91 replies to this topic

[Hakki069]

The daily mail is claiming all teams have agreed to a driver salary cap from 2023 at £22M.

https://www.dailymai...s-Hamilton.html

[DarthWillie]

Salary 22 mil. Sponsor contract 22 mil driver still earning 44 mil

[Hakki069]

This will kinda force Lewis potentially into a 3 year deal if he was only thinking 2 years. . If the contract was agreed before the cap was officially agreed then he could still get paid 40 from Mercedes in 23. So Verstappen for example is alright in 23 if Redbull was due to pay him more than 22 Million.

[Marklar]

Salary 22 mil. Sponsor contract 22 mil driver still earning 44 mil

exactly, pretty pointless rule change

[fed up]

Salary caps are just another way for the teams to earn more money and get richer. We now have a cost cap to add to the salary cap, why are they doing this? Will there be a reduction in income that the teams get? Of course not, so the teams get richer, and with the barriers to entry for new teams the current signatories to the Concord agreement are onto a great thing.

 

F1 driver salaries are made up of a retainer and performances bonuses. If they cut the performances bonuses that the drivers earn based on performance, there will be an unequal distribution of the prize money in favour of the teams. As the teams need the drivers to earn the prize money, I agree with the comment above regarding where any additional pay will come from for the top tier drivers, or the drivers may negotiate their own image rights deals etc.

Edited by fed up, 28 October 2020 - 07:48.

[Rodaknee]

The majority of drivers don't earn huge amounts, some are paid dependant on what they fetch in from sponsors, Perez for example..  There are 3/4 drivers who don't need to worry about money Dad's rolling in it, and the teams will always find enough for the superstars.  For example, cash strapped Renault allegedly found $25m a year for Ricciardo.  What will McLaren pay him next year, if they've got any money in the pot?

[P123]

It's just McEvoy.  He's excited at the prospect of Hamilton losing a few million.

[absinthedude]

It's just McEvoy.  He's excited at the prospect of Hamilton losing a few million.

 

That's the way it reads....it comes across as if he's practically salivating at the prospect. 

 

As others have said....salary from the team 22 million....a little of what is now sponsorship for the team redirected as "personal sponsorship" contracts to drivers to top it up. Pointless rule change.

[shure]

The rule is a a little more nuanced than that.  It basically means that any salaries above the cap will be deducted from the team's budget.  So teams can still choose to pay a higher salary but this will impact them elsewhere.

[taran]

This will kinda force Lewis potentially into a 3 year deal if he was only thinking 2 years. . If the contract was agreed before the cap was officially agreed then he could still get paid 40 from Mercedes in 23. So Verstappen for example is alright in 23 if Redbull was due to pay him more than 22 Million.

 

Why do you think this is the case? The exception seems to be in place to cover any existing long-running contracts (like Leclerc allegedly has).

We already have contracts in F1 where the salary changes per year (for example $1m in year 1, $2m in year 2, $3m in year 3).

So it wouldn't be a stretch to imagine Mercedes offering Hamilton $40m for 2021 and 2022 and then the maximum allowed $30m in 2023 now that they know of the proposed cap.

 

In fact, they don't have to offer Hamilton a lot of money at all. Mercedes can guarantee wins and an 8th title. Hamilton should be paying them to drive the car....

[Sterzo]

This is actually a major step forward. It introduces the principle of a cap on driver salaries, left out of earlier cost cap proposals. The intitial figures mean there's little immediate impact, which is exactly how you go about introducing long-term change. Like the initial team cost cap, the figures have been set fairly high, but it enables the authorities to make future reductions and begin addressing the ludicrous costs of F1. We need it to be more affordable to survive if manufacturers pull out or TV demand reduces.

Edited by Sterzo, 28 October 2020 - 09:44.

[shure]

This is actually a major step forward. It introduces the principle of a cap on driver salaries, left out of earlier cost cap proposals. The intitial figures mean there's little immediate impact, which is exactly how you go about introducing long-term change. Like the initial team cost cap, the figures have been set fairly high, but it enables the authorities to make future reductions and begin addressing the ludicrous costs of F1, which damage its future prospects.

