F1 mustn’t let post-season budget cap rows become a regular occurrence

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The history of Formula 1 is filled with acts and accusations of rule-bending. From technical infringements like secret fuel tanks and claims of hidden software settings to on-track scenarios such as causing a deliberate crash to win a race, to off-track scandals such as espionage.

But until last week, no F1 team had been accused of potentially breaking the rules with their finances. That changed when the FIA announced Red Bull had been found to have exceeded its 2021 spending limit.

‘Cheating’ is a strong word, but it was one McLaren CEO Zak Brown did not shy away from using last week in a letter to FIA president Mohammed Ben Sulayem, and copied to F1 president Stefano Domenicali where he stressed that, in his view, any team breaching the budget “constitutes cheating.”

Ten months have passed since the controversial conclusion to last year’s world championship in Abu Dhabi. It has taken this long for the FIA to decide Red Bull committed a ‘minor breach’ of the $145m budget cap – which constitutes an overspend of up to 5%, potentially as much as $7.25m.

Horner is adamant Red Bull stuck to F1’s spending limit
Red Bull was also found to have committed a ‘procedural breach’, as was Aston Martin (and as was Williams in June). The team which took Max Verstappen to the drivers championship last year is adamant they did not exceed the limit. A Red Bull statement said their 2021 submission was “below the cost cap limit,” and they were “disappointed” in the findings and would “consider all the options available” to them.

Nothing has followed in the nine days since. Questions therefore still hang over not only the 2021 season, in which Red Bull is said to have overspent, but also this year and future championships.

Before the announcement was made, many had suspected a team of breaching the costs limit. Mercedes team principal Toto Wolff described it as an “open secret” in the paddock.

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His opposite number at Red Bull, Christian Horner, strongly denied there was any truth in the allegations and demanded rivals withdrew ‘fictitious, defamatory’ claims otherwise.

Zak Brown, McLaren CEO, Spa-Francorchamps, 2022
Brown said over-spending constitutes “cheating”
“We made the submission in March,” Horner said. “We stand absolutely, 100% behind that submission that we are below the cap.

“That submission has to be signed off by your auditors – obviously ours is one of the ‘big three’ – and then it goes through a process with the FIA, a little bit like an audit, where there are questions and interpretations that are raised and discussed.”

As Red Bull has been found both to have exceeded the spending cap and committed a procedural breach, does the matter ultimately rest on the interpretation of the rules? This is the first time the Financial Regulations have been put to the test in this way, and new rules bring the possibility of unexpected interpretations or ‘loopholes’.

“There are always loopholes” Haas team principal Guenther Steiner acknowledged, speaking before the FIA’s findings were announced, while stressing any team should be considered “innocent until proven guilty.”

“If there is a breach, I would say we have to make sure that we are informed, if there were loopholes, what we think they are, [so] that everybody understands them.”

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Steiner is especially concerned no team should be able to get around the spending limits. “We need to make sure that we are not watering down the budget cap for the future,” he said. “That, I think, is the most important thing, and I’m sure the president of the FIA will make sure that is happening.”

Sebastian Vettel, Aston Martin, Istanbul Park, 2021
Aston Martin also committed a “procedural breach” in 2021
However Alfa Romeo boss Frédéric Vasseur pointed out teams discussed the regulations with the FIA at length before they were introduced to prevent any misunderstandings from arising.

“We had two years now to discuss with the FIA, to ask for clarification,” he explained. ”I think we had clarification on the Financial Regulations almost every week.

“Teams [were] asking questions to the FIA and they are replying to everybody. If we have a grey zone, I think it was also our job to ask for clarification.”

So if teams all got regular clarifications from the FIA, how could one team still have found themselves in breach?

Ferrari’s Laurent Mekies was sceptical any loopholes existed, pointing out the FIA had regular access to the team’s bases to police their spending. “I don’t think loopholes are issues right now,” he said. “We have been discussing non-stop with the FIA for two years. It was a new regulation, we have pretty much the FIA living with us in our factories, going back and forth with questions, and clarifications every week.

“So, I think it’s not the approach of trying to find a loophole and exploiting it and hoping that nobody finds out about it. It’s about whenever there are questions, we will ask the FIA, as will every team, and they will give an answer.”

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In his letter to the governing body, Brown insisted the FIA should release the details of the breach as soon as possible so there can be “no room for loopholes” in the future.

