With the cost of living crisis looming, is it fair to cap drivers salaries?

https://the-race.com...-young-drivers/

I mean this is absurd, top driver salaries are insane. More of this money should be going to mechanics etc.

Trust me, there will be no shortage of drivers coming through even if they cap it to a million.

In work I use USD for much of my funds, and we are saving so much on salaries in GBP that it has negated the cost of all other expenses. Surely with F1 teams based in the UK and Europe, paying in GBP and EUR, the salaries aren't really being affected that much given the cost cap is in USD? 

Edited by JimmyClark, 10 June 2022 - 10:16.

I dont have much to say about whether or not a cap on driver salaries makes sense (I personally feel that these millions are way too much, but that's the market at work I guess), but to use the cost of living as an argument with these types of salaries seems a bit silly. 

https://the-race.com...-young-drivers/

 

I mean this is absurd, top driver salaries are insane. More of this money should be going to mechanics etc.

Teams are not going to pay mechanics more just because they don't have to pay drivers as much anymore. Whatever they save, they're going to spend it in a way that profits their companies the most and paying people more than they demand is not that.

And just because drivers don't need to earn as much as they do, I see no reason why someone would limit how much they can earn. It's private money.

I dont have much to say about whether or not a cap on driver salaries makes sense (I personally feel that these millions are way too much, but that's the market at work I guess), but to use the cost of living as an argument with these types of salaries seems a bit silly. 

Really? You think?

Teams are not going to pay mechanics more just because they don't have to pay drivers as much anymore. Whatever they save, they're going to spend it in a way that profits their companies the most and paying people more than they demand is not that.

 

And just because drivers don't need to earn as much as they do, I see no reason why someone would limit how much they can earn. It's private money.

Well the reason would be that F1 is desperately trying to reduce costs.

Really? You think?

It's friday, it's easy to miss sarcasm after an exhausting week!

Well the reason would be that F1 is desperately trying to reduce costs.

I'm pretty sure the driver salary cap would not be so strict that it would make an impactful difference to the lowest spending teams and the highest spending teams can cope with the situation in a multitude of ways.

In work I use USD for much of my funds, and we are saving so much on salaries in GBP that it has negated the cost of all other expenses. Surely with F1 teams based in the UK and Europe, paying in GBP and EUR, the salaries aren't really being affected that much given the cost cap is in USD? 

Steiner actually pointed this out recently concerning certain teams screaming about raising the cap.

In a free capitalist market the drivers are paid what the teams are willing to pay them, if a team find $50 million per year is fine for the services of Verstappen, Hamilton or Zhou then good on those drivers, I can see no reason for the team cost cap having any influence on what the drivers are making.

If the teams find the salaries to be too high, it is an easy fix, don't pay those high salaries.

Edit: In as much that the payments to the driver companies have the appearance of being salaries, though they are billed from companies selling their services as Rinehart point out above.

Edited by KWSN - DSM, 10 June 2022 - 12:16.

In a free capitalist market the drivers are paid what the teams are willing to pay them, if a team find $50 million per year is fine for the services of Verstappen, Hamilton or Zhou then good on those drivers, I can see no reason for the team cost cap having any influence on what the drivers are making.

 

If the teams find the salaries to be too high, it is an easy fix, don't pay those high salaries.

 

Edit: In as much that the payments to the driver companies have the appearance of being salaries, though they are billed from companies selling their services as Rinehart point out above.

This seems to miss the fundamental point that F1 is desperately trying to cut costs.

I find the notion bizarre. Take a look at motorsport in general and you will find many that are paying a lot for the privilege to drive. Are the suggesting a minimum salary too? Surely not...

Let them get what they can. If they want 'too much' F1 is the only place in motorsport they can command such a salary anyway.

Presumably if you can cap the spending for things like wind tunnels, manufacturing, freight etc, then you could figure out a way of doing it for the drivers. If you wanted to.

Even with a salary cap there would be nothing saying companies can't pay drivers to hawk their products.

The NFL has a salary cap (for the team, not individual players) and plenty of the players make millions pimping insurance and such. Above and beyond their NFL pay.

Even with a salary cap there would be nothing saying companies can't pay drivers to hawk their products.

 

The NFL has a salary cap (for the team, not individual players) and plenty of the players make millions pimping insurance and such. Above and beyond their NFL pay.

Ok but that's money that the teams don't have to find.

People like Audi have said that cost is a major issue and we also want to level the playing field.

This seems to miss the fundamental point that F1 is desperately trying to cut costs.

No.

F1 Teams are missing the fundamental point of F1 desperately trying to cut cost. There is a perfectly fine budget cap in place for the cost of running a team, sourcing an engine and building a car, the teams are free to pay the drivers nothing, a little or a whole darn lot. Which incidentally is exactly as it is today across the grid.

Presumably if you can cap the spending for things like wind tunnels, manufacturing, freight etc, then you could figure out a way of doing it for the drivers. If you wanted to.

Naturally, but why would you want to? Paying Hamilton $5 million instead of $500 million will not add a single cent to the Team budget.

