2021 Cost Cap Rumours and Speculation

[mendis]

When the cost cap was introduced, I am sure nobody in FIA or teams would have ignored the possibilities of cost cap breaches via difference of interpretations, or exploitation of grey area, definitely not for the first couple of years. Like every new governance procedures, this one also has to evolve to become water tight. I don't think what we are seeing is totally unexpected. We live in an age of multimedia where every damn thing becomes a sensation and gets amplified by the clickbait journalism. I don't think cost cap is going away and I don't think it should.

So lets leave anything unpunished because it needs to mature? thats your opinion? i respect it but my opinion is that because of what you say exactly the teams didn't try too hard to police themselves because they knew that the punishment logically would had been light. We have also words from RB that they will not stop upgrading the car no matter the cost cap or anything if i remember right.

I dont agree off course and there must be real punishment no matter where the expenses was. Its also a nice trick to let the catering for example to be over budget (if this is really the case here) or something that in all eyes doesn't seem crucial but what you all forget is that the money that left from catering went to something else more crucial....

I dont like any team manager, especially Toto but what he says is right. With some extra millions they could had won the last year championship or this year they could had done a faster job to fix their car.

Please don't read what's not written. Expectations of breach, was also expected to be handled via clarifications if it's about incorrect positioning of spend or incorrect implementation of the regulations and penalties in cases of clear violations. This is how new regulations mature. But it would stupid on all parties if no one expected a breach at all and everyone thought it would be hunky dory.

As for Toto or for any team manager, they know very well, money doesn't bring performance. It's the right ideas. Assuming Mercedes spent a few millions less than Red Bull last year to build W13, see what they came out with. Look at what they did with W12! Could they have won the last year's championship without inducing damage to Red Bull in Silverstone and Hungary? One could argue, if RB didn't suffer the damages induced on them, they could have used that to bring further upgrades themselves. There are always question marks that we can debate with.

[Wouter]

https://find-and-update.company-informa ... y/03120645

You can also go back to the companies house main page and find infomation on any company or person in charge of any company. for example Christian horner, Adrian Newey etc etc

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Thank you Chris, but I can't find the figures just-a-fan mentioned. I only found this, just 3 people.

https://find-and-update.company-informa ... 5/officers

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Filing history, full accounts made up to 31st December 2021. Employee numbers and wage is on Page 18 of the same document. Hope that helps.

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Thanx again Chris. I looked at that page and I saw this:

04 Oct 2021 Full accounts made up to 31 December 2020

I only read 04 Oct 2021 and didn't see December 2021.

Also thank you for the Company's name of Newey. Interesting.

RBR should have known that in this way Newey is not an employee of RBR and therefore
does not belong to the three highest paid people.

If this is really the reason for the disagreement between the FIA accountants and RBR,
then there is no point in appealing.

They will therefore not have to count the fourth highest paid employee and will have to include Newey
and see what amount exceeds the BC. I'm curious.

[DChemTech]

So lets leave anything unpunished because it needs to mature? thats your opinion? i respect it but my opinion is that because of what you say exactly the teams didn't try too hard to police themselves because they knew that the punishment logically would had been light. We have also words from RB that they will not stop upgrading the car no matter the cost cap or anything if i remember right.

I dont agree off course and there must be real punishment no matter where the expenses was. Its also a nice trick to let the catering for example to be over budget (if this is really the case here) or something that in all eyes doesn't seem crucial but what you all forget is that the money that left from catering went to something else more crucial....

I dont like any team manager, especially Toto but what he says is right. With some extra millions they could had won the last year championship or this year they could had done a faster job to fix their car.

But it does matter what the expenses was, as there is disagreement between team and governing instance about whether it amounts to costs that are to be included in the cap!

Let's consider the following -purely hypothetical- situations:

Situation 1:
Team A spends 144 M$ on car development, and 5 M$ on catering
Team B spends 144 M$ on car development, and 1M$ on catering.
Team A (for some reason) thought 4M$ of the catering could be accounted as marketing expenses. Team B probably held such dinners too, but under other circumstances (maybe not during race weekends or so), and they were accounted as marketing.