Ben Sulayem’s FIA is in the spotlight over the budget cap
Barring unexpected developments, questions over the budget cap will hang over the upcoming race in Austin this weekend. The FIA says it is now “currently determining the appropriate course of action to be taken.” That leaves a wide range of potential penalties on the table, from fines to confiscation of championship points, and therefore doubt over whether championships past, present or future may be affected by their decision.

When Williams was fined $25,000 for a procedural breach of the Financial Regulations four months ago the FIA announced both the infraction and fine simultaneously. The fact no “accepted breach agreement” has been announced so far suggests the row has a while yet to run.

Red Bull clearly believe they have done nothing wrong. But their rivals have warned of the implications which may arise if the dispute over their spending in 2021 leads to changes in how the Financial Regulations are interpreted, now nearing the end of year two under the budget cap.

“What we don’t want is that the rules change in the middle of the season, that we find a compromise and that, suddenly, the rules of engagements are different,” Mekies said. “Not only as far as the 2021 season is concerned but also, as a result, for 2022 and perhaps as well for 2023. That’s the key aspect.”

During the first season of the budget cap, one F1 team has fallen foul of the spending limit, putting it at odds with the sport’s governing body. The stakes are high and the potential for a long-running argument – and potentially a legal battle – exists.

However this is resolved, clarity is needed. F1 cannot afford to repeatedly call the outcome of its championships into doubt 10 months after they finished.

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Author information

Claire Cottingham
Claire has worked in motorsport for much of her career, covering a broad mix of championships including Formula One, Formula E, the BTCC, British...

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70 comments on “F1 mustn’t let post-season budget cap rows become a regular occurrence”

  1. Red Bull clearly believe they have done nothing wrong.

    I’d say they clearly state that is their position, as would a lawyer in a (civil) court about their clients position, but nothing more.

    1. That’s how I define it as well, what the ‘know’ or believe’ can be quite different.

      Also the quote (“We made the submission in March. We stand absolutely, 100% behind that submission that we are below the cap.”) says a lot in what it doesn’t say.
      Undoubtedly, there has been communication between FIA and RBR after their submission in March. And based on those communications they know a lot more about the grey areas, or items where FIA disagrees with their initial submission.

    2. Indeed, and the article further notes that 2021 was the first year of the budget cap when it was actually the second, merely the first where the cap was enforced. So Red Bull knew how the game was played going into the 2021 season.

      Whether they “believe” they didn’t actually spend more isn’t that important. The FIA has already confirmed that Red Bull spend more. The only way out for Red Bull is to argue successfully that their excessive spending falls under one of the exempted categories. Since these are quite clearly defined, and that this wasn’t a problem for the other 19 submissions over two seasons, this is going to be quite the challenge.

      1. The budget cap only applies to three teams, the other 7 are unaffected. Where do you get 19 from?

        1. There have been 20 reports filed so far, 10 for 2020 (when the teams had a test run but no cap) and 10 for 2021. While I suppose we don’t actually know if Red Bull’s first submission contained errors, all teams nevertheless had an opportunity to make all their accounting system ‘cost cap ready’ both prior to, and based on, those first filings. So any errors as for which costs goes in which budget (drivers, salaries, engines, r&d, etc.) would have been noted before the 2021 season, or at least prior to the submission of the 2021 budget.

          That’s what I was attempting to refer to; it would be rather unexpected if Red Bull filed legitimate spending in the wrong categories given that this would have either been pointed out to them after 2020, or something they started only for 2021 – which in itself would raise questions.

          Aston Martin and Williams had some procedural errors, not an actual spending breach. Only Red Bull was listed by the FIA as having broken the actual spending cap. But, granted, it probably might have been better to stick with 9 rather than 19.

          1. It’s hard to see a tidy way out of this. Fines mean little to a big team, it surely must be a sporting penalty.

            If the FIA take actions that affect the ’21 result, then effectively they are saying the result of a championship can never be certain until late the following year.

            If they decrease the cap of a team in the following year, then that pretty much guarantees the team will be further over that year because probably the accounting practices will be the same and retrospectively they are aiming at a lower cap – after the majority of their spending.

            So that only really leaves actions like reduced testing going forward, which is no consolation at all to the teams that feel hard done by in the year the breach occurred.

