The CEO of McLaren, Zak Brown, has explained how the COVID-19 pandemic and the introduction of the budget cap have fundamentally transformed Formula 1, helping to reduce the performance gap between teams and allowing the Woking-based team to climb back to the front of the grid.
According to Zak Brown, the key factor behind McLaren’s rise in recent years – including its ability to attract some of the most talented engineers in the sport – has been the budget cap. Introduced in 2021 with the dual aim of making Formula 1 more financially sustainable and increasing the sport’s attractiveness to new manufacturers, this regulation has significantly lowered operating costs for certain teams, particularly the traditionally high-spending squads such as Ferrari, Mercedes, and Red Bull. The measure has also paved the way for the entry of major manufacturers such as Audi and Cadillac into Formula 1 in 2026, showing its wider impact on the sport’s structure and competitive balance.
Another primary reason for implementing the budget cap was the clear desire of both the FIA and Formula One Management (FOM) to level the playing field as much as possible. Back in 2021, McLaren was very different from the team we know today. According to Zak Brown, over the years the budget cap allowed McLaren to steadily climb the ranks, eventually arriving at its current position as a team capable of challenging the very best on the grid.
Speaking on the podcast How Leaders Lead, Zak Brown highlighted how the challenging period of the COVID-19 pandemic was crucial in pushing Formula 1 to adopt the budget cap. He explained that initially three of the major teams were hesitant about the measure but eventually recognized that it was ultimately in the sport’s best interest.
Zak Brown and the budget cap: “The timing was perfect”
In 2020, the world had come to a near standstill due to the COVID-19 pandemic. Like many other industries and sports, Formula 1 suffered significant economic strain during the enforced pause. This situation made it necessary to implement a strategy that would allow all teams to operate sustainably, financially speaking.
Zak Brown reflected on this period, noting, “COVID was obviously a terrible event, but in a certain sense, the timing worked in our favor. The pandemic put the sport under enormous pressure, and at the same time we were discussing the budget cap, which was originally intended to be significantly higher. In that sense, we were a bit fortunate with the timing because it allowed us to push even more strongly to lower the spending limit.”
He added, “Formula 1 had become a sport where the question was essentially, ‘How much can you afford to lose?’ Especially in our world, where technology buys speed and the largest manufacturers enjoy massive commercial returns, these teams can afford to spend 500 million dollars a year because the investment pays off. For them, it was always money well spent.”
“On our side, we were spending half that amount. How could we compete against someone spending twice as much? That is precisely why the budget cap has been so fundamental,” Brown continued. “I have always believed that with the introduction of the spending limit, competition comes down to ‘Which team has the best culture, the best people, and does the best work,’ rather than ‘Which team has the deepest pockets?’ I knew we could not compete financially, but I felt we could compete in terms of putting the best team on track.”
How three teams eventually changed their minds
Although Zak Brown did not name names, it is clear which teams he was referring to. Ferrari, Mercedes, and Red Bull were historically the highest-spending teams in the sport. However, the financial pressures created by COVID-19 forced even these dominant teams to embrace the budget cap.
“It was difficult because three teams were spending far more than all the others,” Brown said. “You can imagine that their initial reaction was completely against the idea. Over time, though, they started to recognize their financial responsibilities, even though their spending levels were very different. The team with the highest spending, and one that would still prefer no budget cap today, was opposed. The others wanted the limit to be higher.”
He continued, “I think those of us in favor of the budget cap had the advantage that at that time Liberty Media had acquired Formula 1, and the spending limit was already part of their agenda. The FIA shared the same vision. Ultimately, the three high-spending teams gradually had to accept the idea. The entire industry wanted it. COVID then created a kind of perfect timing to seize the opportunity and bring the sport to a situation from which it is now reaping enormous benefits.”
Thanks to the budget cap, McLaren has been able to compete on a more even footing, leveraging efficiency, team culture, and strategic decision-making rather than simply financial power. Zak Brown’s insights underline how regulation changes combined with effective leadership can reshape competitiveness in modern Formula 1.
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