Situation 2:
Team A spends 144 M$ on car development, and 5 M$ on catering
Team B spends 140 M$ on car development, and 5 M$ on catering

For me, situation 1 and 2 are different situations, especially if there is some reasonable explanation regarding the disagreement between FIA and the team. And so, the consequences may very well - and rightfully - differ, too. Hyperbolically, killing someone is wrong in all but a few cases - but the penalty does very much depend on the circumstances.

Similarly, if the issue is that of one salary being accounted as 'top 3' by the team, but not by the FIA, reasoning matters. Maybe there is disagreement to what is the top 3? Is that hierarchy or salary? I can very well imagine Dieter being counted in hierarchy, but very unlikely in salary. Maybe it was unclear as to whether or not contractors could be included and that's the issue. It could be that it was clear and RB tried to exploit it nevertheless and pretend to be unaware, it could also well be that the FIA just had written their rules in an unclear way and RB used that notion.

It would not be surprising if the issue is poor writing - many TDs are issued not because teams do something illegal, but because the FIA has poorly written rules and teams use them to the room provided. In those cases, the teams are punished for an issue that is in effect caused by the unclarity of the FIA. The same could be true here, or it may not be. At this point all we know is that the FIA rules that RB breached the cap by at maximum 5% (we do not know by how much, or on which expenses), and that the team disagrees as to whether they breached the cap. On bsais of this limited information, we cannot claim RB is malicious (as some are very eagerly doing), nor can we conclude that the FIA is incompetent in administring the cost cap. All that is clear (to me at least) is that FIA once again screwed up in properly communicating the issues; where everyone was hoping for clarity, they did not clarify anything beyond confirming the rumors.

[Wouter]

Edit:
Another item that would be open to interpretation would be Adrian Newley’s absence for a “significant period of time” during 2021 due to his accident, this incident became widely reported on his return at the Turkish GP.

There are many points that are open to interpretation, there are various items that are exempted from the cost cap.

There needs to be transparency in these reports from the FIA (if not with the public, then certainly for the teams), otherwise more breaches will occur in the future.

Personally, I would put money in a few of the teams being very (VERY!) close to the cap!

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As I understand it, Newey bills RBR every month for the work he has done for them that month. That will be a variable amount, as he does not always work the same number of hours each month.
During his absence due to his bicycle accident, he will therefore not have sent any invoices, because he was unable to work at the time.
If he had been a permanent employee of RBR, he would have been paid all those months, so not now.

[KeiKo403]

You saw his billable invoices? You’re out of your depth, chief.

Here I am adding a valid assumption and all you can say is I'm out of my depth? As another has kindly stated, as I assumed most here already knew, Fallows was moved off all involvement with the F1 team, as is typical with most gardening-leave type situations. I've pointed out that Wolff's salary is $26m but let's assume that his is Mercedes' top salary that is excluded, and given Allison's own words that Wolff found a way for him contribute to the team but not be CTO, well, I assume any team can do that. I'll add in a conspiracy theory for you though, just to make it interesting- what's Sheila-Ann Rao's involvement in all of this

It’s almost as though you think the F1 paddock is only made up of 10 people and so it must be one of them. Red Bull parent company could’ve easily had an internal call with AT and RBR to try and come to a common way of working. One of the AT people could’ve said something to someone outside of the call who’s a very good friend of some one at Ferrari and boom, no FIA leaker, no Mercedes mole.
Alternatively Todt may still have close ties to people in the FIA or Tombazis and that maybe how the rumour got out via Ferrari who shared it with Mercedes to protect their source. Just like Mercedes got Red Bull to start questioning the FIA about Ferraris PU in 2019.

My point is the rumours could’ve come from anyone of a hundred+ people.

