Should Formula 1 introduce a salary cap for drivers?

Image for article titled Should Formula 1 introduce a salary cap for drivers?

Photo: Dan Mulan (Getty Images)

The safety issues surrounding porpoising have been at the forefront of discussions in the Formula 1 paddock, but rumors of a possible driver salary cap have simmered in the background. While the exact details of a salary cap have not emerged, it is speculated that it would be similar to the salary caps of some of North America’s major sports leagues. There would be a strict limit on annual driver salaries with a ban on teams paying drivers through other means such as sponsorship deals.

At the Azerbaijan Grand Prix pre-event press conference, Max Verstappen was asked for his thoughts on the matter. The reigning world champion said:

“From my side, it’s completely wrong because I think that at the moment F1 is becoming more and more popular. And everyone is making more and more money, including the teams, [Formula One Management]. Everybody benefits so why should the drivers with their intellectual property rights and everything be capped, you know who really brings the show and puts their lives on the line because we eventually do.

It’s hard to disagree with Verstappen. Most drivers currently get paid regardless of how much teams think their abilities are worth in the open market. If a team wants to lure a driver with an extremely lucrative contract, that’s their prerogative.

Reports say Mercedes’ Lewis Hamilton and Red Bull’s Max Verstappen are the highest-paid drivers on the grid, with salaries around $40 million a year. At the bottom of the ladder, young drivers from less competitive teams, like Mick Schumacher of Haas and Zhou Guanyu of Alfa Romeo, earn $1 million a year. For comparison, the minimum salary for a freshman player in the National Basketball Association next season is also $1 million.

Alpha Tauri's Yuki Tsunoda during the Canadian Grand Prix weekend

Alpha Tauri’s Yuki Tsunoda during the Canadian Grand Prix weekend
Photo: Peter Fox (Getty Images)

The market for F1 drivers is not really open. The lowest paid driver in the field is Alpha Tauri’s Yuki Tsunoda, earning around $750,000 per season. Red Bull’s driver academy products are often the lowest paid drivers on the grid during their first seasons in Formula 1. The main benefit for F1 teams of operating a driver academy is to have first option on promising talent and dictate the terms of their rookie contract.

While Formula 1 has a spending cap in place to reduce team costs, there are exemptions to the financial regulations. Currently, each team’s two drivers and three highest-paid employees are exempt from the championship’s $140 million cap. The three exempt employees are usually the team manager, sporting director and technical director. Or, to use more common corporate nomenclature, CEO, COO, and CTO. These are the same executives who are considering potentially capping driver salaries.