Formula 1's seven UK-based teams may be forced to slash up to 1,250 jobs when a stringent spending cap is imposed next year, motorsport sources have revealed.
Liberty Media, which bought the sport for £6.3 billion in January last year, is imposing a £117.6 million annual limit on each team. There is mounting speculation that the move will trigger job losses as the teams slash costs.
Motorsport heartland regions Northamptonshire and Oxfordshire – known in the industry as Motorsport Valley – are expected to be hardest hit. An investigation by The Mail on Sunday with the help of senior sources indicates the teams may have to cut almost a third of their total workforce of 3,951 staff.
The average F1 team spends £171.8 million a year. Britain's biggest spenders – current champions Mercedes spearheaded by Lewis Hamilton and Valtteri Bottas – had a £274.9 million budget in 2016.
Teams justify their spending by race results as opposed to profits. UK-based teams made a combined net loss of £3.5 million in 2016 on a total revenue of £1.2 billion.
Many say the spending excesses of big teams make it impossible for smaller outfits to compete. Northamptonshire-based Force India had to be bailed out by a group of billionaires after crashing into administration in July.
Salaries are one of the biggest expenses and some of the largest teams employ 1,000 people. Driver salaries and marketing staff are exempt from the restriction as are employees working on the design, development and manufacture of the engines.
Over the past decade the number of staff at UK-based teams has soared by 28.5 per cent.
One high-level motor industry source said the industry is braced for potentially devastating cuts. He added: 'People could move jobs within the industry but may not want to go.'
But a spokesman for McLaren said: 'McLaren Racing is not only supportive of the proposed budget cap, but we believe it should be introduced as soon as possible in its entirety for the long term health of Formula 1. Few other major sports operate without some measure of financial control to ensure a sustainable competitive environment.
'We are comfortable that we will be able to manage our existing resources within the final budget number proposed. McLaren is a diverse organisation with a fast-growing Applied Technologies business and successful Automotive company. Add to that our involvement in other motorsport categories, and our ongoing consideration of new series, and we are confident that we can redeploy and refocus resources accordingly.'
An F1 spokesperson said: 'The introduction will be phased to allow for adjustment, and due to an improved revenue distribution going hand in hand with the cost cap, smaller teams will be able to expand their organisations, making it more of redistribution of labour. Some teams will absorb surplus labour into their road car groups, others are already involved in other motorsports, including Formula E.'
However, there is no guarantee that there are enough alternative positions available. Mercedes team boss Toto Wolff recently said 'my utmost priority is protecting our structure and our people.'
Wolff supports the plan to phase in the cap and added that it should be 'a process, not an event...It needs to go over several years, and it needs to consider the various structures that are being put in place.'