The 2020s have seen a significant shift in the economic structure of Formula One teams. Prior to the implementation of spending limits, budgets varied significantly between the top and bottom of the grid. In 2019, the Constructors' Champion, Mercedes, spent $420 million, while the lowest-scoring teams, Williams and Haas, spent only $125 million and $150 million, respectively.
To curb the advantage gained by wealthier teams, the FIA implemented a cost cap starting in 2021. The timeline for the cap is as follows:
2021: Initially proposed at $175 million, then reduced to $145 million due to the economic turmoil of the COVID-19 pandemic.
2022: Reduced to $140 million.
2023–2025: Settled at $135 million per year.
The cost cap is intended to limit expenses related to car development and staff payroll, though it excludes certain costs such as driver salaries, marketing, and the compensation of the three highest-paid staff members.
The value of a position on the Formula One grid is protected by a significant financial barrier for new entrants. Entering a new team requires a $450 million up-front payment to the FIA, which is then shared equally among the existing ten teams. This "anti-dilution" fee reflects the increased commercial value of a grid slot. In early 2025, Cadillac received final approval to join the grid as an 11th team for the 2026 season onward.
Team revenue is influenced by the Concorde Agreement, which governs the distribution of prize money and television income. In August 2020, all ten teams signed a new Concorde Agreement committing them to the sport until 2025. This agreement changed how prize money and TV revenue are distributed to support equal competition and sustainable development.
Teams also generate value through title sponsorships and rebranding. For example, Sauber introduced a title partnership with the online casino Stake for the 2024 and 2025 seasons before its planned transition to the Audi works team in 2026. Similarly, Racing Point was rebranded as Aston Martin for the 2021 season following an investment by Lawrence Stroll.
The average annual cost of running a team—including designing, building, and maintaining cars, staff payroll, and transport—was approximated at £193 million as of 2018. The financial health of the series was impacted by the COVID-19 pandemic; in the second quarter of 2020, Formula One reported an operating loss of $122 million compared to a $26 million profit the previous year. However, the subsequent introduction of the cost cap and the 2020 Concorde Agreement were designed to foster a more stable financial environment for all participants.