Questions and answers on the Red Bull case
It lasted until the Monday after the Japanese Grand Prix. Then the FIA finally made public the information that had been haunting the paddock since the Singapore Grand Prix. Three teams broke financial rules in the last Formula 1 season. Regarding Williams, the case had been known for months. The Grove team had submitted the financial documents too late. The FIA imposed a fine of $25,000.
Aston Martin is also accused of a procedural error. The financial rules of the FIA provide for a fine in such a case. The sentence has not yet been announced. That would only have happened on Monday (October 10) if the accused had accepted the verdict without complaint.
The same is true for Red Bull, which is attracting the most attention. After all, Max Verstappen became world champion for the first time last year. In 2021, there was a budget cap in Formula 1 for the first time ever. Teams were allowed to spend a maximum of $148.6 million in 22 Grands Prix.
The FIA accuses Red Bull of both procedural errors and exceeding the maximum limit. The Milton Keynes racing team spent too much money, according to the auditors. Red Bull denies that. Here are some of the most important answers regarding the big dispute.
What does the FIA say?
The FIA auditors have looked through the documents of the teams in recent months. They reviewed the financial aspects for the year ended on 12/31/2021. The result: The so-called Cost Cap Administration issues a certificate for seven out of ten teams that have complied with the financial rules. Williams, Aston Martin and Red Bull have not done so in the required form.
The Williams case is settled. Aston Martin and Red Bull are still being negotiated. The World Champion team is said to have committed a Minor Overspend Breach. That would be a breach of up to five percent. The range goes from one dollar to 7.4 million dollars. The FIA does not provide any information on this.
In its publication, the FIA indicates that all teams supported the audit process. All provided the necessary insights. All cooperated and acted in good faith at all times. These lines are very important. They give an indication of what the penalty might be and points to a mild judgement. If a team deliberately tricked the supervisors, the penalties could be draconian. That didn’t happen.
The FIA also points out that the intervention of the Cost Cap Administration “was limited to the verification of the submissions of the participants and that no full formal investigations were initiated”. The appropriate course of action to be taken with Red Bull and Aston Martin is currently being determined.
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What does Red Bull say?
The world champion team stated in writing that they were surprised and disappointed at the same time. The documents submitted to the FIA would reveal that the budget had remained below the upper limit. One thing is clear: a racing team like Red Bull has its documents approved by top auditors.
There is disagreement between the FIA and Red Bull on several points, it is said. Red Bull is a few million US dollars under the budget cap on its own account. How can it be that the examiners come to a different conclusion? The FIA interprets some of the items listed differently. They count them in the budget cap and Red Bull doesn’t. For example, it should be about salaries in case of illness. Red Bull is said to have suspended them – and therefore not included them in the budget cap.
The top three earners on each team are exempt from the budget cap. In between it was said that Red Bull design guru Adrian Newey was not one of these three. Red Bull would employ him through a consultant contract, and thus not count. So Red Bull could put another top engineer under the exceptions and save money.
However, as Chief Technical Officer, Newey makes a crucial contribution to vehicle development. Red Bull denies the rumours. Newey is one of the three top earners – and is therefore exempt from the budget cap. It should be different with sports director Helmut Marko. The team is not supposed to involve him.
Apparently, Red Bull subsequently received a tax credit that was not included directly in the 2021 information. You couldn’t know how much you’d get refunded.
What is the competition saying?
Numbers numored through the paddock spoke about an infringement of between eight and ten million US dollars. That would have fallen into the category of a capital breach of financial rules. It is not so. It is only a minor violation, as the FIA officially states. But you have to use common sense to put them in quotation marks.
The FIA and the teams have dug a pit for themselves. Theoretically, you could spend up to $7.4 million more in 2021 — and it’s still treated as a “minor breach.” That’s a bad joke. With that much money you can develop a car over the whole season. And even with half a million or a million you can do a lot.
A new front wing, for example, cost 100,000 euros under the old regulations. Roughly the same amount was estimated for the construction of an underbody. A rear wing was 65,000 euros. Every cent that is invested in further developments can bring performance. Every millisecond can make the difference. Especially in a head-to-head race like Red Bull and Mercedes did last year.
Accordingly, the competition demands severe punishment – even if the budget overrun is not that high. Mercedes and Ferrari state that Red Bull not only had an advantage going into 2021 but also for years to come. If you spent more money, you could also develop more in parallel.
The top teams had to downsize with the introduction of a cost cap. Jobs had to be cut. Mercedes states that over 40 employees have lost their jobs, while Red Bull team boss Christian Horner spoke of around 90 employees.
Not only Mercedes and Ferrari are demanding a hard hand from the FIA. The other teams do it too. You have had to cut staff or cut salaries yourself. Red Bull would call for unrivaled salaries and offer extra benefits such as discounted car leases. This is also part of the budget cap.
What could the penalty be?
The FIA and Red Bull could come to an agreement and close the case. Apparently that didn’t happen. The case is thus forwarded to the “Cost Cap Adjudication Panel”. It consists of six to twelve judges appointed by the FIA General Assembly. A slight exceeding of the budget cap can be penalized as follows:
A public warning
Deduction of points in the Constructors’ Championship
Deduction of points in the Drivers’ World Championship
Disqualification from one or more races
Restrictions in the aerodynamic development (wind tunnel, CFD) or reduction of the cost cap.
The choice of words by the FIA suggests that there will be no hard punishment. Max Verstappen should keep his world title. Red Bull had a big buffer to Ferrari in the Constructors’ Championship. A point deduction would have to be huge for second place to be in danger.
One possibility that was raised in the paddock by Ferrari and Mercedes: Red Bull should have the excess amount deducted from the 2023 budget cap, but double the amount. So if you breached it by one million, two million should be deducted. And on top of that, reduce the wind tunnel time based on the calculated time gain. If, for example, one million promises two tenths, the development time in the wind tunnel should be deducted accordingly.
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