No income, but significantly reduced development programme

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Formula 1 teams are faced with a huge challenge as a result of the ongoing coronavirus crisis. With their income practically falling to zero, they have to put any selifsh interest away in a bid to secure their own and the sport’s financial stability.

Leaving no stones unturned, the coronavirus epidemic has had a severe impact on the Formula 1 championship, as well. Aside from the cancellation and postponements of races, the sport has been forced to implement its first measure to avoid a possible financial catastrophe.

Teams gather their income from their sponsors and from the Commercial Rights’ Holder. With no races, sponsors are not obliged to pay for their partnership and again with no races, teams do not receive any money from Liberty Media. Teams get their money mainly based on the results of the Constructors’ Championship of the 2019 season, but the Commercial Rights’ Holder pays that from the income it gets from the Promoters and the TV channels for the races of the actual season.

With no income, the problem is that teams still have to pay the salary of their employees while they can only save a small amount of money by not travelling to races. Racing Point team principal Otmar Szafnauer estimates that teams can save around 2 or 3 million US dollars with the first eight races either postponed or cancelled. They cannot cancel all hotel bookings and flights without paying for it while a further issue is presented by the fact that they had ordered a certain amount of parts and materials from their suppliers that had been calculated for a season featuring 22 races.

The other side of the coin

To mitigate the financial effect of the coronavirus, the sport has introduced a package of measures including the delay of the introduction of the technical revamp for 2021 until 2022 and the continuation of the 2020 cars in the coming season.

AlphaTauri team principal Franz Tost was buoyed by the set of measurements, stating that teams can save a huge amount of money by the fact that they do not need to develop two cars at the same time. "The good thing about the coronavirus story is that we don't have to do double development this year," he is quoted as saying by

"We can't develop the car for 2022 until the beginning of 2021. That also means 2021 development will now happen under the umbrella of the budget cap. [That is] a very important point because it saves a lot of money. It means that double development at high cost level is no longer necessary," the Austrian concluded.