around the cap. For instance, Red Bull, Aston Martin, and Mercedes AMG have all been found shifting staff or resources to side projects or affiliated companies that are not listed under the team's budget. For these reasons, the rules are still being tightened for 2026 to close these gaps. Another issue is that the cap mainly covers yearly operating costs, not major investments like building new factories, wind tunnels, or equipment. Bigger teams already made those investments years ago, and they can enjoy a long-term advantage. Newer or smaller teams cannot easily catch up because they are unable to afford the same facilities under current spending limits.
Overall, yes, the budget cap is helping smaller teams to an extent. It has slowed down runaway spending, made the sport more financially sustainable, and given the mid- and back-markers a better chance to compete. However, it is not a silver bullet. The legacy advantage of wealthy teams, resource disparities, and structural differences means that the cap’s full benefit will take time, and in some respects, may never fully level the field. Smaller teams still need to invest both wisely and patiently to close the gap.
