The FIA has pinpointed 13 categories regarding the adjusted or excluded costs which have not been correctly treated by Red Bull and led to the Austrian side’s budget cap breach, which was confirmed last week after the FIA concluded its financial review for the previous season.
The governing body explained that Red Bull “inaccurately excluded and/or adjusted costs amounting to a total of £5,607,000” when they presented the financial documentation last year and based on the data they have overspent by £1,864,000.
But where did Red Bull get it wrong with their submission?
FIA provided details only about the basic information regarding which elements of the financial rules were broken. However, some information has emerged in recent weeks. Explaining the list, the FIA points out that “in accordance with the findings of the cost cap administration, Red Bull has acknowledged that the reporting documentation submitted by it included the following incorrectly”.
Here are the rules involved:
1 Overstated excluded costs pursuant to Article 3.1(a) of the Financial Regulations (concerning catering services)
This is related to catering costs at the factory, and the inability to separate costs of feeding employees who don’t come under the cap, such as admin and marketing, and those who do. The FIA insisted on including the total catering costs.
2 Costs pursuant to Article 3.1(w) of the Financial Regulations concerning consideration and associated employer’s social security contributions)
This is linked to excluding the costs of an “employee that has been formally placed on indefinite sick leave or disability leave”. It seems that there was a disagreement relating to costs connected to a senior employee who was both ill and at the same time involved in a redundancy process.
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3 Costs pursuant to Article 3.1(h)(i) of the Financial Regulations (in respect of Non-F1 Activities), as those costs had already been offset within Total Costs of the Reporting Group.
This rule shows the exclusions of “all costs directly attributable to non-F1 activities”.
4 Costs pursuant to Article 3.1(k) of the Financial Regulations (in respect of bonus and associated employer’s social security contributions)
This rule relates to the exclusion of employee bonuses, which Red Bull memebrs received following Max Verstappen’s 2021 F1 title.
5 Understatement of Relevant Costs in respect of a gain on disposal of fixed assets by failing to make the necessary upwards adjustment.
The FIA has given no information on what assets were sold.
6 Costs pursuant to Article 3.1(q) of the Financial Regulations (concerning apprenticeship levies)
This rule relates to the exclusion of social security contributions and in this case apparently involved apprentices working at Red Bull.
7 Costs pursuant to Article 3.1(h)(ii)(i) of the Financial Regulations (concerning consideration and associated employer’s social security contributions)
This rule relates to exclusion of “social security contributions incurred in respect of any personnel engaged in both F1 activities and non-F1 activities”.
8 Understatement of Relevant Costs in respect of provisions set forth by Article 4.1(a)(i) of the Financial Regulations (concerning the cost of use of Power Units)
This rule states that any “power unit transaction in connection with an F1 activity must be included in relevant Costs at not less than fair value.” In 2021 Red Bull was supplied with free works power units by Honda.
9 Costs pursuant to Article 3.1(h) (i) of the Financial Regulations (concerning consideration and associated employer’s social security contributions)
Just like point 3, this is linked to excluding costs directly attributable to non-Formula One activities.
10 Understatement of Relevant Costs in respect of provisions set forth by Article 4.1(f)(i)(B) of the Financial Regulations (concerning use of inventories)
This relates to allocating the costs of unused spare parts to the heritage department and thus taking them out of the cap. It is believed to be the single biggest item in this list, with Horner suggesting in Austin involves a seven-figure sum.
11 Clerical error in respect of RBR’s calculation of certain costs re-charged to it by Red Bull Power Trains Limited.
This relates to the sister Powertrains division that was being set up during 2021.
12 Certain travel costs pursuant to Article 3.1(r) of the Financial Regulations
This rule relates to the exclusion of all flight and hotel costs in connection with a competition or testing of current cars by personnel.
13 Costs of maintenance pursuant to Article 3.1(i) of the Financial Regulations
This is linked to the exclusion of “all costs directly attributable to human resources activities, finance activities or legal activities.
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