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Red Bull fined $7 million and lose development time for 2021 budget cap breach

2021 F1 season

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The FIA has announced Red Bull’s penalty for violating Formula 1’s Financial Regulations during the 2021 season.

The sport’s governing body announced on Friday it has entered into a Accepted Breach Agreement with the team as defined in the Financial Regulations. Red Bull has been fined $7 million (£6.059m) and will have a 10% reduction in its restricted wind tunnel and computational fluid dynamics development time during 2023.

The FIA confirmed Red Bull exceeded the cost cap, calculated at £118.036m for 2021, by £1.864m, which is 1.6%. It was therefore found to have committed a “minor” overspend, which the regulations define as being less than 5%.

Red Bull incorrectly excluded 13 separate items from the costs it submitted for the 2021 season, with a total value of £5.607m, the FIA noted.

However the FIA stated “there is no accusation or evidence that RBR [Red Bull Racing] has sought at any time to act in bad faith, dishonestly or in a fraudulent manner, nor has it wilfully concealed any information from the Cost Cap Administration.”

Red Bull’s “minor” over-sped was announced by the FIA on October 10th. It is the only team which has been found to have exceeded the cap, which was introduced for the first time last year.

Red Bull has until 30 days of the decision to pay its fine.

The team finished second in the 2021 constructors championship behind Mercedes. Red Bull’s Max Verstappen won the drivers’ championship ahead of Lewis Hamilton.

FIA statement on Red Bull’s budget cap penalty

Following the submission of all required documentation by all ten Formula One Teams, the Cost Cap Administration carried out the first ever Review process under the FIA Formula One World Championship Financial Regulations. These new Financial Regulations are a very complex set of rules that competitors were required to adapt to for the first time.

Red Bull Racing was found to be in breach, however, the Cost Cap Administration recognised that Red Bull Racing has acted cooperatively throughout the review process and has sought to provide additional information and evidence when requested in a timely manner, that this is the first year of the full application of the Financial Regulations and that there is no accusation or evidence that RBR has sought at any time to act in bad faith, dishonestly or in fraudulent manner, nor has it wilfully concealed any information from the Cost Cap Administration.

In these circumstances, the Cost Cap Administration offered to RBR an ABA to resolve this matter. That offer was accepted by RBR.

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An Accepted Breach Agreement (“ABA”) dated 26 October 2022 was therefore entered into by and between the Cost Cap Administration and Red Bull Racing pursuant to Article 6.28 of the FIA Formula 1 Financial Regulations (“Financial Regulations”). A link to a summary of the terms of the ABA as provided for by Article 6.32 of the Financial Regulations is below.

An Accepted Breach Agreement (“ABA”) dated 26 October 2022 has been entered into by the Cost Cap Administration and Red Bull Racing F1 Team (“RBR”) pursuant to Article 6.28 of the FIA Formula 1 Financial Regulations (“Financial Regulations”). The Financial Regulations are issued by the FIA and form part of the terms and conditions of participation in the FIA Formula One World Championship.

The Cost Cap Administration recognised that RBR has acted cooperatively throughout the review process and has sought to provide additional information and evidence when requested in a timely manner, that this is the first year of the full application of the Financial Regulations which are a very complex set of rules that competitors were required to adapt to and that there is no accusation or evidence that RBR has sought at any time to act in bad faith, dishonestly or in a fraudulent manner, nor has it wilfully concealed any information from the Cost Cap Administration.

The Cost Cap Administration considered it appropriate, in these circumstances, to offer to RBR an ABA to resolve this matter on the terms set out below, given the limited nature of the Procedural Breach in issue and the fact that the Minor Overspend Breach falls at the lower end of the [less than] 5% minor overspend range, and RBR’s willingness to accept the breaches and to cooperate with the Cost Cap Administration. That offer was accepted by RBR.

The ABA concerns:

• RBR’s submitted Relevant Costs reported in its 2021 Full Year Reporting Documentation of £114,293,000;

• Subsequent to the findings of the Cost Cap Administration, a Procedural Breach committed by RBR pursuant to Article 8.2(e) of the Financial Regulations due to the submission of inaccurate Full Year Reporting Documentation in respect of the Full Year Reporting Period ending on 31 December 2021 because it inaccurately excluded and/or adjusted costs amounting to a total of £5,607,000 in its 2021 Full Year Reporting Documentation; and

• Consequently, a Minor Overspend Breach committed by RBR under Article 8.10(b) of the Financial Regulations because its Relevant Costs, as adjusted by the FIA, exceeded the 2021 Cost Cap of £118,036,000 by less than 5%, namely by £1,864,000 (i.e., 1.6%).

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Summary of ABA terms and sanctions

In accordance with the findings of the Cost Cap Administration, RBR has acknowledged that the Reporting Documentation submitted by it included the following incorrectly excluded and/or adjusted costs:
1. Overstated excluded costs pursuant to Article 3.1(a) of the Financial Regulations (concerning catering services);
2. Costs pursuant to Article 3.1(w) of the Financial Regulations (concerning consideration and associated employer’s social security contributions);
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;
4. Costs pursuant to Article 3.1(k) of the Financial Regulations (in respect of bonus and associated employer’s social security contributions);
5. Understatement of Relevant Costs in respect of a gain on disposal of fixed assets by failing to make the necessary upwards adjustment;
6. Costs pursuant to Article 3.1(q) of the Financial Regulations (concerning apprenticeship levies);
7. Costs pursuant to Article 3.1(h)(ii)(i) of the Financial Regulations (concerning consideration and associated employer’s social security contributions);
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);
9. Costs pursuant to Article 3.1(h) (i) of the Financial Regulations (concerning consideration and associated employer’s social security contributions);
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);

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11. Clerical error in respect of RBR’s calculation of certain costs re-charged to it by Red Bull Power Trains Limited;
12. Certain travel costs pursuant to Article 3.1(r) of the Financial Regulations;
13. Costs of maintenance pursuant to Article 3.1(i) of the Financial Regulations.
and further that consequently its Relevant Costs for the 2021 Reporting Period exceeded the 2021 Cost Cap by £1,864,000 (1.6%). RBR has therefore accepted that it has breached: (i) Article 8.2(e) of the Financial Regulations due to its failure to file accurate Full Year Reporting Documentation in respect of the 2021 Full Year Reporting Period, and (ii) Article 8.10(b) of the Financial Regulations due to its failure to keep its Relevant Costs under the 2021 Cost Cap.
The FIA acknowledges that had RBR applied the correct treatment within its Full Year Reporting Documentation of RBR’s Notional Tax Credit within its 2021 submission of a value of £1,431,348, it would have been considered by the Cost Cap Administration to be in compliance with Article 4.1(b) of the
Regulations and therefore RBR’s Relevant Costs for the 2021 Reporting Period would have in fact
exceeded the 2021 Cost Cap by £432,652 (0.37%).

On that basis, RBR has accepted the imposition of the following sanctions:

a) RBR must pay a Financial Penalty of USD 7,000,000 to the FIA within 30 days of the date of
execution of the ABA (Article 9.5 of the Financial Regulations);

b) RBR receives a Minor Sporting Penalty in the form of a limitation of RBR’s ability to conduct aerodynamic Testing during a period of 12 months from the date of execution of the ABA through the application of a reduction of 10% of the Coefficient C used to calculate the individual Restricted Wind Tunnel Testing (RWTT) and Restricted Computational Fluid Dynamics (RCFD) limits applicable to each Team as set out in Article 6 of Appendix 7 to the FIA Formula 1 Sporting Regulations. For example, if the Coefficient C, based on RBR’s championship position is 70%, the effective new value of C will be: CNEW=70% x (1-0.10) = 63.0%; and

c) RBR bears the costs incurred by the Cost Cap Administration in connection with the preparation of the ABA.

The decision of the Cost Cap Administration to enter into the ABA constitutes its final decision resolving this matter and is not subject to appeal. Non-compliance by RBR with any terms of the ABA will result in a further Procedural Breach under Articles 6.30 and 8.2(f) of the Financial Regulations and automatic referral to the Cost Cap Adjudication Panel.

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232 comments on “Red Bull fined $7 million and lose development time for 2021 budget cap breach”

  1. Michael (@freelittlebirds)
    28th October 2022, 15:09

    The FIA has chosen Red Bull over the sport.

    1. Michael (@freelittlebirds)
      28th October 2022, 15:16

      10.28.2022 – the day F1 officially died.

      1. Honestly pathetic. 7million means nothing to RedBull. They’d pay more than that for the advertising gained from winning the championship alone.