            So, the real long term action to make this work is to come up with some form of real time reporting in each year. No idea if that is possible. If it is, the the future rules should be made simple – if over, you are out.

    3. Exactly. Off course they don’t go out and say “yeah, we played around with it enough to find some loopholes we hoped nobody would challenge hard enough to cost us too much” since that would be an admission of guilt.

      The simple fact that the FIA has not published any details, nor shared them with the other teams and that after taking months extra to finally see no way but to conclude there was a breach, it is now getting close to 2 weeks after the announcement with no news on sanctions/penalties for Red Bull (or AM) shows this is getting messy.

  2. Andy (@andyfromsandy)
    19th October 2022, 12:43

    If a team wants to admit guilt and the Cost Cap Administration allow it then I think I have found a somewhat interesting get out jail free card. IMO.
    An ABA may:
    impose any Financial Penalty or Minor Sporting Penalties that would be available to
    the Cost Cap Adjudication Panel pursuant to Article 9 in respect of the relevant type
    of breach, save that the Cost Cap Administration shall not be entitled to impose the
    Minor Sporting Penalties specified in Articles 9.1(b)(ii), 9.1(b)(iii) and 9.1(b)(vi)
    That would allow for a team to overspend but know they will not get a reduction in points from either championship nor a reduction of the cost cap.
    After some sanction is imposed the team would then be subject to close monitoring I assume to ensure they wouldn’t overspend again.

    1. I guess the key phrase here is [if] “…the Cost Cap Administration allow it.”

      There is no obligation on them to do so and as such teams cannot rely on it as an automatic get out of jail free(ish) card.

    2. It’s not really that great of a card, though – for a number of reasons. First, the CCA may simply refuse to enter into any sort of agreement, and this can not be appealed.

      Second, an Accepted Breach Agreement (ABA) may impose ‘certain obligations or conditions’ on a team ‘on an ongoing basis’. This sounds a bit like what happened to McLaren for the 2008 season where they had the FIA look over their shoulders over the winter (although McLaren did win the drivers’ title that year so it evidently wasn’t a big hindrance), or Ferrari’s drawn out engine-case where they FIA loaded more and more sensors unto their car which did interfere with its use.

      Third, even after reaching an ABA the CCA can still impose Minor Sporting Penalties, namely a reprimand, suspension from the competition, and limitations on testing. An ABA avoids a deduction of points and a reduction of the future cost cap.

  3. I am hoping the punishment here is severe enough to discourage teams from getting around the budget cap. It has to be financial in nature, ie reduce RB allowance by at least double of the breach, but also there has to be a element of lasting disadvantage, for example a material restriction in wind tunnel and CFD time.

    1. ´Double the breach’ could be enough of a penalty, but they shouldn’t leave it until the end of the following year.
      With current inflation rates (and assumed increases in the cap) doubling will be meaningless in a couple of years.

      1. I’d think double the breach would be adequate – if they plead guilty.

    2. @pmccarthy_is_a_legend

      It has to be financial in nature

      Whilst I agree with the type of penalty you have detailed, I would be wary of the more broad suggestion that it ‘has to be financial’ as this could also encompass fines, which I feel would be the least appropriate penalty that could be applied.

  4. Until we get details, everything else is complete and pure speculation. Steiner, so far, seems to be the only one with a bit of common sense about it.

    “There are always loopholes” Haas team principal Guenther Steiner acknowledged, speaking before the FIA’s findings were announced, while stressing any team should be considered “innocent until proven guilty.”

    Since no details have arrived, what possibly could anyone contribute to the topic of punishments? There’s literally nothing to base it on.

    Zak Brown and his likeminded colleagues are already calling for heads to roll, making claims about performance gains, and a certain subset of the media is running with it like it is a factual statement. When, after all, it’s still entirely possible the R&D budget spend by Red Bull could be entirely equal to everyone else at the top teams. It’s still possible they employ roughly the same number of people as the other top teams do. It’s still entirely possible the overspend is a couple of hundreds of dollars and not 7.25 million dollars. It could, literally, be that they spend too much on car rentals at GP’s… Probably not, but the point is: we don’t actually know and therefor can’t make any informed judgements.