Ok but that's money that the teams don't have to find.

People like Audi have said that cost is a major issue and we also want to level the playing field.

Audi have said a lot, they have also not raced in F1 since the 1930ies.

Of course Max Verstappen is going to have an opinion on the matter as it is relevant to him, and therefore the article is 'news', but I hope that no one considers the opinion of that titan of moral philosophy (or is it of microeconomics?) Max Verstappen to be worth more than the bytes required to publish it.

The issue is how/whether to make the results of the sport less dependent on the wealth of the competitor. Various sports in the US have become more competitive, more entertaining, and 'fairer' through the use of team-wide salary caps and similar schemes. Before these schemes were in place, teams with the inherent advantage of having a huge stadium located in a large metropolitan area often would win championships for year after year. Having more funding never guarantees success, but undeniably it creates a systematic advantage that undermines the premise of fair competition and an equal chance of winning on the playing field.

We can see the opposite - almost completely unfettered spending -  in English football, where in the last 27 years, with a single exception, only five teams, all located in huge catchment areas, have won the league championship. The richest football teams might as well form their own elite league. Oh, wait - they tried to do that.

Make them drive for turnips and be done with it all, bet they'd still turn up. These salaries are out of control and have been for years. Even hundreds of thousands for a top sportsman is ridiculous imo, some of them earn that a week. There is a deeper and more important discussion to be had about it all that goes beyond a cost cap.

There is a Baseball player who have a contract guaranteeing him $450 million over 10 years.

There is a Football player guaranteed $230 million over 5 years

There are multiple Basketball players guaranteed $180 million over 4 years (may be 5).

Lionel Messi makes $41 million per year.

So my point is, athletes makes a lot of money these days, complaining about it will not help - Not buying tickets, not buying streaming services will eventually, if you get everyone onboard that with you - Just do not hold your breath,.

Ok but that's money that the teams don't have to find.
People like Audi have said that cost is a major issue and we also want to level the playing field.

Audi? That would be the same Audi that don't compete in F1. Who gives a damn about anything they say? Do you have a link to where they say salaries are an issue? Just wondering if there are any other pearls of wisdom from them.

It seems I completely imagined the huge ongoing drive to cut costs in F1

It seems I completely imagined the huge ongoing drive to cut costs in F1

More that you seem make a connection between two un-connected fiscal realities.

More that you seem make a connection between two un-connected fiscal realities.

That's just waffle mate, the reality is that F1 is desperately trying to cut costs for teams. If the teams pay the salary, salary is part of the equation.

That's just waffle mate, the reality is that F1 is desperately trying to cut costs for teams. If the teams pay the salary, salary is part of the equation.

No the teams do not.

The sponsors do, as the cost cap have taken effect the Mercedes team can only spend $150 million, instead of the $500 million they used to, Monster will happily pay Hamilton $50 per year instead of $150 to Mercedes.

That is the reality.

This seems to miss the fundamental point that F1 is desperately trying to cut costs.

is it? The F1 market is expanding, revenues asked are growing, a lot of tracks are packed, there's online revenue now.
 

I read somewhere that 2 teams (MGP and RBR) actually made some profit last year.

So why are driver salaries issues? Sports salaries are crazy in sports that bring in a lot of money. It tends to be that way, the best performers ask for their share of the show

Are you kidding? Aren’t you aware of current inflation rates? Do you ignore the cost of a private jet plane and the cost of keeping a yacht in Monaco? These poor guys work three days every fortnight. The sky should be the limit of their salaries!

is it? The F1 market is expanding, revenues asked are growing, a lot of tracks are packed, there's online revenue now.
 

I read somewhere that 2 teams (MGP and RBR) actually made some profit last year.

So why are driver salaries issues? Sports salaries are crazy in sports that bring in a lot of money. It tends to be that way, the best performers ask for their share of the show

Salaries are an issue because not every team has the money to hit the salary cap for the car, pay the additional millions for legal and admin, marketing, property costs, HR, interest payments, utilities, staff bonuses, and in addition pay the salaries of two top drivers - say another $40m/yr. All together, against a 'cost cap' of $140m, you're talking about total expenses in excess of $200m.

Inflation/increasing cost of living is just a pretext. The real question is whether all the teams can afford to pay what it costs to field a championship contender, and at present the answer is 'no'.

It is no coincidence that the teams in the top 3 positions in WCC both last year and this - the first two years of the cost cap - have been the three richest teams.

Are you kidding? Aren’t you aware of current inflation rates? Do you ignore the cost of a private jet plane and the cost of keeping a yacht in Monaco? These poor guys work three days every fortnight. The sky should be the limit of their salaries!

3 days every fortnight you say? Is that a real assumption you make or just ignorance?

They also tend to be the best at their jobs and very few people capable of doing those jobs.

Salaries are an issue because not every team has the money to hit the salary cap for the car, pay the additional millions for legal and admin, marketing, property costs, HR, interest payments, utilities, staff bonuses, and in addition pay the salaries of two top drivers - say another $40m/yr. All together, against a 'cost cap' of $140m, you're talking about total expenses in excess of $200m.