        10% reduction when they’ve already got the fastest car by at least 30% won’t make any difference.

        Cheated their way to 2 championships and get a small fine. RIP to F1

        1. There are also questions about whether the 10% reduction is before or after the FIA reduces the testing time the team had to begin with.

          There are suggestions that the 10% value is after Red Bull have had their hours reduced to their original value of 70% of the baseline allowance (i.e it is not a flat rate reduction, but 10% of 70%), so the penalty is actually a bit more lenient than the headline figure suggests – instead of having their hours reduced from 70% to 60% of the baseline figure, it is reduced from 70% to 63% of the baseline figure.

          1. It is 10% reduction of their aero testing time. I don’t think there is anything wrong with the headline. If you are allocated 7 hours of windtunnel testing and get a 10% penalty, you could expect your windtunnel testing hours to be 6,3 hours and not less. If Williams got the same penalty, their 12 hours would be the base of the 10% reduction, not the base 10 hours. And rightly so.

          2. Before or after isn’t really as issue. i.e. 100 * 70% * 90% is the same as 100 * 90% * 70%. I do see your point though, that most people will think a 10% reduction means taking their 70% figure down to 60%, not 63%. I know it didn’t occur to me until I read your post.

          3. This is why people need to both be clear and be educated about the difference between percentage changes and percentage point changes.

            For example, if the interest rate is increased from, say, 5% to 6%, many people say it’s increased by 1%. This is wrong. It has increased by 1 percentage point, an increase of 20%.

            Note: this isn’t a criticism, it’s just a maths geek having a grumble about inaccurate reporting lol

          4. 10% of 70% is 7%, even if you want it to be more.

          5. e clear and be educated about the difference between percentage changes and percentage point changes

            Exactly @drmouse publishers used to sell to bookstores @ 40% off RRP which of course left retailers a max “profit margin” of 67%.

        2. +1 Well said.

        3. More like RIP Hamilton fans

      2. Absolutely. As a life long F1 fan who went to their first race at four years of age, and who is now 45, and never missed a race, I’m done with this sport if this is what it has become. A complete joke, and I feel sorry for all the other teams. Thank you FIA for killing my one joy in life!

      3. It may be when the cost cap died, as I’d imagine the other big teams are now deciding whether to adhere to it or not.

      4. Was always wishful thinking from hamilton or merc fans to expect red bull to be excluded by the 2021 championship or stuff like that; fine is irrelevant ofc, wind tunnel is a significant penalty, I don’t know if it’s sufficient, especially till I read the other article where horner explains why the breach happened.

        1. Sikhumbuzo Khumalo
          29th October 2022, 10:22

          If Mercedes breached the financial regulations of F1 i world rightfully expect them to be punished by points being docked. After this is a team which was disqualified for having their wing 0.22mm out of spec. However I honestly didn’t expect Redbull to be punished by FIA.

    2. Did you read the list of infractions, its a £432,652 (0.37%) overrun. I’m sure that 13 accounting errors really made that car faster. Indeed, if they accounted for the social security contributions of their UK taxes properly, they would have been behind the Williams. They probably spend more on the accounting firm required for compliance the overrun of which they are accused.

  2. Invincible_isaac
    28th October 2022, 15:10

    Seems a bit lenient to me …

    1. The fine is irrelevant. However the 10% reduction in aerodynamic development might actually hurt them pretty bad.

      1. They have already overspent to get a better car so the wind tunnel testing will not hurt them too badly…

        1. @lee1
          Exactly, they already used 1.86 in parts/labor that is probably equivalent to 10 guys or a car or two that is abused.

          Yeah really nothing… Except it is quite a lot! When you consider 1mm breach gets u dsq…

        2. I love how Team LH talk about how every penny is worth minutes per lap but a 10% reduction in wind tunnel time is worthless.

      2. I doubt it will. It may reduce the amount of in-season development they can do next season, but they are starting from a position of significant advantage already, so it’s unlikely to have any significant impact.

    2. It would be lenient if the fine does not need to be included as cost under the budget cap of 2022 or 2023.
      If the $7M (plus cost of the ABA) falls within the budget cap for this/next year then it’s even harsher than I expected.

  3. Lol. Asking a team to pay more money as penalty for a foul that was based on spending more money than allowed. Classic FIA.

    1. Michael (@freelittlebirds)
      28th October 2022, 15:12

      @knightameer there are forces at play here that we are clearly not aware of. This is not a sensible decision that any governing authority would have issued.

    2. Makes perfect sense to me. The penalty for overspending has to be a sufficient deterrent to over pending so you don’t just say, I need to win a title I’m going to do one more floor this year for 1 million and then just eat the penalty next year. Even with this penalty, if you go back to 2021 and tell Mercedes’ and rbr, you can overspend by 7 percent and only get a forward looking penalty they would have to think about it rationally speaking.

      1. Fines are excluded from the budget cap, so that will have no impact on Red Bull in terms of day to day operations.

  4. A 7 million fine and a 10% reduction in wind tunnel time seems perfectly fair to me for an overspend of less than 2 million. That should negate the alleged advantage they gained in lap time, I would think.

    1. I doubt it as they have already achieved the fastest car by overspending. The fine is ludicrous as RB can easily afford that by just collecting their spare change that fell down the back of the sofa. The £7million should have been deducted from next years cost cap not just be able to be paid from outside of it.

      I can see serious court cases launched by the other teams on the grid. £1.8 million is a major upgrade or two! Not only that but it is highly likely that the other teams were well under the cost cap in order to make sure they did not breach it accidentally. So by going over, RB were able to also spend any contingency so have probably gained by a further £1-2 million. It does not really matter if they did it on purpose or not, that is not how sporting rules work…

      1. All teams agreed to these rules as they were. So court cases seem pointless and I doubt anyone will go for that. The penalty is significant for the overspend, especially considering the majority of the overspend is an incorrectly filed tax return and the remaining overspend is only 0,36% of the cap.

        I doubt anyone is going to court. But I’m sure there will be discussions on the minor/major distinction for the future.

        1. Nobody agreed to what specific punishment should be given…. That was left up to the FIA to decide.

          Also I am sorry but these teams have the best Accountants available. The incorrect Tax return was likely a purposeful attempt to shift money and to plan on using it as an excuse later on. None of the other teams managed to file incorrect returns. I have never filed an incorrect return either and I do not have the level of accountants that RB have! Any overspend means they will also have spent their contingency as no team will have run it so close that they hit the cap to the penny. The teams will have been well under it. So by going over RB have benefitted in two areas. By filing an incorrect tax return they have managed to re-allocate funds to development. Now even if the tax return was an accident (I doubt it) it still means they had more funds for development than they should have. They cheated regardless of whether it was purposeful or not. I mean if you were a marathon runner and you accidentally took a shortcut, you would still be disqualified for cheating…

        2. Davethechicken
          28th October 2022, 20:31

          No matter what way you look at it, it is multiples of the “couple of hundred thousand” ie two, that Horner told us at the weekend. Why lie when you will be caught out?

          1. They probably had no idea it was such an amount overspent.

      2. The FIA acknowledges that had RBR applied the correct treatment within its Full Year Reporting Documentation of RBR’s Notional Tax Credit within its 2021 submission of a value of £1,431,348, it would have been considered by the Cost Cap Administration to be in compliance with Article 4.1(b) of the
        Regulations and therefore RBR’s Relevant Costs for the 2021 Reporting Period would have in fact
        exceeded the 2021 Cost Cap by £432,652 (0.37%).

        So not 1,8m but only an overspend of £432,652.

    2. So it’s now a 10% reduction in wind tunnel time for an overspend of nearly 9 million. Not my idea of “perfectly fair”.

    3. Genuine question:

      How does the FIA monitor wind-tunnel usage?

  5. The thing I find worrying is how accurate the leaks were. Definitely some loose lips about.

    1. @1nkling The initial sources I heard were saying there was one minor overspend and one major overspend, when in reality there was one admin error (AM, well, and Williams but that was settled months ago), and one minor overspend (RB). Admittedly though, I don’t get much of my news outside of this site, and I haven’t followed this story particularly closely, so may have missed some of the leaks that came out.

  6. 10 percent cfd and wind tunnel time cut.

    Newey orders more notebooks and pencils from Amazon.

  7. So clearly Red Bull cheated their way to the 2021 drivers championship. Embarrassing for F1 and the 2021 season can now be regarded as corrupt.