I agree it looks like a stealth move.  Personally I don't see why they should cap these costs.  If they want to pay a driver an arm and a leg then let them.  It's not going to change their car development or the cost of competing, which is what the cap should be about.  Mercedes isn't where it is because of what they are paying Hamilton.  It's just a control thing but there's no real benefit that I can see.  Why shouldn't top athletes be paid as such?

[taran]

I agree it looks like a stealth move.  Personally I don't see why they should cap these costs.  If they want to pay a driver an arm and a leg then let them.  It's not going to change their car development or the cost of competing, which is what the cap should be about.  Mercedes isn't where it is because of what they are paying Hamilton.  It's just a control thing but there's no real benefit that I can see.  Why shouldn't top athletes be paid as such?

 

Maybe it's a social acceptability issue. I wonder if Hamilton's contract extension has been delayed because Mercedes is balking at his asking price. Not because they can't afford it but because it would be unacceptable to pay Hamilton $50m while they are simultaneously sacking tens of thousands of workers.

 

Transport patterns are also changing and ride-shares and public transport is increasing considerably. Volume of car sales will likely decline in Western countries. All of which makes splurging obscene amounts of $$$ on F1 a hard sell to boards as factories are shut down and production patterns shift.

 

In the past, being the most expensive and best earning racing series was part of F1's glamour. But as times and norms have changed I wouldn't be surprised if its becoming an embarrassment.

[shure]

Maybe it's a social acceptability issue. I wonder if Hamilton's contract extension has been delayed because Mercedes is balking at his asking price. Not because they can't afford it but because it would be unacceptable to pay Hamilton $50m while they are simultaneously sacking tens of thousands of workers.

 

Transport patterns are also changing and ride-shares and public transport is increasing considerably. Volume of car sales will likely decline in Western countries. All of which makes splurging obscene amounts of $$$ on F1 a hard sell to boards as factories are shut down and production patterns shift.

 

In the past, being the most expensive and best earning racing series was part of F1's glamour. But as times and norms have changed I wouldn't be surprised if its becoming an embarrassment.

yes, I can see that, but isn't that effectively market forces at work?  If Merc feel the cost is too high (in this theoretical example) then they simply don't have to pay it.  Do they need the FIA to govern their negotiations?  Conversely, if they do feel that he gives them a decent ROI then what is the harm in paying him whatever he wants?  What I'm trying to say is that F1's cost issues aren't about which driver is in which seat.  Williams won't suddenly have a brighter future because they will be able to afford to pay Hamilton - he won't go there because their car is sh*t, not because they can't pay him what he wants.  I completely understand the principle of the budget cap where it relates to team development.  It's just not clear to me what benefit this gives.

Edited by shure, 28 October 2020 - 10:08.

[P123]

Maybe it's a social acceptability issue. I wonder if Hamilton's contract extension has been delayed because Mercedes is balking at his asking price. Not because they can't afford it but because it would be unacceptable to pay Hamilton $50m while they are simultaneously sacking tens of thousands of workers.

 

Transport patterns are also changing and ride-shares and public transport is increasing considerably. Volume of car sales will likely decline in Western countries. All of which makes splurging obscene amounts of $$$ on F1 a hard sell to boards as factories are shut down and production patterns shift.

 

In the past, being the most expensive and best earning racing series was part of F1's glamour. But as times and norms have changed I wouldn't be surprised if its becoming an embarrassment.

 

It's probably worth noting other drivers do earn over the level of the proposed cap.
 

[Slackbladder]

There's always ways and means around these things. The top drivers will have commercial interests outside the team as well. 

[DeKnyff]

Salary 22 mil. Sponsor contract 22 mil driver still earning 44 mil

But then, it's 22 millions less for the team. The sponsor are not going to pay 22 extra millions.

[jee]

I think this cap is rather per team, not per driver.