    And mind you, I’m not saying this is the case. And if there was a significant overspend that warrants a call of “cheating” and a severe penalty, it should be handed out. Even if it means, for instance, taking all of RBR’s WCC points for 2021 (and, of course, their payout from that result) and decreasing their budget next year by X millions as compensation. But that should only happen if the infraction actually warrants it. Not because of speculation and before the FIA can properly reach a verdict, even if that doesn’t happen in just one week because the media, the Twitter fiends, or Zak Brown’s of the world get restless. This process warrants being thorough and correct way more than it warrants speed.

    1. Ultimately, I’m not convinced anyone would care if it weren’t for Red Bull dominating the season…

      1. Michael (@freelittlebirds)
        19th October 2022, 17:48

        @joshgeake yeah but that makes it much worse for Red Bull. If they had overspent and scored 0 points last season and this season, they may have just gotten a slap on the wrist since their incompetence may have been punishment enough. The combination of overspending and domination dictates that the punishments will have to be severe if indeed they spent more.

      2. I think they would, but that certainly intensifies it. There is every possibility that they are only so far ahead this year because they overspent last year, which means that there’s a chance that their breaking the rules has affected 2 seasons already…

        1. Or it could be that the rest of the teams are just incompetent?

    2. The budget cap is just that, a cap. It’s not a budget that prescribes what the teams can spend their money on, and how much. What Red Bull chose to spend their money on is thus largely irrelevant. The only exceptions being if they believe their excessive spending falls under one of the few exempted categories. Given that everyone knew from the previous season how this worked, this seems hard to believe – but it’s not impossible.

      As of now, the FIA has stated that Red Bull did spend more than allowed. Steiner’s comments are thus only valid to a point. Red Bull may technically still be innocent, but they’re already knee deep into a case that’s not looking too promising for them. They still have a chance to explain themselves, of course, but the stories that have appeared in the media – whether fed to them by Red Bull or not – about expensive catering and other trivialities don’t inspire much confidence.

      1. This is very true. If a car users 5% more fuel than allowed, or a slot gap as 5% too large, the car will be disqualified even if it was by mistake or a result of damage. Heck, it would generally be with 0.5%, even if the team thought that a certain part didn’t count.

        How far over the cap they are doesn’t really matter. 50p, £5 million or £50 million is still over the cap, just as 2cm or 0.02mm is out of spec.

  5. Saracens in Premiership Rugby constantly claimed they did nothing wrong, then were found guilty of overspending on a salary cap and were relegated to the bottom of division 2. NOt saying you can do the same with an F1 team, but where there is smoke there is fire.

    Simply put, if a team remains within a budget cap then doing a compliance check each year on spending shouldn’t be an issue or a headline.

    Whatever. 2021 and in part 2022 will always have a stink about it where Red Bull spent more than others. If Red Bull are happy with that in the definition of integrity then that will forever define how they do business and competition.

    I wouldn’t work for them.

    1. I assume you wouldn’t want to work for Ferrari (oil burning), McLaren (spygate), Mercedes (illegal test sessions), Williams (water-cooled braking), Haas (doing R&D for Ferrari), Renault/Alpine (crashgate), Honda (secret fuel tanks), Sauber (employing 5 drivers with valid contracts to race in two seats), either.

      I think you’ll find integrity to be at the bottom of the list for the entirety of Formula 1, past, present, and no doubt future.

      1. Blimey, scraping the barrel to find examples from each team. Even so, those most serious ones were dealt with accordingly. Lets see a penalty that fits the crime. A $100m cost cap reduction for RedBull akin to spygate, or for Christian Horner to be banned akin to crashgate would be good comparison starting points. ;)

        1. Are they not all examples of teams acting with a lack of integrity? Was that not your point?

          1. The key point was referring to another sport where a team cheated a budget cap and they were fined. If teams remain within a cap then this audit check is nothing else than just a report.

            I’m all for supporting a person and/or team that serves their penalty, but so far all RedBull have done is admit surprise. They need to own their error and deal with the repercussions. Like those that were penalised in your examples – learn and move on, integrity helps to be restored.

          2. @tsgoodchild – I don’t think anyone in those examples admitted fault prior to a punishment being negotiated. If they’re given a punishment they find acceptable, I’m sure they’ll say it was a misunderstanding that has now been clarified and they’ll work to ensure everything is ok with the FIA in future. There are examples in football (eg Man City) who were given severe punishments and successfully fought them in the courts so whilst this is being looked into, they aren’t going to admit anything yet.