  8. So… no penalty then… nice FIA….

  9. Seems perfectly acceptable considering that the breach is minor…

    1. Michael (@freelittlebirds)
      28th October 2022, 15:18

      @webtel what are you on about? A breach is a breach is a breach is a breach in a sport where a millisecond is the difference in pole vs p2 and potentially worth 14 points.

      1. Then that 10% reduction in cfd will have a significant impact then, no?

        1. On last year? Nope. Needed a harsher penalty to set a precedent that you cant just make a “mistake” and get a title in the process that won’t get overturned

      2. Well is it a breach? As you were “allowed” to go 5% over.

      3. If you read the FIA statement carefully, the actual overspend was only £432,652 (0.37%)…
        So the punishment seems very harsh to me.

      4. what did they do wrong, if you compare it with this situation…

        how many engines may be used during 1 season.
        How many teams take an extra penalty by taking an extra engine.
        Did Red Bull do the same, take a ‘penalty’ for an extra ‘engine’?

        I guess a lot of fans weren’t complaining when Hamilton had that monster of an engine during the Brazilian GP…

        If you respond, pls keep it civilized and without personal attack

    2. someone or something
      28th October 2022, 16:07

      I had to scroll pretty far to find this opinion. But I’m inclined to agree with it. Especially considering that 10% less aero development time is too painful to be considered a slap on the wrist. It’s more of a slap in the groin.

      1. It’s really not going to make a difference. The RedBull is already by far the best car on the grid, they could remove all testing and it’s still win races next year.

        10% is actually 7% when you factor in the 70% RedBull originally had. In practice that relates to 1 maybe 2 wind tunnel runs over a season. Hardly a punishment.

        1. Instead of 1400 hours on wind tunnel time then now will have 1260.
          I cannot judge how important this is, but it seems to be more that 1 or 2 runs over a season.

  10. I think people need to take note that the FIA pointed out that RBR had not acted dishonestly, nor had attempted to willfully hide or disguise what they’d done. In fact most of it appears clerical rather than deliberate. The punishment is fair.

    The FIA really should discover how Toto Wolff knew this before RBR did, though.

    1. So recently a British Athlete was disqualified from the previous Olympics due to being found to have performance enhancing drugs in his samples. They agreed that this was accidental on his part but he was disqualified and banned from future competitions regardless as he had still cheated even if unintentionally… Now his Ban would probably have been much longer if he was found to have done it on purpose but the DQ stands no matter what.

      1. An athlete accidentally taking performance enhancing drugs and gaining a tangible advantage is a bit different to an organisation of hundreds of people minorly overspending money. We can quite literally see where the money went, it’s right there in the article – and the FIA who wrote the rule do not feel it amounted to anything performance enhancing. While for the poor athlete, there is a tangible advantage whether they intended or not.

        Nuance is literally a thing people. Even in law.

        Also worth pointing out that the teams all agreed these potential punishments a very long time ago. The FIA have punished Red Bull fairly and within the structure of the rules that all of the teams agreed. Whether you or I feel that is unfair or fair is irrelevant, the process was followed in accordance to the rules. There’s nothing more to say on it.

        1. No it isn’t different. Performance enhancing drugs may not even give you a particularly significant advantage. It may be minute but it is an advantage and therefore you are disqualified and banned. £!.8 million extra spending on development can easily gain you a couple of tenths per lap! that is significant in F1!

    2. I agree. Red Bull were confident they did not overspend. Now that the matter has been clarified, at least they know what they should look out for in the future.

      1. The end result is that they spent more than anyone else and over an agreed cap. Having Horner on the Monaco grid literally saying he plans to breech the cap doesn’t fill me with confidence that this wasn’t planned.

        To put it into perspective, RedBull changed their rear wing multiple times over the final few races to gain a performance advantage. Had they not had the budget to do this (as clearly they didn’t) it could easily have resulted in a DNF or a disqualification (as happened with Hamilton)

        Let’s face it, the FIA have failed and to apply any punishment here. Which after Abu Dhabi was always going to be the case. A sad day for the sport indeed.

        1. This is hyperbolic nonsense considering the article literally breaks down where the money went and none of it went on this phantom rear wing you’ve imagined.

          1. They overspent. So it went on something it shouldn’t.

          2. They only overspent on the stuff listed because they had already spent a certain amount on car upgrades. If they has spent £1.8 million less on car upgrades at any point in the season then they would not have overspent on the stuff listed.

          3. That is irrelevant. Overspending on anything means they had extra to spend on performance related (direct or indirect) areas. All other teams have these seemingly innocent costs such as catering but managed to not overspend from the total budget.

    3. Part of why the FIA can’t claim Red Bull acted dishonestly is because it is the first year and they are not doing forensic accounting yet. That only starts next year. If they were able to do forensic accounting, only then would they might have been able to determine if Red Bull was attempting to cook the books or if this was just accounting mistakes. I wouldn’t read too much into that statement at all.

      1. Andy (@andyfromsandy)
        28th October 2022, 17:02

        Starting next is this year 2022 accounts or 2023 accounts.

        It looks like we could be back here again in 2023 discussing 2022.

    4. Teams that make parts 3mm out of compliance aren’t necessarily being intentionally dishonest and yet are penalized harshly just the same. That argument doesn’t work in F1. Or at least it didn’t.

  11. I think that’s lenient enough for another big team to decide to just take the hit and pour money in to get ahead then deal with the penalty later on

    1. This, this is what the problem is, take the fine and make it payable from the capped budget – that makes a difference!

      1. The fine should be the amount they overspend deducted from next years. This was not intentional so that would solve it

      2. Wait, what? The fine should be deduced from the cap obviously, otherwise it would be irrelevant.

        1. But unfortunately @venedikov fines aren’t part of the budget cap as far as I can see. Since this agreement doesn’t explicitly say it does go from their (2023, as 2022 has been planned and mostly used I’d guess) budget, I have to think it will not.

          That leaves the 10% windtunnel time deduction, and that’s 10% of whatever they are getting, which would be 70% as WDC, as someone above points out; I’d think it would be clearer if it was 10% of the norm as now one’s punishment is lower the higher one finishes, which would seem exactly the wrong way around.

          Now, I’d say that this settlement indicates several changes might be in order.

          One, it is quite possible that Red Bull got off a bit easier because this was the 1st year, and the procedures aren’t quite solid (clearly, given how long it took); I’d expect the further along we are, any other team (or even Red Bull) doing something like this would be punished harsher.

          And then, as I mentioned, I do think any windtunnel time penalty needs to be a percentage of the norm to make sure it isn’t less the higher one finishes, which a) seems counter what the rules should do, and b) is unfair and unclear when potentially more teams have a similar breach but different positions at the end of the season. Any penalty’s should probably also count against the cap of the next year too, to make sure it’s properly punishing.

          Finally, I do think that 5% of the budget is perhaps too much (and even a million seems like it could be extra development, or several important aero bits when it counts), so I’d say they need to reconsider that. Perhaps listen to how much it would impact according to the smaller teams.

          1. …fines aren’t part of the budget cap as far as I can see.

            @venedikov, @bosyber I agree with your argument the fine should be taken from within the budget cap, but I guess there could be an argument which is you might end up with a repeating cycle of financial regulation breaches, which is what you want to avoid. For example, say a team went over the budget cap, e.g. as in this case, and they were fined, which is what’s happened, so then if the money for the fine was part of the current financial year (which the “30 days” clause seems to suggest) and it was included within the budget cap, then that fine could push the team to exceed the budget cap for this year, meaning next year they will be found to have exceeded this year’s budget cap, so they will get another fine, which will then be taken from an account covered by the budget cap, meaning the following year they again will be found to have breached the financial regulations resulting in another fine, etc. If the money isn’t part of the budget cap then if the team does exceed the budget cap next year then they can’t say “It’s the FIA’s fault we exceeded the budget cap”.

          2. @drycrust yes it probably is something like that.

            Though given currently the accounts are checked in the year after, and penalties are then for the following year I’d say a team should be able to plan for it (well if they insist it was mistakes, maybe not, but that’s then their problem to solve!)

    2. I imagine the penalty will be FAR harsher if you willingly overspend (instead of overspending by mistake)

      1. How can they prove that, though? Proving intent is incredibly difficult without a confession.

        I also strongly suspect that we will see more “mistakes” next year, with teams “accidentally” classifying certain expenses incorrectly. Even a few hundred K could easily equate to a couple of extra in-season upgrades, and the ongoing advantage for that and the following season is very likely to exceed the disadvantage of reduced wind tunnel time a couple of years later.

        The fine, especially coming outside the cap, is completely irrelevant to the big teams.

        The FIA have, basically, guaranteed we will get this same rigmarole every year.