[jcbc3]

Why do we need a cap on drivers salaries? Isn't it up to the teams to decide what they should be?

If Mercedes get their wish and make their team into a profit center do we need a cap on their profits too? Should any surplus be funneled into Liberty? If not, why should Mercedes benefit and not Lewis if he is the major contributor?

 

Madness!

[BRG]

I am in despair.  How will the poor mites rub by on only £22m a year?  And the government won't even fund free school meals for their kids.  Poverty stares them in the face.  Tragedy.

 

Personally, I would set the salary cap at £500,000.  Nobody is worth more than that for just driving a car for a few weekends a year.  A bus driver drives for hours every day, and is responsible for the many lives of his passengers, and they get how much?  And if you use buses, you will know that most of them are driven as fast as F1 cars.

 

And the Law of Supply and Demand suggests that if there are more capable racing drivers available - and we all know that there are currently a dozen of so outside F1 with Superlicences- the salaries of F1 driver ought to be falling, even if your name is Lewis.  The fact that they don't is all part of the Closed Shop mentality that wants $200m just to be allowed to join the series.

Edited by BRG, 28 October 2020 - 11:46.

[Kalmake]

That's the way it reads....it comes across as if he's practically salivating at the prospect. 

 

As others have said....salary from the team 22 million....a little of what is now sponsorship for the team redirected as "personal sponsorship" contracts to drivers to top it up. Pointless rule change.

Redirecting team sponsorship to the driver is such an elementary loophole that even the first draft regulations will have it covered. Like other sports with salary cap, they will probably have the catchall regulation that bans any arrangements circumventing the cap.

 

Will be interesting to see if GPDA comments anything. Some sports had player strikes.

[Retrofly]

I am in despair.  How will the poor mites rub by on only £22m a year?  And the government won't even fund free school meals for their kids.  Poverty stares them in the face.  Tragedy.

 

Personally, I would set the salary cap at £500,000.  Nobody is worth more than that for just driving a car for a few weekends a year.  A bus driver drives for hours every day, and is responsible for the many lives of his passengers, and they get how much?  And if you use buses, you will know that most of them are driven as fast as F1 cars.

 

And the Law of Supply and Demand suggests that if there are more capable racing drivers available - and we all know that there are currently a dozen of so outside F1 with Superlicences- the salaries of F1 driver ought to be falling, even if your name is Lewis.  The fact that they don't is all part of the Closed Shop mentality that wants $200m just to be allowed to join the series.

That's all well and good but every half decent driver would move to a series where there wasn't a budget cap.

This is a commercial enterprise not run by a state or tax payer money, its a free market, the price teams pay is what they deem the worth of the driver, his skills and image/exposure for the team. As much as I like socialism this is a capitalist venture and everything that comes with it.

[Retrofly]

Redirecting team sponsorship to the driver is such an elementary loophole that even the first draft regulations will have it covered. Like other sports with salary cap, they will probably have the catchall regulation that bans any arrangements circumventing the cap.

 

Will be interesting to see if GPDA comments anything. Some sports had player strikes.

Mercedes sponsors Hamilton £22mil for wearing a Mercedes cap

[oli4]

Silly rule, as if those small teams would ever be able to pay big salaries. And it's not like Mercedes, Ferrari or Red Bull care.

[Mark521]

So, we'll have a cap on the team spending, a cap on the salaries of the 3 highest paid team management (per the Autosport article) and a cap on the driver's salaries.  I guess this means the most important person on the team will be their accountant/lawyer as this will create an arms race in accounting loopholes versus the normal technical loopholes.

 

I would guess the real question is how the driver's personal sponsors money gets counted against the cap.  I also think that the driver's contracted promotional time would be another issue.

[Retrofly]

So, we'll have a cap on the team spending, a cap on the salaries of the 3 highest paid team management (per the Autosport article) and a cap on the driver's salaries.  I guess this means the most important person on the team will be their accountant/lawyer as this will create an arms race in accounting loopholes versus the normal technical loopholes.

