Horner: Teams Are Spending $500–600 Million, F1 Needs a Revamped Cost Cap

Formula 1 must seriously rethink its $215 million cost cap as real team budgets continue to escalate to staggering levels, according to former Red Bull boss Christian Horner, who claims actual spending across the grid is still hitting $500m to $600m a year despite existing financial regulations.

The budget cap was introduced in 2021 with an initial baseline of $145m before rising to the current $215m figure. However, that total is far from comprehensive when it comes to covering the true operational costs of an F1 team. Driver salaries, the pay packets of the three highest-earning team members, marketing, and travel expenses are all exempt. With a separate $190m cap in place for power unit manufacturers, overall budgets remain astronomical alongside record team valuations.

Horner, whose former Red Bull team breached the 2021 financial cap by 5% and received a $7m fine alongside a 10% reduction in wind tunnel and CFD testing, shared his thoughts with Autosport:

Horner noted that the financial framework has transformed teams from loss-making ventures into sustainable, multi-billion-dollar franchises, with even outfits like Haas and Williams enjoying a sharp rise in market value.

However, Williams have voiced reservations over the existing system. Team principal James Vowles recently stressed that the front-running constructors continue to hold a distinct advantage under the current rules. The Briton pointed out that his squad is constrained in car development and personnel spending because funds must be diverted into capital expenditure (CapEx) to modernise facilities. By contrast, the likes of Red Bull, Mercedes, and Ferrari already boasted world-class infrastructure before the spending limits arrived, allowing them to channel their full operational allowance directly into on-track performance.

Capital expenditure was only integrated into the overall cap starting this season, having previously operated under a standalone limit. Midfield and smaller teams have been granted higher CapEx allowances relative to the top outfits since 2024, while the upcoming 2026 regulations will further account for the pre-existing infrastructure disparities.

Despite the ongoing debates, the cost cap has brought unquestioned stability to the grid — Force India remains the last team to enter administration, back in 2018.

The significant jump in the headline cost cap — from $145m previously to $215m today — stems from expanding the range of expenses included under the ceiling. The most substantial change is the inclusion of depreciation costs, which were previously excluded from the calculations.

The accounting treatment of depreciation offsets a significant legacy advantage for the sport's heavyweights. Formula 1 applies straight-line depreciation, dividing an asset's purchase value over its useful lifespan to calculate an annual charge. Consequently, infrastructure constructed and paid for long before the cap was enacted continues to draw from the top teams' annual expenditure. Under the revised 2026 financial regulations, this disparity will be eliminated.

If the front-runners still maintain an edge in infrastructure, it is not because they avoid paying for it — it is fully accounted for through depreciation. Instead, the real disparity lies in timing: pre-pandemic construction was vastly cheaper before raw material prices spiked. While the established powerhouses continue to 'pay' for their headquarters through depreciation under the cap, their state-of-the-art facilities cost far less to build than identical setups would today.