    3. Yep, especially as I am pretty sure the benefit of finishing Second as opposed to Third is more than £7million… So there is a net gain and not only that the extra sponsorship money you can charge by being drivers champions is probably quite sizeable too. I am sure Merc would have been more than happy to pay £7million to get Lewis the championship last season…

    4. This. A penalty in the future is a deterrent in some situations but when you are in a close championship battle then gaining the upgrade now for a larger penalty later can be in a teams best interest.

  12. Does the fine come out of the 2023 budget, if not then this is less than a slap on the wrist.

    1. I mean this is the main question for me also. If not, then the cost cap and F1 is probably dead.

  13. What an absolute shambles. FIA proving to be totally spineless as usual.

  14. I’m not debating whether the ~$7m fine is the correct amount for a ~$2m overspend—though it seems about right. But whatever the fine is, should come out of their annual budget cap allotment. Otherwise it’s not a penalty.

    The 10% wind tunnel reduction is fine, but an overspend should be penalized with a forced underspend (i.e. reducing the amount they are allowed to spend this year.) And that underspend limit should be significantly greater than the overspend amount, in order to deter overspend activity.

    I don’t think $2m overspend will break the sport or that RBR are the d i r t i e s t team to ever exist. But if the cost cap is going to be meaningful, actual penalties need to exist for breaching it.

    1. @hobo Article 3.1(m) of the regulations, discussing exclusions from the cost cap, include this:

      All Financial Penalties in respect of any breach of these Financial Regulations;

      Before I jump to any conclusions, I find the wording of the whole article somewhat confusing (“Relevant Costs” vs “Excluded Costs” vs “Total Costs”), so I don’t want to say much, but it seems to suggest Cost Cap fines are not included in the Cost Cap. And if this is the case, I 100% disagree with that. For someone like Haas, a $7 million fine has no choice but to come from their cost cap, because that’s the entire budget they have, and could easily be the difference between midfield and last in the constructor’s, or even staying afloat of going bust. Meanwhile, a huge multinational company that owns a racing team will see a $7 million fine that doesn’t come out of the cost cap as no more than a slap on the wrist. I know these are the rules the teams signed up for, but if this is the case (and I stress, I don’t fully understand the article), it is still disappointing.

      1. Well said @hobo, and I agree RandomMallard.

        In addition, as I said above, I also think that the bigger teams need to rethink (Merc. and Ferrari having felt the ‘hurt’ they talked about from the discussion about Red Bull overspending and Red Bull presumably having had time to evaluate their budget ;) whether 5%, or up to $7 million really is minor given that it can be quite a few extra aero bits, especially in a tightly fought season.

      2. Appreciate you laying this out further. Much more nuanced and detailed explanation.

        1. For RandomMallard above

          and good point @boysber

  15. So. No surprises then.

  16. Then next year exceed the wind tunnel time by 20% and take a £5m budget reduction penalty in the following year 👌😈

    1. Mmmm…. don’t think so! Jokes aside, it’s like impossible to prove “innocence” any more if you make the same mistake 2 years in a row, and if FIA is still…. OK….. that should be instant disqualification from both champs.

      1. In addition @mg1982 and @theessence, wind tunnel time is already closely monitored and has been for years so I can’t see anyone risking going over.

  17. The thing I’ve never understood is how Horner can be absolutely adamant they got no on track advantage.

    If we can ignore the partisan opinions and whether any breach was deliberate or totally innocent, could someone explain how it’s possible for them to overspend but there be no possibility of on track benefit?

    1. iirc the argument is the extra spend went to paying a team member on gardening leave (so no advantage since they weren’t designing anything) and sick pay (again, sick people aren’t working, so no advantage) as well as the incorrect tax return, which normally would have counted towards their budget cap and the other UK based teams have had the same.

      (this is not my argument, I just think that’s roughly what Christian has said about it)

      1. Yes I’ve heard that explanation too. He doesn’t really answer my question though!

        If the things that should have been included (but didn’t give an advantage), had been included, then there would be less money available under the cap for the everything else (including things that did give an advantage).

        An overspend is an overspend. I’ve yet to have it explained why it’s possible to do that and be 100% sure it had no impact to on track performance.

        1. I mean, hence the penalty, they have accepted that they breached it. I think they accept the 1.8million figure as the breach. With the majority being the 1.4m tax break they didn’t end up getting, which I assume is noted as a “you didn’t intend for this part of the overspend” leaving the roughly half a million as the actual overspend that gave them an advantage.

          But the wording is unclear, so I’m not sure if that’s correct or not.

          1. That’s my understanding. What I’m trying to ascertain is can it be possible to say with 100% certainty that the half a million overspend had no impact on track?

            I’m struggling to work out how it would be possible to take that position (as Horner has). You could argue it’s unlikely, or any benefit would have been negligible, but I can’t see how it’s possible to argue with 100% certainty that there was zero on track benefit.

            Unless that’s what you’re trying to explain to me and I’m just not understanding, which is very possible!!

          2. Michael (@freelittlebirds)
            28th October 2022, 17:39

            @sjaakfoo the whole tax break is a joke. We spent $200 million but expected a $55 tax break. Sorry guys for winning every race. Here’s 7 million…

    2. Horner is using an advanced marketing technique, known to insiders as ‘l i e s’. In fact he is a master at this.
      We have had: “It’s a disgraceful allegation and I’ll sue”, through stages down to: “I didn’t mean to do it”, soon it will be “a big kid did it and ran away”.

      1. Davethechicken
        28th October 2022, 20:42

        Last week he was quoted as staying it was a couple of hundred thousand in dispute. He forgot to mention you need to multiply that by 10!!!

        1. Yes, I have to admit I’m surprised he was so far off the estimate, especially since I consider horner a way more honest person than many people here.

    3. @oweng – Horner is defending Red Bull so he’ll obviously say that. It’s the same as the Hamilton fans on here who are absolutely adamant that it did improve performance. Neither should be trusted.

      Ultimately, it doesn’t matter what Horner says. Those who support Red Bull will believe him and those who support others will say he’s lying. It makes little difference. The penalty has been issued and that’s the end of it. Everything from here forward on the subject is just wasted breath.

      1. @petebaldwin I was trying to avoid the titfortat of partisan opinion! I was trying to understand if what Horner said was possible, that’s all. Because when I think about it logically I don’t see how it can be possible.

        Ultimately it does matter though to help work out if the punishment is harsh enough – if it is possible to be sure that there’s zero impact on track then the punishment should be a sufficient deterrent. If it isn’t, and it is a possibility that there was an on track advantage gained (no matter how small), it potentially leaves the door open in future for teams to make a call on whether to risk the punishment for a perceived benefit on track. Which isn’t good for the sport.

        And I’m trying to look at this purely as a fan of the sport, rather than be blinkered based on what my preferred drivers or constructors championship outcome is. Funnily enough, as someone who would have preferred last year’s championship not to be decided in the manner it was, I really hope Horner is correct and it can be proven that the overspend did not have any impact on track.

      2. Horner is defending Red Bull so he’ll obviously say that. It’s the same as the Hamilton fans on here who are absolutely adamant that it did improve performance. Neither should be trusted.

        Two parts: If Horner says the sun will rise tomorrow – go and check, since the only recent information you have is from Horner.

        I don’t care whether it produces a performance improvement. It’s a breach of the rules. Indications are that they tried a tax dodge for the bigger part of the figure and when HMRC told them where to stick that idea they had an overspend on Masi’s sarnies. (He’s a biggish bloke and eats a lot of sarnies – honest, Christian said so)

        BTW. Has anyone figured out the relative costs of 2 x WDC and 1 x Constructors?
        Just wondering how much I need to pay the FIA to be WDC

      3. Davethechicken
        28th October 2022, 20:43

        I think he is either terrible at maths or he deliberately mislead everyone by saying a couple of hundred thousand was the dispute. It is way more than 200,000!!!!

    4. It’s not possible to for Redbull to be 100% certain overspending this no impact the cars performance. I like to look at budgets as a bucket of water (representing your available finances), for each expense you take some water out of the bucket and pour it into another (which represents the cost cap). At the end of the year as long as the second bucket is not overflowing you are on or under budget.

      But once the water is in the second bucket it mixes and there is no way to tell which parts of the water you put in is where. So, if the budget cap bucket overflows its simply impossible to determine which contribution of water caused it to overflow. Yes, it may seem that the last cup caused it to overflow, but if the bucket hadn’t been too full before that it wouldn’t have overflowed. You can’t just take a cup of water out of the spent bucket and be 100% sure it the exact cup you put in.