 

I would guess the real question is how the driver's personal sponsors money gets counted against the cap.  I also think that the driver's contracted promotional time would be another issue.

Yep, see also Rugby Union in the UK - https://www.rugby.co...andal-explained

 

A team caught breaking the budget cap rules by "helping" players invest in property.

[GrumpyYoungMan]

Could the salary have a performance add on - so the driver salary be capped at say £20m but paid another £10m in performance related pay?

[BRG]

its a free market, 

That's just the point. It ISN'T a free market.  it is closed shop, an oligopoly of ten teams that have agreed to effectively bar anyone else from entering.  Throw it open and see what would happen.

 

Could the salary have a performance add on - so the driver salary be capped at say £20m but paid another £10m in performance related pay?

Ahh, sweet, you're worried that they may not be able to make ends meet.

Edited by BRG, 28 October 2020 - 12:32.

[shure]

I am in despair.  How will the poor mites rub by on only £22m a year?  And the government won't even fund free school meals for their kids.  Poverty stares them in the face.  Tragedy.

 

Personally, I would set the salary cap at £500,000.  Nobody is worth more than that for just driving a car for a few weekends a year.  A bus driver drives for hours every day, and is responsible for the many lives of his passengers, and they get how much?  And if you use buses, you will know that most of them are driven as fast as F1 cars.

 

And the Law of Supply and Demand suggests that if there are more capable racing drivers available - and we all know that there are currently a dozen of so outside F1 with Superlicences- the salaries of F1 driver ought to be falling, even if your name is Lewis.  The fact that they don't is all part of the Closed Shop mentality that wants $200m just to be allowed to join the series.

A bus driver doesn't have millions of people paying for the privilege of watching him go about his work, though.  At most he'll probably have a few hundred people who will interact with him.  And I doubt the fact that John Smith, who drives the No 42 bus in Croydon, wears Tommy Hilfiger in  his spare time would induce droves of people to buy it themselves.  It's not realistic to compare a sports person with the average Joe Bloggs.  Their remuneration encompasses so much more than what they do in their core job.

 

Personally I do kind of agree that's it's crazy to pay someone like Hamilton a reported 40m* when there are plenty of capable drivers  who would give their left nut to drive in that car for a fraction of the salary, so I don't see Supply and Demand playing a part here.  OTOH if Merc want to pay him that amount then I don't see why they shouldn't.  Limiting it to eg 500,000 of any currency seems a bit arbitrary and doesn't really reflect the fact that while there are people who love the sport for the cars there are also a good number who follow the drivers themselves.  In  which case why shouldn't they have a cut of that action?

 

*also applies to other drivers with similar  telephone number salaries

[MirNyet]

Common sense finally.  Another cap to stop a team buying such an advantage that it can't be caught.  Also makes it within reach of smaller teams to be competitive.  The only negative thing about this is that it's for 2023 onward and not immediate. 

[thiscocks]

22k a year

[shure]

Common sense finally.  Another cap to stop a team buying such an advantage that it can't be caught.  Also makes it within reach of smaller teams to be competitive.  The only negative thing about this is that it's for 2023 onward and not immediate. 

How does a cap on driver salaries allow a team to buy an advantage that it can't be caught?

[Ivanhoe]

But then, it's 22 millions less for the team. The sponsor are not going to pay 22 extra millions.

I wonder if Mercedes could offer him a sponsor contract next to his salary.

[Roadhouse]

So Bottas' contract for 2023 will probably read -20 million?

[milestone 11]

Autosport article suggests the figure includes both drivers. https://www.autospor...iver-salary-cap

[pdac]

They should have looked at capping driver contract lengths (limit each driver to a maximum of 2 years at any single team, with no return within 5 years)

[JHSingo]

I'm generally in support of a salary cap. In fact, in some ways, I'd go even further and say F1 should adopt a system like in American sports, where they have to sign all their players under a certain amount. I think it's make it interesting to see how teams would manage that. They could still have their star driver earning top whack if that's what they decided, but could negatively effect the team's chances in the WCC if they then had to sign a cheaper driver for the second car.