          3. @sjaakfoo in the case of Haas, you claim that they have been “doing R&D for Ferrari”, but they have not been found guilty of that offence – the FIA’s investigation has confirmed there had been no transfer of intellectual property from Haas to Ferrari.

            In criticising others for complaining about a proven breach of the regulations, you are actively smearing other teams by falsely claiming that they have been found guilty of an offence that they have not committed – rather hypocritical behaviour on your part.

        2. Very worrying stuff as well is this connection between Mercedes and the FIA. They clearly had information they legally were not supposed to have. I would call it a competitive advantage and cheating, equal to an overspend situation. Who knows what WCCs Mercedes has won because of their ties within FIA. A full investigation into all their WCCs is in place given the severity of this breach. How can one team have such informational competitive advantage and how long have they had this?

  6. It’s the nature of accounting that you cannot avoid the actual checks being completed quite a bit after each season’s end.

    Hence, the only way to avoid discussions of potential breaches is to drop the cost cap altogether.

    1. It’s also the nature of accounting that a layman’s “just add up all the bills” approach isn’t how it works at all. Hence all this conjecture, assumption and aggressive “just give Lewis the championship” isn’t necessarily fair.

    2. @proesterchen Especially since the timeframe covered is the calendar year (itself ending weeks after the book closes on any given season) and teams have until the end of March of the following year to submit the documents.

      This sort of thing was a big reason why I was against a budget cap in the first place, and it looks like the other one (about it being easy to break the regulations and receive no consequences) is also likely to be bourne out, unless the FIA suddenly decides that this is the one regulation breach it won’t do to protect Red Bull’s 2021 results.

    3. Of course, there’s always a chance. Just as there’s a chance that something like SpyGate or CrashGate will happen again and change the result of the championship a significant time afterwards. Heck, we could end up 5 years down the line and find out that a team has been purposely hiding some spending… Just like doping, this kind of thing can happen. It doesn’t mean the rules should be dropped, though.

      That said, I’m sure there are things they can do to reduce the chances. Strict punishments would be a deterrent, for instance, and close monitoring throughout the season would help to spot potential errors early.

      The fact that it may affect the results of a previous season after the fact is no reason to drop the rule, unless you’re going to say we should drop the rules on e.g. spying or purposely crashing. Everything reasonable should be done to ensure it doesn’t happen, but we have to accept that it may, occasionally, change the result of a season after it is completed.

      If it happens regularly, that’s another thing, of course.

      1. Let’s quote Claire:

        F1 cannot afford to repeatedly call the outcome of its championships into doubt 10 months after they finished.

        Well, if that is to be avoided, there is only one way to accomplish that.

        Never let the cheerful supporters of a budget cap (always a fun bunch, pushing for hundreds of gainfully employed engineers and other personnel at several fully-funded teams to get forced out of their jobs) forget that this is a problem of their own making.

        1. F1 cannot afford to repeatedly call the outcome of its championships into doubt 10 months after they finished.

          If significantly harsh punishments are handed out for any breaches, they won’t repeatedly be called into question, as the teams will play by the rules. They’ll make sure they check with the FIA for anything abnormal, just as they do for technical innovations now.

          It’s only if they are too lenient that results will repeatedly new called into question, because the teams will push the boundaries repeatedly. If the advantages of breaking the rules are more than the disadvantages of the expected penalty, they’ll break the rules and accept the penalty (like Perez, last year?), and every year we’ll have teams breaking the rules and camping into question the previous year’s results.

      2. @drmouse

        and close monitoring throughout the season would help to spot potential errors early.

        Several team principals already talked about this having been done last year, and I think also this year, so while @proesterchen and @alianora-la-canta are right that the final check only can be done after the season is done.

        Surely just like I can and should check with my accountant when something is out of the ordinary in our company books, the teams(‘s accountants) have a duty, according to the rules, to work with the FIA to clear that (to avoid penalty’s from the FIA as well as their their tax offices after the fact).

        We don’t know for certain whether Red Bull had the same ‘interpretation’ during the earlier dry-run season as the FIA hasn’t cleared up the precise nature of the dispute, but given the FIA already disagreed with them on it, it seems likely they either did and were told by the FIA not already then, or they came up with it later, and the FIA now told them no. It remains possible that didn’t come clearly during last season, which might be seen as typical of the FIA way, and gives Red Bull a reason to deny wrongdoing, but clearly this has been policed.

