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Aug 26, 2023

Toto Wolff admits to huge problem for Mercedes

Toto Wolff explains how one of the biggest hurdles to overcome means that the

Toto Wolff explains how one of the biggest hurdles to overcome means that the Mercedes Formula 1 team cannot possibly develop fast enough to catch up to Red Bull and Max Verstappen.

In the race to out develop each other, the F1 grid has a huge team of engineers to help design and test parts for their cars as a season progresses. Recent rule changes has severely handicapped bigger teams like Mercedes in their quest to return to the sharp end and challenge Red Bull.

Mercedes must save for the cost cap

Formula 1's budget cap is both a curse and a blessing. On the one hand, the top teams can no longer use their enormous financial resources to clearly set themselves apart from the midfield teams; on the other hand, it has also made it more difficult to catch up with dominant teams with development.

While Red Bull is circling lonely at the top of the 2023 Formula One season, Ferrari and Mercedes would in theory have enough money to make a lot of updates to eradicate the weaknesses of their cars, but with the cost cap, big spending is no longer possible and progress is delayed.

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"I think the cost cap brings so many restrictions," says Mercedes team boss Toto Wolff.

"In the past we didn't even know what a front suspension cost, and now we have to take the purchase price of the aluminium and then factor it in."

"How much does it cost to machine the aluminium? How much do you have to write off the aluminium that you don't need, every bolt that goes into the suspension, the carbon that you bought as raw material, then cut and put on? What are the energy costs for the composite room, the overheads that are incurred? And at the end, the product comes out."

"It's very complex, to the point where we have cost analysts and engineers who have to decide whether buying a kilogram of aluminium raw material is worth the performance gain on the other side," Wolff explains.

The budget cap will be $151.1 million for the 2023 season, that is now clarity after the G7 countries’ inflation rate for March was published. This was 5.4 per cent, meaning teams will receive an inflation bonus of $7.3 million.

This is, after all, only one of the allowances in addition to the basic amount of $135 million. In addition, the inflation bonus from last year (4.6 million dollars) will be carried over plus 1.8 million for the six sprint events and another 2.4 million for 23 Grands Prix in the racing calendar. For each race that exceeds the basic number of 21 races, 1.2 million dollars are added.

In recent years, the top teams in particular have had to take cost-cutting measures on all fronts in order to be able to comply with the budget limit. Red Bull laid off 154 employees for 2021 – the first season of the cost cap – to save on fixed costs, only to be penalised in the end because they didn't quite manage to stay within the cap.

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"This process is so difficult and painful," adds Mercedes team boss Toto Wolff.

"People who should just be creative and have carte blanche can't do it because someone tells them whether it's feasible within the cost cap or not, and that's why it's so important that everyone sticks to the cost cap. If you go over that, it comes down to every tenner."

However, not only can teams bring fewer updates than they did in the pre-2021 era, but the process for getting an update to the track has been greatly lengthened by the budget cap, as Wolff says:

"It takes much longer because the administration has become a process."

"Our finance department has grown from 15 to 45 staff, which is quite a size. But again, I think cost capping was necessary in Formula One and if you ask me: cost capping yes or no, I’ll take cost capping every single day of the week!"

"It is important to make the sport sustainable. But we have to adapt. As Mercedes, we’ve put a lot of time and effort into cost-capping, and we have all these assessments and tools, timing, literally everything, and that's going to benefit us in the future because others have to go through this painful process."

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