[Nathan]

I'm curious how they stop money flowing from sponsors direct to the drivers.

 

People need to consider the difference between leagues of hundreds or even thousands of players where 95% earn 95% of their income via playing contracts and F1 where there are only 20 drivers all of whoms salary is significantly "sponsorship activation" based.  The average (eg not super stars) F1 driver has a much higher marketing value than the average NFL/NBA player as they are global, much more rare, have nationalistic value, and can sell sponsor space on their helmets, uniforms etc. 

 

So what I'm saying is, the two contracts types are quite different, and sure you can easily limit the salaries for the driving but it sure gets muddy once third-party entities looking to market and brand come into play.  What stops Petronas taking on a large portion of Hamilton's salary directly as Marlboro did with MSC, or when MSC went to Flavio for more money from Benetton and instead was given the sidepod to sell. 

Edited by Nathan, 28 October 2020 - 13:39.

[Marklar]

I'm a bit amused how it's received by some here as a necessary change when it's probably the same people who think drivers dont make a difference, cause that's the only reason why you would even consider a salary cap in the first place.

[fed up]

A bus driver doesn't have millions of people paying for the privilege of watching him go about his work, though.  At most he'll probably have a few hundred people who will interact with him.  And I doubt the fact that John Smith, who drives the No 42 bus in Croydon, wears Tommy Hilfiger in  his spare time would induce droves of people to buy it themselves.  It's not realistic to compare a sports person with the average Joe Bloggs.  Their remuneration encompasses so much more than what they do in their core job.

 

Personally I do kind of agree that's it's crazy to pay someone like Hamilton a reported 40m* when there are plenty of capable drivers  who would give their left nut to drive in that car for a fraction of the salary, so I don't see Supply and Demand playing a part here.  OTOH if Merc want to pay him that amount then I don't see why they shouldn't.  Limiting it to eg 500,000 of any currency seems a bit arbitrary and doesn't really reflect the fact that while there are people who love the sport for the cars there are also a good number who follow the drivers themselves.  In  which case why shouldn't they have a cut of that action?

 

*also applies to other drivers with similar  telephone number salaries

 

The problem with statements like this is that it assumes that Lewis gets a flat basic salary of $40m a year. It doesn't work like that - the figures quoted in the press are headline figures and includes various performance assumptions. Lewis earns the most because he scores the most points, wins the most races, contributes to the team winning the WCC, and gets a huge bonus for winning the WDC. Bottas probably has a similar contract albeit with a lower base retainer, but he'll have the same opportunity to earn the mega bucks. F1 is a meritocracy and has always been like that.

 

The issue I have with a salary cap is that it'll end up with the teams pocketing more of the cash pool. Those claiming that it'll somehow even things up are missing the point IMO. $22m is still a sizeable salary, out of the reach of all but the top 3, perhaps including Renault, so it will have no impact on the status quo.

 

A salary cap and a cost cap for the whole team sounds like a great idea in principle and one would have thought these moves would help in attracting new teams to F1. But then they introduced the $200m entry fee for new entrants. How does that work? In the end, the current teams will earn more from F1 - the drivers will still earn a decent income, but I'm never a fan of artificial intervention into a free market.

[fed up]

I'm a bit amused how it's received by some here as a necessary change when it's probably the same people who think drivers dont make a difference, cause that's the only reason why you would even consider a salary cap in the first place.

 

Exactly!

[Calum]

Could you be employed as a Mercedes-Benz Grand Prix Limited driver for £22m and a Mercedes-AMG GmbH brand ambassador to do some adverts for the cars for another £23m?

 

Maybe not since they are related parties, but there's going to be some bean counter who finds the way to do it with the same net result! It just seems pointless to regulate.

Edited by Calum, 28 October 2020 - 13:45.