        It’s just the case that punishment in a thought to be more or less rule-based competition is hard, just as it proved difficult even in the case of crashgate, which was a blatant and obvious on track cheat and fraud. It has never been easy or clearcut in F1 (McLaren’s fine is a clear example I think).

        1. final check only can be done after the season is done.

          … let me finish that sentence, sorry.
          … season is done, surely both the team accountants as well as the FIA auditors can and should look at odd positions in the books and balance sheet as well as in the budget forecast that they would have needed to properly plan the season and year while they come up and not wait for the final results to query them so that the team(s) don’t run the risk Red Bull now is.

  7. Coventry Climax
    19th October 2022, 13:23

    That’s what F1 has become, the pinnacle of lawyers battling, overthrown with the sauce of show.

    1. Pretty sure it’s been that for maybe 5 decades by now, maybe longer.

  8. I’m still of an opinion that if we are going to have a cost cap then the penalty for breaching it is severe. So severe that if a team is unsure whether an expenditure is outwith the cap or not that they include it to be on safe side.

  9. Any penalties for breaches should be written into the rules so it is clear and transparent for all (inc fans).

    Something along the lines of:
    Breach over 5% = a penalty of position(s) in both drivers and constructors championship.

    Breach under 5% that is proven to be deliberate and/or premeditated = a penalty of position(s) in both drivers and constructors championship.

    Breach under 5% that is ruled to be unintentional = a fine of 2 x breach amount + reduction in following years cap by 2 x breach amount + 5% reduction in following years aero testing allowance.

    Clear, reasonable and a suitable deterent.

    1. Andy (@andyfromsandy)
      19th October 2022, 14:26

      The financial regulations for the cost cap gives a list of penalties for a minor sporting penalty and a major sporting penalty. It is quite explicit although it doesn’t go into specifics on which will apply or be given exactly.
      A team knows if it spends more than it should it can face a deduction of points from either championship and even exclusion from races.
      Take a chance on overspending on the hope of just a monetary penalty is quite risky IMO.

      1. The problem is that, while it could be any of those, it could be any of those. The FIA could well issue a small fine. There is no precedent, yet, and the FIA are inconsistent with penalties anyway. Teams are more likely to take a chance if they may just get a slap on the wrist.

        I’m in favour of more strictly-defined minimum penalties in general (as well as more strictly defined rules and less leeway for stewards interpretation). But I definitely like the idea of defined minimums for the cost cap, where a beach is quantifiable. My own minimums would be asking the lines of:

        Minor breach: fine of 2x breach amount, taken from inside this year’s cap, to be redistributed (see below)
        Major breach: fine as above, plus reduction in all testing limits in proportion to the beach and a reduction in both WCC and WDC points for the season in which the breach occurred in proportion to the beach.

        Breaches in multiple successive years should include an escalator in the fine and the officials should, obviously, have the power to increase the penalties, but those minimums should always apply for any breach.

        *Redistribution: place all these fines in a pot, them distribute that pot to the teams which didn’t breach the cap on proportion to how far under they were.

    2. @aussierod – Seems reasonable to me but it’s funny looking in from the outside seeing all of these team bosses complaining about potential punishments and what they should be etc. Why did they decide to remain silent when the rules were being agreed in the first place and the punishments were left undefined? We’ve seen some team bosses try and argue that an overspend of less than 0.5% would bring serious benefits to the team and yet when the idea was floated that 5% was considered a “minor breach”, they said “yeah alright…”

      1. @petebaldwin They didn’t. This was what they were able to get the FIA to agree to.

    3. Michael (@freelittlebirds)
      19th October 2022, 15:12

      @aussierod there’s no way to prove that something was deliberate or premeditated. Do you expect you’ll find an email that states the following:

      “Okay guys, let’s break the cap by slightly less than 5%! Delete this email so they don’t think it’s deliberate! Oh no, our press department shared it with the FIA! It’s officially deliberate and premedidated.”

      Imo, the distinction of percentages is immaterial and perhaps that is where Red Bull made their biggest mistake. There is no such thing as a minor sporting violation when you may have bought yourself half a second or one second in each race for 2-3 years as everyone is suggesting. You will receive the same penalty for either minor or major unless you can prove that it didn’t affect your team’s performance at all.

