Mercedes Formula 1 boss Toto Wolff believes a driver salary cap should be gradually introduced from 2024, to avoid a controversy over inflated wages while the championship is slashing costs.
F1 teams will need to operate under a $145million budget cap from next season, reducing by $5m over each of the following two years.
“I don’t think we should lose the superstars of today. So it needs to be a gradual introduction from 2024 onwards” :: Toto Wolff
There will be exemptions to this, including the three highest earners within the team.
Mercedes driver Lewis Hamilton’s contract situation has been the subject of speculation in recent weeks and during the Austrian Grand Prix weekend he hit out at ‘made up’ rumours he was demanding an inflated salary to remain at the team beyond 2020.
Wolff backed up his driver by declaring “weird” stories about a “hilariously high salary or me saying it’s only 50% of that” were “total nonsense”.
He said Hamilton is “very aware of the financial realities of the auto industry and about Formula 1, and in the same way, I’m very respectful of his achievements and his class, and therefore it’s gonna lead to a satisfactory outcome for all of us”.
However, Wolff believes it is in F1’s interest to map out a plan to reduce the costs, to avoid star driver salaries clashing with team budget reductions long-term.
“The salary cap is something that we have supported,” said Wolff. “I believe similar to the leagues in the US.
“If you cap the team at $145m with a downward slope, you need to at a certain stage also cap high salaries.
“But I don’t think we should lose the superstars of today. So it needs to be a gradual introduction from 2024 onwards, so that the future generations of drivers end up on a more sensible level considering that we have a cost cap on the team.
“And this is still my opinion, I think it would be good for the sport.”
Salary caps work in different ways in American sports, and allow for flexibility so the biggest stars earn the most.
It is possible to operate a hard-line cap or manage it over a multi-year period in which salaries can be above or below the cap in individual years as long as they are within the cap overall.
In the NFL, teams operate with a total salary cap of just under $200m, but there is still room for players to negotiate blockbuster deals.
Kansas City Chiefs quarterback Patrick Mahomes has netted the most lucrative contract in the league’s history, a long-term deal that includes a base annual salary of almost one-fifth of the team’s entire cap.
To have such flexibility in F1, a cap could encompass both drivers or, adopting the terminology of the current financial regulations, the two drivers and the three highest non-driving earners.
But salary caps do not have to encompass personal deals outside of the team – in the NBA, Golden State Warriors star Steph Curry has the highest base salary (nearly one-third of the team’s cap) but LeBron James earns more overall because his endorsements considerably outweigh his Lakers’ earnings.
So there could still be ways for drivers to boost their payments through sponsorship arrangements.
“They need to be inspirational, the drivers, and as you can see in the US, the top football players and the top basketball players are still very inspirational,” said Wolff.
“I think high salaries is what they deserve, because they are global superstars and the best of the league.
“But I think it should not end up in a ratio – salary of an individual compared to the team cap – that over a certain time is going to create controversy that is not needed.”
