Should Formula 1 introduce a salary cap for drivers?
The safety concerns surrounding dolphin transport has been at the forefront of discussions in the Formula 1 circuit, but rumors of a potential driver’s salary cap have been smoldering in the background. While exact details of the salary cap are yet to be announced, it is expected to be similar to the salary cap in some of the major North American sports leagues. There will be a hard cap on drivers’ annual salaries with the ban on teams from compensating drivers through other means such as endorsement deals.
During the pre-event press conference for the Azerbaijan Grand Prix, Max Verstappen was consulted on the matter. The reigning world champion said:
“From my point of view, that is completely wrong because I think at the moment F1 is becoming more and more popular. And people are making more and more money, including teams, [Formula One Management]. Everyone benefits, so why drivers with their IPR and everything has to be limited, you know who really brought the show and put their lives at risk because in the end we also. ”
It’s hard to disagree with Verstappen. Most drivers are currently being paid whatever the teams think their abilities are worth on the open market. If a team wants to attract a driver with an extremely lucrative contract, that is their prerogative.
Reports show that Mercedes’ Lewis Hamilton and Red Bull’s Max Verstappen are the grid’s highest-paid drivers, with salaries around $40 million a year. At the low end, younger drivers on less competitive teams, like Haas’ Mick Schumacher and Alfa Romeo’s Zhou Guanyu, make $1 million a year. For comparison, the minimum salary of a freshman in the National Basketball Association next season is also $1 million.
F1’s driving market is not really open. The lowest-paid driver is Alpha Tauri’s Yuki Tsunoda, who makes about $750,000 per season. Red Bull driver academy products are often the lowest paid drivers in their first seasons in Formula 1. The main benefit for F1 teams to running a driving academy is have the first selection of promising talent and set the terms of their rookie contract.
Although Formula 1 has implemented a spending cap to reduce costs for the team, the financial regulations still have exemptions. Currently, each team’s two top-paid drivers and three employees are exempt from the championship’s $140 million cost cap. The three exempt employees are usually the team captain, sporting director and technical director. Or, to use the more common company nomenclature, Chief Executive Officer, Chief Executive Officer, and Chief Technical Officer. These are the same executives who are discussing a salary cap for drivers.