      1. The last bold part is indeed very likely, considering how little difference that amount makes. Let’s not forget ferrari constantly spent 60-80 mil more than their closest competitors and haven’t been able to win a title now for 14 years. Not to mention toyota, at least ferrari brought a consistently competitive car, toyota not even that.

      2. @freelittlebirds – And yet there are “minor” and “major” categories. Why did no-one flag this up as a problem before it was suggested Red Bull had breached the cap?

        1. @petebaldwin Because the people thinking in that direction were busy arguing that even a single-category version would have the exact same problem (but at the difference between “on the line” and “over the line”, especially given how different accounting systems have differences in how some of the other terms are defined).

  10. “What we don’t want is that the rules change in the middle of the season, that we find a compromise and that, suddenly, the rules of engagements are different,” Mekies said.

    i could not hold back a big laugh… rule changes in the middle of the season are common under Liberty.

    There are two things important in this soap.
    1: The leak, some teams already knew the outcome of a very confidential process.
    2: Transparency, what constitutes the breach and how is it possible this breach only now is known. The balance figures were from march. What happened in the meantime?

    The penalty should be in relation to the breach.
    As said before, the teams accepted less then 5% as a minor breach when the cost cap was set.

    1. But the FIA said there was no leak, so Wolff and co. must just be really good at guessing.

      On a more serious note, it is true that everyone signed up to the ‘minor breach’ definition. But in some media this is being portrayed as a slap on the wrist, but the actual rules allow for all or some of:

      – deduction of points (driver and constructor)
      – suspension
      – limitations on future testing
      – reduction of a future cost cap

      It is not likely, perhaps, but entirely possible within the current rules for Red Bull to be outright disqualified from 2021 – Verstappen included – and for the team to be handed such a limitation on their 2023 budget that they’ll go the way of Ferrari after their engine settlement. Again, not likely, but minor is only minor in name. The penalties could still be severe.

      1. The FIA has spoken wrongly about many other things. Their claim of there being no leak simply doesn’t stand up to the numerous other sources providing details of such a leak.

    2. There is a wide range of consequences for a minor breach, including points deduction from constructor and driver championship, and suspension from one or more stages of competition.

      So if you win a championship while breaching the cost cap the points deduction is the most meaningful option. Especially when you win by a few points only, as this can be a result of the “minor” overspending.

      Maybe make it a minor points deduction of 5 % of the points then…

  11. I really think we should blame the FIA to allow a 5% allowance of the 100% allowed in the cost cap.

    1. But they don’t allow it, they just count it as a less severe infringement that one over 5%.

      That said, I think having this distinction is pretty stupid. They don’t have different penalties for a minor or major breach of the technical regulations, it’s pretty much just a straight forward DSQ. Even if the team has used a faulty measuring device and thought the car was in spec, or thought a certain area wasn’t covered, the penalty is the same for 2 microns out or 2cm.

  12. To me, it’s pretty telling that at the end of the day, nine out of the 10 teams interpreted the cost cap regulations with enough parity with the FIA that they did not exceed the cap as determined by the FIA. The best that can be said for Red Bull is that they are the only team who interpreted the rules differently enough that they exceeded what the FIA interpretation is. And with all the information and questions being shared for years about how to interpret the regulations, I don’t feel sorry for Red Bull at all in this case. As Brundle often says, ambition ahead of adhesion.

  13. Penalty should be severe, I just hope they’re not negotiating the punishment. However, no news is not good news hopefully they will have some sort of announcement this weekend otherwise journalists will be asking the same thing too everyone.

  14. One thing I feel is getting lost in this thread is that cost accounting still involves considerable judgment even when well established accounting standards like FASB and IFRS. The FIA has created its own set of accounting standards that are have far more exceptions and less details than these standards. For example in the exception category, marketing, HR, Legal, Employee Termination costs, Employee Benefits are all excluded from the cost caps. So I can see Red Bull taking an expansive views of something like Employee Benefits and Marketing, to allocate CAP costs outside of the limits. And in regards to capital expenditures period allocation, I see the FIA guidelines lacks specificity in actual durations whereas FASB regulations are generally specific durations for different types of capital expenditures.

    Lastly, the regulations use the term fair market value for determining cost, which in the F1 world where so much of what is done is bespoke work, one can easily see how one could debate this costs.