      1. @theoddkiwi that was my understanding too. I just wondered if I’d missed something!

  18. So Red Bull has to take it up the chin and move on.

  19. So cheats DO in fact prosper! I wonder what Ross Brawn has to say about this decision. I would not be surprised to see him resign, and go back to his beloved fishing.
    A fine is meaningless to RB, and if you believe they will stick to any restrictions, I have a very nice bridge to sell you.
    The precedent set by this disgraceful decision will kill off whatever ‘sport’ remains in F1, and most of my interest in it. Oh well.

    1. @biker56 I find it more than coincidental that Ross Brawn has stepped down

  20. What an utter joke. Fully expect other teams to take this further, or worse, weigh up the impact of overspending themselves in the future if they can spend an extra £1.8m…which in turn makes the point of a CAP moot.

    The penalty is not a deterrent. A reduction of their budget for next season by $7m and a restriction of development on the car in all areas for the first half of the season would be a deterrent.

    The past is the past, so leave that. If the brand of Red Bull is happy to know it won through cheating…then what a turd of a company that is. Cheating Gives You Wings.

  21. The FIA acknowledges that had RBR applied the correct treatment within its Full Year Reporting Documentation of RBR’s Notional Tax Credit within its 2021 submission of a value of £1,431,348, it would have been considered by the Cost Cap Administration to be in compliance with Article 4.1(b) of the
    Regulations and therefore RBR’s Relevant Costs for the 2021 Reporting Period would have in fact
    exceeded the 2021 Cost Cap by £432,652 (0.37%).

    Can someone with knowledge of the British tax system explain this? Because it seems that a large chunk of the overspend is due tue RBR not getting money back from Her Majesty’s (speaking 2021) revenue and customs. Was that a large gamble to make in the books or is it just unfortunate?

    1. I’m no expert but I’d guess it was a gamble with some ‘creative accounting’ that didn’t pay off.

      1. Andy (@andyfromsandy)
        28th October 2022, 17:11

        Neither am I but it seems to be that the accountants working for the FIA have in fact found an error item in the accounts to their benefit and deducted it from the spend.

    2. What I don’t understand is why any tax treatment is or should be considered under the cost cap… Why is it relevant?

      1. If the taxes in question are social benefits/employment taxes for staff that does fall under the cap @drmouse, wouldn’t that tax also need to be under the cap as part of the full cost of employing them?

        I don’t know the UK tax system either, but if a team was based in NL or Germany then the full ‘salary’ cost would also include a tax contribution from the employer, in addition to the taxes paid by/on behalf of the employee. If in that RBR had an argument about the tax payable to the UK government (perhaps employee only part of the year, or significant time in different country w lower taxes, and division of what to pay where dependent on UK/that country’s tax treaties) which in the end was refused, I can see that happening.

      2. I would guess it’s an R&D tax credit which can be claimed on certain research and development costs. Unsure how that would interact with the cost cap but it would seem from the statement that it is also allowed as a deduction against costs that go against the cap. Redbull miscalculated their deduction by around £1million so their actual overspend when correctly calculated was only £432,652.

        And I doubt it would have anything to do with the actual timing that the repayment was made by HMRC. It would be shown in the accounts as an accrual for the period even if the actual payment isn’t made until later. So not a gamble as such, just an error they made with their tax return.

      3. @bosyber @keithedin I still don’t understand it, truthfully.

        I’m a mathematician, with a pretty decent understanding of accountancy and a reasonable understanding of UK tax laws (to the level needed to run my own business). I understand that some taxes are part of the costs of employing people, and some are part of the costs of doing business.

        However, when it comes to tax credits for R&D etc, I would see these as a reward for doing business in a country rather than a reduction in the costs of employment and/or doing business. To me, they are an increase in company profits more than a reduction in costs, so shouldn’t be offset against the cap. I highly doubt that, say, returns on an investment in shares/commodities can be, so why should this?

        That said, this is the reason the financial regulations are so difficult to apply. Different teams operate with different company structures in different tax and political regimes. It, like the global financial system, is really complicated…

    3. Ruben, the suggestion is that it is likely to have been the UK’s Research and Development Expenditure Credit (RDEC) scheme which, as is implied by the title, allows teams to claim a tax credit that is worth 13% of their expenditure on research and development if it meets certain criteria.

    4. I guess they expected to pay less tax as a result of a tax reduction scheme. But that did not stick so the tax was added to the cost cap, thus exceeding the allowed number.

  22. I won’t argue the merits of the penalty here; lots are already doing that better than I in the comments above. But I will comment on the number of areas where the FIA found Red Bull did not follow the correct accounting procedures seems pretty lengthy. Time to fire their accountants if they really did just make this many mistakes and it wasn’t an attempt to cook the books.

    1. @g-funk To me this feels like Red Bull have tried a classic “lets try to exploit a loophole” tactic seen in the technical regs from time to time (DAS, double diffuser etc), but instead of exploiting one potential loophole every few seasons (as technical regs change slowly and take time to develop for), have just gone in with everything blazing and tried to exploit every possible potential loophole in the rulebook in it’s first year, with it backfiring.

      The one advantage to come from this is that it nicely clears up some of the potentially more ambiguous parts of the financial regs and sorts it into a black and white “allowed” and “not allowed”. Well, hopefully…

      1. Yeah, I would get that if all the teams hadn’t said that there was an FIA representative in their facilities and every time there was a question or clarification from any team, it was broadcast to every other team for their awareness.

        So either they a) thought they were being super sneaky and didn’t want to clue the FIA into their loophole ideas (with the obvious risk of it blowing up in their face as is seen here), b) they have bad accountants or c) they purposely tried to conceal spending from the FIA. I guess I wouldn’t have expected a) given the stakes involved. In the end, it doesn’t seem like the punishment was very severe so they may have got away with it this year but it was a very risky gamble for them. They could have lost a lot more than $7 mil and 10% CFD time.

        1. Indeed RandomMallard and @g-funk, I get that they are presumed innocent, but I not so sure any accountant would fully believe that.

  23. So how much is the Constructors and World Championship worth??..probably a lit more than the fine…..
    A predicable outcome but I cannot think the other teams will let it slide…

    1. Exactly. Now all of the other teams know exactly how much it will cost them if they ‘accidentally’ go over budget next year. $7m for an extra place or two in the constructors? Probably a financially sound decision.

      1. @dot_com – They don’t know anything as deliberately going over the cap isn’t something there’s a precedent for. What Red Bull did is now public knowledge and the FIA have accepted it wasn’t done deliberately. If a team copies what they did (despite having previously done it correctly), it’s obviously a deliberate thing and will be treated more harshly. Same would apply if Red Bull did it again.

        1. So all they (any of the big teams) have to do is find another way to “accidentally” overspend, something with no clarification from the FIA. It’s nearly impossible to prove intent without an admission or documentary evidence of collusion, so it’s unlikely that the FIA would be able to legitimately call it out as intentional. Therefore, for any team except RBR (who could be penalised more for a second offence), they would be forced to either give the same penalty or look like they are playing favourites (or being inconsistent at best).

        2. Can someone with knowledge of the British tax system explain this?

          I know a retired man who could, but probably wouldn’t bother unless I bought him a lot of beer.

          Because it seems that a large chunk of the overspend is due tue RBR not getting money back from Her Majesty’s (speaking 2021) revenue and customs. Was that a large gamble to make in the books or is it just unfortunate?

          It’s a result of cocky accountants thinking they can get one over on the guys and gals at HMRC.
          The guy I mentioned above always used to develop a really evil smile when that kind of suggestion was made.

          1. The guy I mentioned above always used to develop a really evil smile when that kind of suggestion was made.

            Is it Bernie Ecclestone? :D

  24. All this fuss over a couple hundred thousand hey Christian. /s

  25. Just to clarify, without a spending penalty, they can just use the money they would have spent on that additional wind tunnel time for something else. It may not be as efficient as being allowed to spend on WT time, but it will just be a way to further reduce the penalty they did receive.

    And if the ruling above says that the money comes out of their spending cap, great. I didn’t read through most of it as legalese this early in the morning is not my idea of fun.

  26. I can’t see any possible world where this doesn’t translate into a net gain for Red Bull. The only positive is that it is plain for everyone to see, unlike the arrangement that had been done about the Ferrari power unit.

  27. I fully agree with others – the fine should 100% come out of cost cap budgets.

    1. I agree. The fine should definitely come from the cost cap for 2023. This makes life too easy for them. I think they have got away quite lightly. I am not surprised though.

