Five years ago, most Formula 1 teams lost money, some of them a lot of it, propped up by manufacturer backing or a wealthy owner willing to treat the team as an expensive hobby. Today, the average F1 team is valued at $3.6 billion, up 89% since 2023. Ferrari and Mercedes are closing in on $10 billion each. Ten of the eleven teams on the grid are now worth $1.5 billion or more, a bar only four teams had cleared just two years ago.
That’s not a fluke of good timing. It’s the direct result of one regulatory change.
The cost cap did the work
Since 2021, F1 teams have operated under a shared spending limit: $215 million per team for the 2026 season, with separate caps for power unit manufacturers. Before the cap, the richest teams could simply outspend everyone else into irrelevance, which made the sport both less competitive on track and structurally unprofitable off it: teams spent whatever it took to win, regardless of revenue.
Capping spending did two things at once. It narrowed the performance gap between rich and poor teams, producing genuinely better racing. And it forced every team, including the biggest spenders, to actually run like a business rather than a bottomless project. Many teams have gone from running at a loss to breaking even or turning a real profit. That’s the less-visible half of the cost cap story, and arguably the more important one for anyone who owns a stake.
The number that proves it
McLaren sold a partial stake in late 2025 at a valuation of roughly $4.1 billion. Five years earlier, that kind of figure for an F1 team would have sounded absurd, in a sport where teams needed manufacturer life support to survive a season. The cost cap turned F1 from a cash-burning passion project into something that looks, financially, like a franchise sports league: predictable costs, real margins, assets worth genuinely buying a piece of.
Why this matters beyond F1
This is a useful case study for a question worth asking about any sport: is a rule change actually about fairness, or is it about turning the sport into a better business? With F1’s cost cap, it turned out to be both: competitive racing and team profitability improved together, not at each other’s expense. Worth remembering next time a league proposes a spending cap and the framing is only about “competitive balance.”
The Wage Bill