    So I can believe that the when we get to the details here, we will find that RedBull did have a coherent plan to fit under the cost caps and the FIA just rejected some of their accounting arguments as they wanted accounting practicing to be consistent between teams. And the real question is when did this conversation happened (in season or post season) as I do think that is relevant to what penalty is applied.

    Just thoughts from somebody with lots of experience in international accounting pratices.

  15. The only way youll stop it from happening is making the penalty so severe that its not worth the risk.

  16. I’m not convinced budget cap punishments will be suitably severe unless there’s a queue of entirely credible, ‘valuable’ potential new entrants waiting to buy any team that might throw the toys out of the pram and quit. I have no idea how watertight the various committments to remain in F1 until [year] are, but I’m working on the assumption they’re worth approximately the value of 100 or so pieces of paper and a quarter of a Canon ink refill.

    The teams, and especially those who control or supply other teams – Red Bullpha Tauri, Mercedes + customers, Ferrari + customers – have far too much power for those in charge (whoever that is…) to be able to give them a proper spanking.

    1. The teams, and especially those who control or supply other teams – Red Bullpha Tauri, Mercedes + customers, Ferrari + customers – have far too much power for those in charge (whoever that is…) to be able to give them a proper spanking.

      This is indeed a serious issue, but while Red Bull’s issue is technically only with the FIA – it’s pretty safe to assume that Mercedes (and its clients) and Ferrari (and its clients) are going to keep the pressure on. New entrants Volkswagen are also going to be keen that the FIA upholds its commitment to the budget cap, because nobody wants to see a repeat of the failed budget cap of 2010 that lured in three teams on a false promise or the spending war that contributed to the demise of LMP1.

      The word of German Volkswagen AG and Mercedes and Dutch Stellantis (Peugeot, Fiat, Alfa Romeo, Chrysler, etc.) carries some weight in the motoring world, and they’re all urging the FIA to act tough – publicly or not (yet).

  17. Did 9 out of the 10 teams comply with the Cost Cap or did they have better creative accounting systems than Red Bull. F1 teams has always found ways to circumvent rules to gain performance. Maybe, Red Bull didn’t circumvent the rules as well as other teams, such as Mercedes. There obviously was a leak of information from the FIA which is in itself a very serious issue. The stink that Toto, Zac etc are kicking up could well be a smoke screen to divert attention away from their own creative budgeting. Lets all wait until we get facts, not conjecture on what other teams and sections of the media are feeing us.

  18. Make the fiscal year June-July, instead of a calendar one. This way we will have budget reviews during the summer and will make silly season even sillier.

  19. Normal in the real world if you have a budgetcap you have accountant buro’s and as a professional organization as the FIA you make sure you have 1 big organization who will hold for every team the budgets which would give the teams a spreadsheat with all the cost on it which is appliable for the budget.

    Teams can have their own accountants but the FIA is the one who get all the numbers and keep the teams informed on how much they spend and how much they can still spend…. So no one can say have different views or different sheat then the FIA ones. And after the season all information is directly avaible … Not almost a year later and have different views on costs.

  20. Davethechicken
    20th October 2022, 8:17

    whataboutery

    1. Davethechicken
      20th October 2022, 8:21

      Reply to Martin

  21. It’s quite interesting how the rhetoric is fully on RB.
    It’s quite typical that teams that have been caught cheating are the most vocal on other teams having to be punished.
    More ironic is that that sentiment comes from two businessmen that have made their fortunes by bending and breaking rules or lobbying the rulemakers.

    Pots meet kettle and start foaming at the mouth.

  22. You would think that even a child doing basic arithmetic would know that a fine for an overspend – would be no penalty at all to a team used to spending millions more.

  23. Won’t be long until there is a ‘no further action’ message, some 10 more articles with people going out of their minds still hoping Lewis will win 2021 and then we can finally move on. McLaren had spy gate, Mercedes cheated with their tyre test, Ferrari with their fuel flow. Let’s just move on.

    1. Andy (@andyfromsandy)
      20th October 2022, 11:35

      Yes, let’s move on with whataboutism.

      Every year the FIA or stewards do something and there are calls for consistency to apply penalties that exist for transgressions. What happened in the past is obviously wrong but it shouldn’t be allowed to continue.

      It started in some respects with the removal of jewellery. What seem like petty things are in the rules and the new broom wants to make a new start.

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