McLaren's unusual solution to cut costs and stay within F1 budget cap

“We’re trying to cut costs everywhere, basically,” James explained. “To put things in sea freight, it pays for itself within a year. So there’s no ongoing freight costs, airfare costs, it all goes in the sea freight. It’s all cost-effective, it’s the way forward.”

Its this kind of counterintuitive thinking that can offer teams an advantage in the new age of Formula 1’s budget cap.

The more that they spend on tools and freight, the less they spend on maiing cars go quicker.

The budget cap limits F1 team’s annual spending to $145m for 2020. It covers all costs of running the teams with the exception of marketing costs, driver salaries and the salaries of the three highest earners at each team.

SO there’s an incentive to save money at the edges so that as much development as possible can be preserved.

“We were spending beyond the cap previously, so we’ve had to make some adjustments.,” said McLaren’s CEO Zak Brown in an interview ahead of this year’s car launch. “But I think the discrepancies, if you like, will be pretty nominal.

“What’s most important is Andreas and James and the team have the full resources to run at the cap. Spending at the cap focused on total performance is the goal.”

Although Ferrari often appears determined to disprove the rule, performance is inextricably linked to budget in Formula 1, and its what makes the budget cap vital, said McLaren team principal Andreas Seidl.

Without it, the future of McLaren would be in doubt, he suggested. “It’s obviously a big and important topic for us at McLaren,” he said.

“It’s a topic that we were supportive of quite a lot, because it makes sure that we can be in Formula 1 in the future in a sustainable way, but also in a competitive way.”

McLaren was hit hard by the economic impact of Covid-19 in 2020.

A lack of revenue from motorsport activities, the halting of its road car manufacturing coupled with a huge downturn in sales, in addition to reduced demand for its technological solutions, meant the Woking company had to cut 1,200 jobs across its Formula 1, road-car and applied technologies businesses.

In an attempt to shore up its finances, the team managed to secure a $150m loan in June from the Bahrain national bank, and subsequently announced plans to sell and lease back its own headquarters, the McLaren Technology Centre. No sale has as yet been confirmed.

“The task is clear,” said Seidl. “We simply work hard on reducing costs in order in all areas of the business we are in, in order to make sure that we protect our people as much as we can.

“Because in the end, it’s our people that make the difference.”

Thanks to clever initiatives such as sea-freighting its garage equipment, Seidl says the savings made have not impacted on the F1 car’s speed or the abilities of the race squad.

“In terms of performance, I’m quite happy with the progress we could make so far,” he commented. “There’s still some fine-tuning required until, say mid season, probably.

“But we have conditions in place. We have a lot of people working on this topic, because in the end it will define how competitive we are in the future.”

The cap is still a work in progress and Brown highlighted that it is likely to be tweaked, with the agreement of rivals, as the year goes on.

“The FIA and the teams and Formula 1 have been working continuously on defining it and and regulating it,” he said.

“While I’m sure there’ll be learnings from year one, and it won’t be perfect, I think they’ll get it right. And I think it will achieve what we were hoping to achieve, which is a more level playing field.”