      Merc and Ferrari are not going to be happy.

  28. I’m not sure it’s reasonable that they went from 70% to 63% of the base WT/CFD time. They’re getting off lightly, their adjusted C should 60%.

  29. Adrian Newey & Helmut Marko ~ 15 million a year
    Christian Horner ~ 10 million a year
    Max Verstappen will be willing to pay the 7 million fine out of his pocket money :)

    1. And dietrich had 15 billion euro, those money have to go somewhere!

  30. They (FIA & REDBULL) took soo long to move the over spend aorund to make it seem like a non essential over spent to minimize the fine and punishment. 7m and 10% is nothing. Thats not a deterrent at all. Pathetic.no wonder redbull are hapoybto accept the punishment and fine.

  31. An unsurprising outcome.

  32. The wind tunnel time should have been stricter. As per F1’s sliding scale rule, teams can do 70% to 112.5% of the standard CFD time each year. Rsd Bull now get 63%. 7% is less than the difference between any 2 positions i the championship. Ideally, this time should have been slashed in half. That will send a proper message to teams that FIA is serious about cost cap.

    1. Knowing that penalty is only 7%, Red Bull will simply use this year’s wind tunnel time (7% might still be remaining), for next year and negate the penalty altogether.

      1. It starts from now, so any wind tunnel testing the do today affects how much they can do next year. It’s a 12-month penalty.

  33. Instead of making the tunnel 10% less windy, they should be made to run 25% fewer wheels.

  34. I said on day one that exceeding it by more than 1% should be losing championship positions in both the constructors and drivers. At least we now know what the figure is so I think the consequences should have been much higher.
    Even if we restrict the penalty to wind tunnel and finances, I think 20% rather than 10% would have been more fitting meanwhile $7 million a bit low but not terrible figure providing it comes out of next years budget. If it comes out of the Red Bull bank account then that is a joke.

    1. If you read the FIA statement carefully, the actual overspend was only £432,652 (0.37%)…
      So Red Bull is safe not to lose championship points following your train of thought.

      1. Thanks for mentioning this. I am somewhat confused how the figure is both reported at 1.6% and 0.37%. Anyway, if the actual figure is 0.37% then the punishment is somewhat closer to the crime. Would still like to see some reduction in what they can spend next year though.

        1. Sam the difference is in Red Bull accountants having lost an argument with UK tax office about a tax rebate, ie. before closing the books, there’s an additional sum they had to add onto it, which quite possibly was spent when the season was over.

          The smaller number is what they were able to spend during the season. As to how much of a difference that translates to on track, well different people will have different opinions. I’d think that in a closely-fought season like 2021, it would be reasonable to think it made a notable difference, but clearly Horner claims there was none.

    2. Andy (@andyfromsandy)
      28th October 2022, 17:15

      An ABA takes points deductions and cost cap reductions off the table. A point agreed by all the teams.

    3. It’s probably like a speeding ticket for a fairly poor family.

  35. Other teams might have lower quality wind tunnel than Red Bull. Any monetary fine should come out of their cost cap budget for next year. To the comment above who said about Toto Wolff knowing any of this before everyone else, one should wonder if he did not know, then what could have happened.

    How severe is the 10% wind tunnel time? It looks pretty lenient because it’s likely that their wind tunnel is better than every team’s wind tunnel. This should affect them with regards to other teams not just Mercedes and Ferrari. I must be missing something.

    1. “As winner of the Constructors’ Championship, Red Bull already have less wind tunnel time than their rivals, 70 per cent. That means 1400 of the 2000 hours permitted by the P10 team.

      A further reduction of 10 per cent leaves them with just 1260 hours as of January 1 2023”

      Quoted for planetf1. I think this appears quite severe. It could be why rumours spread about Horner not liking the proposal of the ABA.

    2. Andy (@andyfromsandy)
      28th October 2022, 17:17

      The overspend was in 2021. How much should they reduce the 2022 budget by?

      THis is the unfortunate side effect of the FIA taking so long to get this sorted out. It is the same with the testing times. ORBR have had the whole of 2022 already.

      It will be interesting to see what happens this time next year with the 2022 accounts.

  36. 1p added to the price of a can of…and the fine paid in a day well done FIA

  37. Agree with others that the fine should rather be a reduction in their cost cap for the following season. A fine is next to meaningless, especially in a sport where hundreds of millions were being spent by the bigger teams and now that is massively reduced down.

    Also hit them with a bigger reduction in wind tunnel time, least of all because they’ve gained a lasting advantage.

  38. Ironically if you finish better in the championship that 10% of wind tunnel penalty actually is worth less than if you finished third so even the 10% is a pitiful penalty. All of this verdict stinks. A fine in the region of 25 million should have been on the cards and 25% loss of wind tunnel time. Red Bull will barely notice either of these “penalties” and I’m pretty sure the WDC they won was worth far more than that 1.86m they overspent or the 7m fine they’re paying.

    A more fitting penalty would have been to take 10% of wind tunnel time off them and also give every other team extra time this year and next.

    1. @slowmo I noticed this as well, nearly commented on it below. It is very weird that this would be a stricter punishment for the team in last than the team in first. I agree, it should be “minus 10%” (i.e. 70% – 10% = 60%) as opposed to “Reduced by 10%” (i.e. 70% * 0.9 = 63%).

  39. If you read the FIA statement carefully, you can see that the actual overspend was only £432,652 (0.37%)…
    So the punishment seems very harsh to me, there should be just a reprimand.. However FIA felt they were forced to hand out these severe penalties because of the leak that occurred and the rumor this gave in the press over the last 2 weeks. So Toto wins..

    1. Michael (@freelittlebirds)
      28th October 2022, 16:31

      There is a list of 13 breaches that they were able to find.

      1. They were not breaches, but incorrect registrations.

        1. You’re trying so hard.

    2. I totally agree

  40. I’ve put my thoughts in a couple of comments above, but I’ll summarise them here:

    1. If my understanding of financial regs article 3.1(m) is correct (and I don’t fully understand this article so I may be completely wrong), then it appears that this fine won’t come out of Red Bull’s current/future cost cap. This is disappointing, as it means teams who have more budget than the cost cap (RB, Merc, Ferrari etc) can pay the fine out of their excess, while smaller teams such as Haas have no choice but to pay it out of their cost cap as that is all the money they have, which could well be the difference between last in the Constructor’s and a decent midfield place, or even staying afloat or going bust.

    2. I don’t really understand the tax stuff either, if someone could explain, that would be much appreciated.

    3. How I’m reading it, it kind of feels like Red Bull have tried to exploit some loopholes in what does/doesn’t count under the cost cap, as you would with the technical regs (e.g. DAS, double diffuser etc), but instead of just trying to exploit one, they have tried to exploit every potential loophole in the book. The one positive this might see is that it should clarify some potential grey areas for the future.

    4. It looks like the FIA are treating a cost cap infringement similarly to a sporting infringement (whereby the penalty is decided based on the severity of the offence) as opposed to a technical infringement (which is pretty much a guaranteed DSQ for any offence, big or small). I’m not sure how to feel about this to be honest. Should someone who overspends by £200k get the same punishment as someone who overspent by £20 million. I don’t know, and I can see good arguments from both sides.

    5. I really hope this doesn’t end up like Financial Fair Play in football, which I think most football fans can agree has not been particularly successful. The big teams still breach the rules by spending too much, get a fine which they can easily pay off, and any further penalties are either later overturned or deemed too radical to apply in the first place. However, I worry this is what the cost cap could turn into.

    6. It’s hard to determine whether this penalty is effective or not yet. First of all, it’s the first ever overspend under the cost cap, so there is no precedent (within F1) to use to apply a similar penalty to. Additionally, we don’t know how much of a disadvantage the reduced aero testing time will be, and this could take a year and a half (into the 2024 season) to truly filter into the results, if it has a noticeable effect at all. I know some want to see Max stripped of last year’s title, but again, I don’t really know where I stand on this, and I can see arguments on both sides, but the general feeling I get from this is it doesn’t really feel like enough of a penalty for now. However, this is very hard to judge when you have nothing to compare it against.

    So overall, I’m not hugely satisfied by this. It leaves many questions still to be answered, and I’m not certain it’s enough of a punishment for RB, or enough of a deterrent for other teams. The one thing I can definitely say for certain is that this fine should be paid out of RB’s cost cap, which I believe the regulations say it won’t be, which I find very disappointing.