[Just_a_fan]

I'll add in a conspiracy theory for you though, just to make it interesting- what's Sheila-Ann Rao's involvement in all of this

Oh, that's an easy one to answer: None. Nothing. Nought. Nada.

Another deflection attempt by you, however, to try to throw mud at Mercedes. Mercedes had nothing to do with Red Bull illegally spending too much money.

[Just_a_fan]

RBR should have known that in this way Newey is not an employee of RBR and therefore
does not belong to the three highest paid people.

If this is really the reason for the disagreement between the FIA accountants and RBR,
then there is no point in appealing.

They will therefore not have to count the fourth highest paid employee and will have to include Newey
and see what amount exceeds the BC. I'm curious.

That's their problem, I think. He's not a direct employee because he works on a contractor basis (better for him and them form a taxation point of view). But they want to use his not-inconsiderable salary as one of the top 3. Can't have it both ways. It does beg the question, if the overspend is the difference between Newey's pay and the next highest paid person not listed in the top 3, how much is it? Newey is paid big bucks so I could see it being a number of million dollars. On that basis, Red Bull are lucky they didn't accidentally end up in the major breach category!

[Just_a_fan]

As for Toto or for any team manager, they know very well, money doesn't bring performance. It's the right ideas. Assuming Mercedes spent a few millions less than Red Bull last year to build W13, see what they came out with. Look at what they did with W12! Could they have won the last year's championship without inducing damage to Red Bull in Silverstone and Hungary? One could argue, if RB didn't suffer the damages induced on them, they could have used that to bring further upgrades themselves. There are always question marks that we can debate with.

It's worth noting that Mercedes turned down their turn to do wet weather tyre testing because of the budget cap. After Imola, the cost of replacing Bottas's car meant they couldn't run the cars for the tyre test. Other teams with damage seemed to build new cars and run the cars for tests.

So at least one team was showing that they were taking account of the budget cap. But if Newey's pay was incorrectly offset by Red Bull, it's no wonder they could afford to rebuild Max's car and do additional stuff.

It does highlight one of the central flaw in the system - by simple interpretation of an financial method, one team was able to spend more on the cars than another team and that extra may have been enough to gain the title. I.e. if Red Bull had taken Merc's approach, they probably wouldn't have been able to bring so many upgrade in the season. That would have hampered Max's run to the title. That's what's getting some people worked up, I guess.

[Shakeman]

Whatever the findings of the investigation you can bet your life that if other teams see an advantage in the way RB has accounted for Newey's time they will also adopt that accounting methodology.

If these cost cap rules favour employees becoming self-employed external entities and if those external entities can also be engaged in other side projects that could provide data off the books then it's an obvious loophole which will be exploited. Where do you draw the line between employee and external contractor and how far can this loophole be exploited?

If key employees are effectively separate companies, how are they audited under the cost cap? It is surely more than ticking off submitted timesheets from the external entity? How does the FIA ensure the submitted timesheets reflect accurately the amount of 'work' done and there's no discounting going on?

Any F1 fan seeing Newey dressed in RB uniform would reasonably conclude he was a RB employee and team member, tyre and fuel engineers assigned to teams always wear their respective company's uniforms not the team they're assigned to. Does Newey pay for all his travel and accommodation then claim it back or does he travel with the team? If you walk like a duck and quack like a duck you probably are a duck and not an external contractor.

How widespread is this activity within F1? Is it just RB or is this common up and down the pitlane?

[KeiKo403]

It’s completely nothing to do with the conversation going on here but if Marko has to be listed as a top paid exec somewhere I wonder if there’s a way for his services to be put under the AT top 3 staff giving Red Bull a slot to exclude a different highly paid member of staff?

[mendis]

As for Toto or for any team manager, they know very well, money doesn't bring performance. It's the right ideas. Assuming Mercedes spent a few millions less than Red Bull last year to build W13, see what they came out with. Look at what they did with W12! Could they have won the last year's championship without inducing damage to Red Bull in Silverstone and Hungary? One could argue, if RB didn't suffer the damages induced on them, they could have used that to bring further upgrades themselves. There are always question marks that we can debate with.