[shure]

The problem with statements like this is that it assumes that Lewis gets a flat basic salary of $40m a year. It doesn't work like that - the figures quoted in the press are headline figures and includes various performance assumptions. Lewis earns the most because he scores the most points, wins the most races, contributes to the team winning the WCC, and gets a huge bonus for winning the WDC. Bottas probably has a similar contract albeit with a lower base retainer, but he'll have the same opportunity to earn the mega bucks. F1 is a meritocracy and has always been like that.

 

The issue I have with a salary cap is that it'll end up with the teams pocketing more of the cash pool. Those claiming that it'll somehow even things up are missing the point IMO. $22m is still a sizeable salary, out of the reach of all but the top 3, perhaps including Renault, so it will have no impact on the status quo.

 

A salary cap and a cost cap for the whole team sounds like a great idea in principle and one would have thought these moves would help in attracting new teams to F1. But then they introduced the $200m entry fee for new entrants. How does that work? In the end, the current teams will earn more from F1 - the drivers will still earn a decent income, but I'm never a fan of artificial intervention into a free market.

The point I was making was that Mercedes have such a strong car and are so far ahead of everyone else that they don't need to pay astronomical figures to their drivers.  The chances are strong that they would win titles with any driver - not necessarily that it would be weighted to one driver like it is in the case of Hamilton / Bottas, but they don't need a fantastically strong driver in the way that eg Red Bull or Ferrari do, and they do have a pool to choose from.  They have a big enough cushion that Supply and Demand doesn't seem to play a part, as the previous poster suggested.  I'm not passing judgement on Lewis here, before anybody's backs are put out, I'm just talking cold facts on salary level vs risk.  Ultimately I don't see a valid reason for the salary cap at all

 

I agree that a salary cap would just mean someone else pocketing the money.  Ultimately the sponsors would be paying less I guess but I don't get the feeling that driver salaries have ever been a stumbling block in a team's development other than right at the bottom of the grid, where the cap is out of reach anyway.  Seems more political than practical to me.

 

Good point about new entrants.  There does seem to be a contradiction in the way the policies are being applied, which is why I feel this is more about PR and control than anything else

[Imperial]

The point I was making was that Mercedes have such a strong car and are so far ahead of everyone else that they don't need to pay astronomical figures to their drivers.  The chances are strong that they would win titles with any driver 

 

That argument has been put forward for years, decades even, yet the top teams always hire the top drivers and pay the top money,

[Marklar]

My question about this. Say Verstappen stays at Red Bull till end of 2023, and he made his contract earlier this year already, how much is Red Bull allowed to pay to their 2nd driver? Due to laws Verstappen wille earn the 40 million no matter what, so what will the 2nd Red Bull driver earn considering that they are already above cap?

[pdac]

That argument has been put forward for years, decades even, yet the top teams always hire the top drivers and pay the top money,

 

If the top teams pay top dollar for drivers, then the TP and others at the higher levels can justify their own salaries.

[P123]

I think the teams are giving themselves a needless headache.  Nobody forced Renault into giving Ricciardo a $50m 2 year contract.  Nobody forced Ferrari to give Vettel a multi-year $40m annual retainer.  Nobody forced Red Bull or Merc to give Max or Lewis similar to Vettel.  And if this cover both drivers then you'll never see two top level drivers in a team again, as the money will all go on one, because if one team doesn't use the salary cap on Max (for example) then you can be sure another one will be more than happy to.  It won't change the fact that some drivers are on huge salaries, and others on fractions.

[Atreiu]

It's good to see F1 retain its tradition of tackling irrelevant issues.

 

House on fire meme.

 

This is fine.

[Kalmake]

My question about this. Say Verstappen stays at Red Bull till end of 2023, and he made his contract earlier this year already, how much is Red Bull allowed to pay to their 2nd driver? Due to laws Verstappen wille earn the 40 million no matter what, so what will the 2nd Red Bull driver earn considering that they are already above cap?

I guess this initial consensus wouldn't have happened if anyone had such a contract.

 

Maybe there will be per driver cap, or something like that. Otherwise teammates to these superstars will end up making a relative pittance.

[ThadGreen]

There are way around a salary cap, interest free forgivable loans is one example.