    1. The punishment is severe, considering that the actual overspend was only £432,652 (0.37%)… However, FIA was under pressure to hand out a substantial penalty because of the leak that occurred and the rumor this gave in the press over the last 2 weeks.
      It should have been just a reprimand, so I am glad it does not directly interfere with their future sportive achievements..

      1. @Bojangles the punishment is a joke. The overspend amount has pretty obviously been massaged down to justify such a weak penalty.

        1. Please clarify the massaging down. You have additional information on this?

      2. The punishment is severe

        The punishment is hardly severe when a single guy in Red Bull’s senior management could pay it out of his own pocket on just this year’s salary.

        This punishment looks bad to normal folks, not those who spend hundreds of millions to race cars 20 times a year. And it’s still hundreds for a team like Red Bull, because of how many costs are outside that 140 million capped part.

        1. “ This punishment looks bad to normal folks, not those who spend hundreds of millions to race cars 20 times a year.”
          That should be 24 times if china goes on.

    2. Bojangles As I’ve put in my original comment, I don’t fully understand the tax credit situation, and am waiting for an explanation from someone more in the know before I come to any opinions on how that stands.

      1. Andy (@andyfromsandy)
        28th October 2022, 17:38

        This is all going to seem backward but I think ORBR put in the accounts a tax credit for something. They are called notional because there would be a reduction in the tax bill by that amount if they actually spent the money in that tax year but they found a way to get a tax credit for money as yet unspent or for something they missed in a previous year.

        As ORBR got it wrong in the way they reported it the overspend was initially thought to be £1.8 million. The FIA at this point obviously looked at this and found had ORBR done the reporting correctly the tax credit worth £1.4 million is correct and can be removed from the amount overspent.

        1. Andy (@andyfromsandy)
          28th October 2022, 17:47

          What I should add therefore is the way ORBR did their accounts they did actually overspend by £1.8 million.

      2. Well you make a budget, you receive some tax refund.
        You file this correctly, you don’t receive it.
        You have a gap worth 1,4 million.
        It’s probably not this simple, but it’s how onthand worked out this time.
        FIA acknowledged Red Bull this this in a correct manner.
        So the gap is actually less than half a million.
        I think this penalty inspireert hard.

    3. Andy (@andyfromsandy)
      28th October 2022, 17:23

      When the 2022 accounts are checked next year it could well be that ORBR have overspent again, don’t know, have no clue, just saying for example then 2024 will be the punishment year.

      It is poor there was no way throughout 2021 to keep tabs on the teams and stop or catch the overspend or accounting irregularities as they occurred.

      1. Blame the FIA

    4. At least there was enough transparency to make the numbers public, I didn’t expect that.

  41. I’m sure if you offered RB two drivers championships and one constructors championship for 7 million and a 10% aero loss in advance they would have bitten your arm off to take it.

    1. This is absolutely true, as would any top team, or even any team, even if your dudget is only 100 mil why not? Especially since with a 100 mil budget it means you’re a minor team, and the chance for a title is normally 0,1% or so.

      1. budget*

  42. $7 million dollar is pocket money to Red Bull. Wouldn’t it be better to subtract the $7 million from the maximum budget Red Bull can spend in 2023? >> This means Red Bull would only be able to spend $138 million dollar instead of $145 million dollar. That, and the 10% in wind tunnel development.

    1. Even doing that, the fine would be the most minor punishment, wind tunnel could actually have a meaningful effect.

  43. I’d love to hear from Toto if this penalty makes “Mercedes willing to breach F1 budget cap”.

    1. It won’t that would be a deliberate breach of the cap and should be penalized hardly.

  44. I’d really love to see every teams spending and how much went into the car and technical personnel. Comparing that would show if Red Bull gained anything over others by overspending. Personally I don’t think they did but we’ll never know because we’ll never see those figures.

    Any team crying red bull did gain anything should look into the past where several teams had many millions more to spend but still didn’t manage to win a championship. Yes, especially Ferrari…

    Seeing everything that went on with engines at a certain team last year and that team suddenly being more competitive and the great driving of Verstappen last and this year I honestly think he fully deserves both championships. Yes, he was aggressive in the latter half of 21 but that’s the way it should be. They shouldn’t drive each other into the barriers like in Silverstone or like Monza but they don’t need to pet each other either…

    1. I think the problem with this thinking, for me, is how close the championship was last year. Given how milliseconds can make massive differences in this competition, and a few hundred grand could easily equate to 1-2 in season upgrades each equating to at least a few hundredths, there is every possibility that even such a small overspend couple change the result of multiple championships.

      I predict that we will see all the teams “accidentally” classifying expenses incorrectly from here on, as potentially gaining an advantage over two seasons is much more important than a small reduction in wind tunnel time 2 years later. I can also see the FIA being harder on future breaches, and looking like they are playing favourites…

      1. (I should say all the big teams, many of them don’t have enough money to even reach the cost cap)

      2. All assumptions, no substance..

        1. Which part is an assumption? I mean, obviously my prediction is just that, but I don’t see any other assumptions.

  45. This punishment looks ridiculously light compared to previous cases such as the McLaren spy gate saga where information was received but not used but still garnered a 100 million fine and a complete removal of all championship points.

    At 7 million fine, no reduction in next year’s budget for RB and only 10% of wind tunnel time lost it is a bargain compared to the boost to sales and sponsorship gained by winning two driver’s championship and one constructor’s. Billionaire are behind RedBull. Do the FIA think such a piddling amount is a deterrent? If they do they are deluded.

    1. I’m not 100% certain we’ve heard the whole truth and nothing but the truth about the spy scandal.

  46. So in short, the fine for spending too much (you can’t make this up…) doesn’t count towards the budget cap, and the difference in wind tunnel testing is smaller than between teams based on their WCC finishing order.

    The lengths F1 has gone to to mess up one of the rare exciting season long title battles in the last… decade is astonishing. Important people at the FIA and FOM should be losing their jobs over how badly they mishandled this.

  47. Great! Now we can move on from this smear campaign and focus on racing again.

  48. I think the fine is useless. So there should be a stronger sporting penalty.

    In the end the issue is that this is not enough to prevent another go. It is not dissuasive.

    1. “ In the end the issue is that this is not enough to prevent another go. It is not dissuasive.”

      That with be with the intention to break the cap. We have a different story than.

    2. Completely agree, losing championship points would be a much better deterent.

  49. Like many others I find the penalty lenient and pathetic. To try to mitigate the penalty by saying that because RBR didn’t knowingly attempt to violate the rules is disingenuous at best. If a team mistakenly makes a part that’s 3mm out of compliance, they are penalized for breaking the rules without mitigation, so to try to understate the impact to RBR’s cheating is insulting to fans of the sport.
    The next thing to watch is how Ferrari, Mercedes and Renault react. I wouldn’t be surprised if they come out and simply say we are no longer going to adhere to the spending cap and we’ll gladly pay the 7 million dollar fine when it’s levied.

    1. “ If a team mistakenly makes a part that’s 3mm out of compliance, they are penalized for breaking the rules without mitigation,”

      That is very easy to measure. Not comparable with this budget soap.

    2. Michael (@freelittlebirds)
      28th October 2022, 19:54

      @velocityboy isn’t it funny how the FIA tried to cover it up by underplaying every one of the 13 counts?

  50. So now we know that you can overspend to win the championship and get to keep that as you won’t get a penalty until 2 years later.

    So show above sporting integrity the cost cap is.

    1. One mustn’t forget ferrari used to spend 400 mil a year, mercedes 350 or something, red bull 300 or so, assuming the others were at the cap limit, 145 for them and 147 for red bull is far closer, within 2% of the others, than it was before, where ferrari spent 33% more than red bull, not to mention compared to the minor teams.

  51. Sso extremely minor on the scale of things.
    Let’s get back to racing!

  52. So basically a pathetic ‘no penalty’ for red bull! What a joke F1 has become under Liberty media…

    Seriously losing intertest in ‘WWE’ F1 when the fia continues to make up the rules to benefit redbull.

  53. IMO the penalty is fair. Points deduction over a breach of 0.37% is just too much.

    This is in line to how other sports deal with these kind of offences. In football for example I have never heard that a breach of the financial fair play rules has led to a deduction of points or anything like that (correct me if I am wrong).

    1. I meant “Points deduction over a breach of 0.37% WOULD BE just too much”.

      1. Hamilton got disqualified from qualifying for a 0.2mm deflection on less than a quarter of the wing plane due to a couple of screws coming loose, which was a 0.023% error.

        1. @theoddkiwi

          This was a breach on the technical regulations which always results in DQ.

          There are no exceptions to this so it is not comparable.