It's worth noting that Mercedes turned down their turn to do wet weather tyre testing because of the budget cap. After Imola, the cost of replacing Bottas's car meant they couldn't run the cars for the tyre test. Other teams with damage seemed to build new cars and run the cars for tests.

So at least one team was showing that they were taking account of the budget cap. But if Newey's pay was incorrectly offset by Red Bull, it's no wonder they could afford to rebuild Max's car and do additional stuff.

It does highlight one of the central flaw in the system - by simple interpretation of an financial method, one team was able to spend more on the cars than another team and that extra may have been enough to gain the title. I.e. if Red Bull had taken Merc's approach, they probably wouldn't have been able to bring so many upgrade in the season. That would have hampered Max's run to the title. That's what's getting some people worked up, I guess.

FIA wasn't clear where and what the issue is in terms of breach. So, I wouldn't go to the length of speculating it was indeed for car development and that's how Red Bull won. While I understand why anyone would do that.

[Just_a_fan]

Newey has his own company too which he is a director of.

RACING SERVICES LIMITED
Company number 05656947

That could be for his racing cars - it has over £2m against plant and machinery, not something one would expect to see for a company set up to allow contracting of professional services.

[bonjon1979]

As for Toto or for any team manager, they know very well, money doesn't bring performance. It's the right ideas. Assuming Mercedes spent a few millions less than Red Bull last year to build W13, see what they came out with. Look at what they did with W12! Could they have won the last year's championship without inducing damage to Red Bull in Silverstone and Hungary? One could argue, if RB didn't suffer the damages induced on them, they could have used that to bring further upgrades themselves. There are always question marks that we can debate with.

It's worth noting that Mercedes turned down their turn to do wet weather tyre testing because of the budget cap. After Imola, the cost of replacing Bottas's car meant they couldn't run the cars for the tyre test. Other teams with damage seemed to build new cars and run the cars for tests.

So at least one team was showing that they were taking account of the budget cap. But if Newey's pay was incorrectly offset by Red Bull, it's no wonder they could afford to rebuild Max's car and do additional stuff.

It does highlight one of the central flaw in the system - by simple interpretation of an financial method, one team was able to spend more on the cars than another team and that extra may have been enough to gain the title. I.e. if Red Bull had taken Merc's approach, they probably wouldn't have been able to bring so many upgrade in the season. That would have hampered Max's run to the title. That's what's getting some people worked up, I guess.

FIA wasn't clear where and what the issue is in terms of breach. So, I wouldn't go to the length of speculating it was indeed for car development and that's how Red Bull won. While I understand why anyone would do that.

The team exists to build a fast car. If they're treating money for catering etc as outside of the budget, that leaves them more budget for car development. Similarly, other teams have staff off sick etc, that will have been included in their budgets and they are within the cost cap. Therefore, they have had less to spend on car development. The FIA will need to be completely transparent with this, and I'll be fascinated to see what the truth is on how much Red Bull are out. If it were a few hundred thousand, I would've thought Red Bull would come out and say to end speculation. The silence is rather deafening.

[bonjon1979]

Newey has his own company too which he is a director of.

RACING SERVICES LIMITED
Company number 05656947

That could be for his racing cars - it has over £2m against plant and machinery, not something one would expect to see for a company set up to allow contracting of professional services.

That depends, he might be making his own models for example, thereby removing that element from the teams budget? We just don't know.

[Just_a_fan]

FIA wasn't clear where and what the issue is in terms of breach. So, I wouldn't go to the length of speculating it was indeed for car development and that's how Red Bull won. While I understand why anyone would do that.

When allocating costs under the budget cap, the aim is to get as much out of the cap as you can so that more of the capped allowance can be spent on the cars - their design, development, running them on track and all of the costs associated with those three things. That's as simple as it gets. No other reason for doing it.