Inflation/increasing cost of living is just a pretext. The real question is whether all the teams can afford to pay what it costs to field a championship contender, and at present the answer is 'no'.

It is no coincidence that the teams in the top 3 positions in WCC both last year and this - the first two years of the cost cap - have been the three richest teams.

That's easy to do. Put some form of driver salaries in the some sort of cost cap and let the teams decide what's better.

NBA affords to have a 1B dollar player but salaries in F1 are too high?

That's easy to do. Put some form of driver salaries in the some sort of cost cap and let the teams decide what's better.

NBA affords to have a 1B dollar player but salaries in F1 are too high?

The principle of a salary cap seems reasonable (albeit debatable), but it is not clear how it would be legal.

The F1 teams are independent of each other and competing in the same industry. By imposing a salary cap, the teams would be colluding to truncate the market price for some (potentially all) of the drivers, the consequence of which would be to increase the profitability of the teams.

US-based sports get around this with (limited) anti-trust exemptions that have been voted into federal law. It would be more difficult for F1 teams to do the same, as they are based in diverse jurisdictions - UK, EU, and Switzerland - that do not always see eye-to-eye with one another!

No the teams do not.

The sponsors do, as the cost cap have taken effect the Mercedes team can only spend $150 million, instead of the $500 million they used to, Monster will happily pay Hamilton $50 per year instead of $150 to Mercedes.

That is the reality.

It seems I completely imagined the huge ongoing drive to cut costs in F1

To be fair, that's called a third party deal and those are usually banned under cost caps. Otherwise why can't teams do those deals for all of their employees (e.g. Monster pays Merc employees $50 million instead of the team)

Is the proposal a cost cap on one drivers salary or for the team?

If its the team then we can forget about ever seeing a Senna Prost pairing in F1 again.

$30m for both drivers.

I suspect Messers Hamilton, Vettel and Alonso are on the button here:

https://the-race.com...ver-salary-cap/

Well the imaginary bit I was referring to was Audi. They are not a competitor.

True but Audi/VW have been a massive part of the conversation about costs.

$30m for both drivers.

 

I suspect Messers Hamilton, Vettel and Alonso are on the button here:

 

https://the-race.com...ver-salary-cap/

Yeah, drivers don't like it shock.

Millions a year is ridiculous for anybody.

Capping driver salary will only lead to more profitability for shareholders.

For the top teams (the only ones who will be affected by such a cap) F1 is becoming more and more profitable with the cost cap and other savings and revenue increase.

You really want billionaire business men to rake in a few more million in stead of the guys who bring value to the team in terms of their exposure and performance?

I'm not a big fan of the super rich (and believe super-wealth should be taxed heavily to invest it in projects to increase welfare and sustainability around the world) but such a redistristribution of wealth from drivers to the invisible shareholders I'm thoroughly opposed to.

Capping driver salary will only lead to more profitability for shareholders.
For the top teams (the only ones who will be affected by such a cap) F1 is becoming more and more profitable with the cost cap and other savings and revenue increase.

You really want billionaire business men to rake in a few more million in stead of the guys who bring value to the team in terms of their exposure and performance?

I'm not a big fan of the super rich (and believe super-wealth should be taxed heavily to invest it in projects to increase welfare and sustainability around the world) but such a redistristribution of wealth from drivers to the invisible shareholders I'm thoroughly opposed to.

Yeah, drivers don't like it shock.

Millions a year is ridiculous for anybody.

True, but F1 driver salaries are not outliers when compared to many other sports.

I don't think a cap would make the driver market more competitive, or a Verstappen likely to sign for a Williams.  Not everybody can win, and only a handful of teams will ever be attractive due to success, and due to that success they are the ones who can pay lofty salaries.  Outside the top 3 or 4 teams nobody touches the proposed salary cap anyway, so in reality it would be a cost saving for the top teams only.  They can afford to pay, therefore it seems a pointless exercise.

Agree with where you're coming from, but at the moment some of the teams can't reach the cap.

To make the sport more exciting and equitable, there needs to be a cost cap; and that should include drivers imo. Give the teams the dilemma of where they spend their money, the car/engineers, or the drivers. That trade off is part of what makes a cost cap important.

The top drivers, who are contractors rather than employees, would then be paid by means of personal sponsorship rather than direct salary from the teams, and probably at some inflated rate just as football teams do to game the FFP system.

The top drivers, who are contractors rather than employees, would then be paid by means of personal sponsorship rather than direct salary from the teams, and probably at some inflated rate just as football teams do to game the FFP system.

Edited by PitViperRacing, 11 June 2022 - 09:38.

Also IMO driver salaries should be under the overall spending limit imposed by the teams.

As was said above, the point of the cost cap should be to make it feasible for any team to have a shot at winning the championship. Drivers have a big hand in winning the title, hence they should he included in the overall cost cap.

That way the teams can choose, do you put more money into paying your engineering staff and development costs, or does more of your budget go into paying your driver? That's the trade off.