The safety concerns surrounding porpoising have been at the forefront of discussion in the Formula 1 paddock, but rumors of a potential driver salary cap have been simmering in the background. While the exact details of a salary cap haven’t emerged, it is assumed that it would be similar to the salary caps in some of North America’s major sports leagues. There would be a hard limit on annual driver salaries with a prohibition on teams compensating drivers through other means like endorsement deals.
During the pre-event press conference for the Azerbaijan Grand Prix, Max Verstappen was asked for his opinion on the matter. The reigning world champion said:
“From my side, it’s completely wrong because I think at the moment F1 is becoming more and more popular. And everyone is making more and more money, including the teams, [Formula One Management]. Everyone is benefiting, so why would the drivers with their IP rights and everything should be capped, you know who actually bring the show and put their lives at risk because we do eventually.”
It’s difficult to disagree with Verstappen. Most drivers are currently 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, it’s their prerogative.
Reports have Mercedes’ Lewis Hamilton and Red Bull’s Max Verstappen as the grid’s highest-paid drivers, with salaries around $40 million per year. On the low end, younger drivers on less competitive teams, like Haas’ Mick Schumacher and Alfa Romeo’s Zhou Guanyu, make $1 million annually. For comparison, the minimum salary for a first-year player in the National Basketball Association next season is also $1 million.
F1’s driver market isn’t truly open. The field’s lowest-paid driver is Alpha Tauri’s Yuki Tsunoda, earning roughly $750,000 per season. Red Bull’s driver academy products are often the lowest paid drivers on the grid during their early seasons in Formula 1. The main benefit for F1 teams to operate a driver academy is having the first option on promising talent and dictating the terms of their rookie contract.
While Formula 1 has implemented a spending cap 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 cost cap. The three exempt employees are usually the team principal, sporting director and technical director. Or, to use more common corporate nomenclature, The chief executive officer, chief operating officer and chief technical officer. These are the same executives that are discussing potentially capping driver salaries.