          1. I was referring you saying overspending by 0.37% should not result in points deduction, I pointed out there are measurements in the sport with even smaller limits with much more harsh penalties, in this case a technical breach of 0.02% leading to disqualification.

            If that 0.37% lead to a technical advantage should that not receive the same penalty as 0.02% technical breach?
            They overspent by 0.37% which has to have had some effect on the technical performance of the car, because without that overspending, they would have had to sacrifice other spending on car development.
            This is fundamental because all money spent by the team is spent to make the car go faster, whether is an extra cleaner in the office at the Team HQ or an extra hour in the wind tunnel. This the whole point of cost caps and why Red Bull can’t pick and choose what they overspent to claim no technical advantage because is irrelevant as long is its accepted that ALL money spent by the team is spent to make the car faster.

          2. @theoddkiwi

            I get your point and I cannot say that this could not be one way of dealing with this issue.
            It seems, though, that they do not consider these kind of violations the same as technical breaches. They rather consider them like a sporting code offence or something along those lines.

            Taking into consideration that it seems that FIA are not sure that they could win this in court, I think that the penalty agreement is understandable. The wording they used also makes it clear that they are free to impose a more severe penalty in case Red Bull exceed the budget again in the future.

        2. I was about to bring up that very point. Hamilton got penalised for his rear wing being off by 0.1 or 0.2 mm, AFTER Max had physically inspected that rear wing, apparently testing to see if it would deflect.

          I never did understand why that rear wing ‘failure’ wasn’t also offset by Max’s breach of the rules prohibiting touching another team’s car in park ferme.

          This was Brazil 2021, where as we know Hamilton started 10th, yet somehow managed to win that race. This could so easily has cost him points and secured Max the championship.

          1. Fair point, but I do not think that this is relevant to what we discuss here.
            We all know that the decisions of the stewards are not always fair or consistent.

  54. 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.

    So other teams take an additional 20m out of their allowance, if so this is a massive gain?

  55. Just playing devils advocate here (I don’t like the fact that they seem to have gotten off quite lightly as an overspend is an overspend and the other teams all managed it), but this could be explained by the extremely confusing HMRC IR35 rules for contractors which came into force in April 2021 (if you’re a contractor you’ll know!). The employer’s social insurance and the employer’s apprenticeship levy are supposed to be paid by the contractors client (RBR in this case), but they, as with pretty much all companies in the UK employing inside IR35 contractors, are passing that cost on to the contractor through an umbrella company without uplifting the rate to compensate (which is actually unlawful and against the HMRC rules – but they’re not doing anything about it as long as they get the money from someone). Both of those payments come to 14.2% of a contractors rate. So if, for example, Adrian Newey is a contractor (which I believe he is) was on £10,000,000 (he’s going to be on a pretty high rate surely!), he would have to be considered inside IR35 as he been technically employed by RBR for the last 15 years, and would have people that he manages, so that 14.2% which he is having to pay would add up to £1,420,000 and that’s pretty much the overspend.

    I can’t quite blame RBR for this as HMRC’s rules are beyond stupid and massively overcomplicated, but it does still mean they had an extra £1,420,000 to play with.

    However, there could potentially be a massive silver lining to this as there may now be precedent (seeing as the FIA’s many expensive lawyers have looked into this) that shows that UK companies are actually responsible for paying the employer’s social security and apprenticeship levy, and in no way should be passing that on to the contractor. This could very good news for a contractors all over the country who have been screwed over by their client but didn’t have the money and time to get lawyers involved. So thank you RBR and FIA!

  56. This is really silly.
    A fine of $7m and only 10% reduction in wind tunnel time?
    How do they even police wind tunnel tine when they have a sister team like Alpha Tauri who they can get info from about wind tunnel time.
    This is really silly and very annoying.
    They overspent by £1.8m. they could have done 6 new f1 wings with that.
    This is really very very annoying. I cant even imagine how their rivals feel

  57. Michael (@freelittlebirds)
    28th October 2022, 19:51

    I’m sick to my stomach after what happened last year and what has just happened now. I feel the FIA should be paying damages to me and every fan out there.

    I think everyone has an obligation to act. The other teams should not run their cars this weekend and it should be a Red Bull and Alpha Tauri procession. Fans should boycott the sport and not watch the races. We are complicit otherwise.

    This is a complete and utter violation of everyone following the sport committed by Red Bull and the FIA working together again.

    1. @freelittlebirds

      If the FIA feel that they should give me some money I will not say no :D
      You are overreacting a bit, though.

      1. Michael (@freelittlebirds)
        28th October 2022, 22:11

        @exeviolthor I think this is incredible especially in view of what happened in 2021. This is the biggest scandal in F1 as it’s the second one committed by the FIA. s.

        1. @freelittlebirds

          Whatever happened in 2021 is completely irrelevant.

          This is definitely not “the biggest scandal” in F1.

          I mean if this is a scandal then what was the non-penalty for McLaren in the SpyGate?

          1. Michael (@freelittlebirds)
            29th October 2022, 4:03

            @exeviolthor McLaren paid $100 million in penalties for Spygate in 2007 which is $143 million in today’s money. 20 times higher.

          2. @freelittlebirds

            And still they were allowed to compete for the drivers championship. Also no penalty for the following year.

            What Red Bull did is equuvalent to a football team breaching the financial fair play rules.

            They should be punished, but calling for exclusion or deduction of points or whatever is just too much.

            The penalty fits the crime. If they repeat it again then that would be a different story…

            In any case your calls for boycotting or not participating in the races just because you do not agree with the penalty that was imposed are at best an overreaction.

            I am pretty sure if it was Mercedes that would have done this you would not be saying the same.

    2. I completely agree with the first paragraph, I could use a million, as could many on this website!

  58. Erm, what happened to ‘overspend and lose your title’?

    An absolute joke.

    1. No one that counts (fia\teams) said that before the 2021 season started, did they? Don’t remember seeing it.

  59. I think a lot of people are missing the bigger picture. Once it was established that RBR exceeded the cost cap, the FIA had a choice, make the penalty so severe no team would ever exceed the cap again, or levy a small fine and it’s business as usual. Now that we know they went with the latter, if I were Mercedes/Ferrari/Renault/McLaren, I’d set my budget to roughly $400M, with $300M for my regular F1 spending and $100M set aside for fines, even though we know the FIA will never fine a team $100M. As these are teams that were spending $5M-$6M per year on F1, a $400M budget is still well under what we were previously spending so we’re still saving money. And yes, I’m that kind of guy!
    Let the games begin!!!

    1. ok. but about when they have levied a 50% cut in development time?

      1. Don’t comply and pay the fine.

  60. Wow! That’s a lot from FIA. I expected them to shake hands with Red Bull and call it a mistake that won’t happen again.

  61. They overspent which has to have had some effect on the technical performance of the car, because without that overspending, they would have had to sacrifice other spending.
    This is fundamental because ALL money spent by the team is spent to make the car go faster, whether they hire an extra cleaner, buy lunch for the pit crew, give the design team new graphics cards or more ram, putting in brighter lights at the factory or an extra hour in the wind tunnel. Everything is there to ultimately make the car faster.

    This is the whole point of cost caps and why Red Bull can’t pick and choose what they overspent to claim no technical advantage because is irrelevant as long is its accepted that ALL money spent by the team is spent to make the car faster.

  62. Slap on the wrist. the other teams should boycott the rest of the season to make an example of Red Bull and the FIA.

  63. Which is the bigger crime? That they inaccurately reported on over 5 million pounds worth of expenditure, or that this was to hide the fact they had overspent, computed as 1.8 million pounds. Even now, have they honestly declared all their expenditures? What happens if this is discovered to be even more?

    As for their penalties, Redbull should also be suspended from taking part in 10% of the grand Prix races. Having a place in fewer races would effectively DNF them, and would have a more telling impact on their points tally.

  64. Anyway, back to motor racing. Great!

  65. Geez, imagine the outcry if there would’ve been a major overspend.

    1. Indeed, I guess they would’ve risked to lose the 2021 driver’s championship then.

  66. Well, to hell with F1. After the farce last year I stopped watching a few races whereas before I’d watch religiously every session. I’ve also missed the last two races and guess what, life moves on and you don’t miss a thing. What is the point of watching a sporting event where the outcome is influenced by the need to create a ‘show’? Moreover now we have an even bigger problem if the governing body does not apply sporting penalties consistently. One may argue it is not the first time the FiA acted in dubious manner, regardless I had enough. I’ll be continuing to switch off from F1, I might read the results here and there but there is no point watching something this corrupt.

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