2021 Cost Cap Rumours and Speculation

[Just_a_fan]

The European GAAP describes what is meant by employee.
Someone who works with his one-person company for a large company and does that more than two days a week
for an extended period and earns at least 2/3 of the minimum wage is an employee of that large company.

From an RBR perspective they are right and he is an RBR employee, but the FIA ​​maintains that he is not an RBR employee as he is not on their payroll but they pay his monthly bills.

But under UK law he isn't an employee. And both Red Bull Racing and Newey's personal company are UK-registered and governed by UK law.

Tricky, isn't it?

[mendis]

The European GAAP describes what is meant by employee.
Someone who works with his one-person company for a large company and does that more than two days a week
for an extended period and earns at least 2/3 of the minimum wage is an employee of that large company.

From an RBR perspective they are right and he is an RBR employee, but the FIA ​​maintains that he is not an RBR employee as he is not on their payroll but they pay his monthly bills.

But under UK law he isn't an employee. And both Red Bull Racing and Newey's personal company are UK-registered and governed by UK law.

Tricky, isn't it?

I mentioned in my earlier post, the FIA rules for exclusion of drivers/individuals doesn't mention of "employee" anywhere in the rule book.

[Just_a_fan]

If these 'separate companies' are also conducting their own R&D outside of the cost cap and then you might as well not have a cost cap. Imagine those 'separate companies' also having secondary funding streams for suspiciously similar work that could be fed into the F1 development work for a discounted fee. Who's to say what an external company can and can't work on and who's to say what IP came from where?

The FIA's finance regs already cover that. If work is done on R&D related to F1 then it falls under the budget cap even if it's a third party.

[Just_a_fan]

The European GAAP describes what is meant by employee.
Someone who works with his one-person company for a large company and does that more than two days a week
for an extended period and earns at least 2/3 of the minimum wage is an employee of that large company.

From an RBR perspective they are right and he is an RBR employee, but the FIA ​​maintains that he is not an RBR employee as he is not on their payroll but they pay his monthly bills.

But under UK law he isn't an employee. And both Red Bull Racing and Newey's personal company are UK-registered and governed by UK law.

Tricky, isn't it?

I mentioned in my earlier post, the FIA rules for exclusion of drivers/individuals doesn't mention of "employee" anywhere in the rule book.

In which case Newey's employment status isn't the issue that has caused RBR to breach the cost cap and this discussion is just killing time.

[organic]

https://racingnews365.com/red-bull-in-t ... budget-cap

Marko gives an update
Team advisor Marko has reiterated that Red Bull believe they are innocent.

"I don't want to say too much, just this: We are still of the opinion that we have not violated the cost-capping rule at all," Marko told German publication F1-Insider.

In terms of what happens next, the Austrian has stated that the team remain in discussion with the FIA.

"The talks with the FIA are still going on. Let's see what the final outcome is," Marko added.

It has been suggested by Marko that the issue may lie in certain expenses being interpreted differently by the team and the FIA; for example, areas such as sick pay for staff.

[mendis]

But under UK law he isn't an employee. And both Red Bull Racing and Newey's personal company are UK-registered and governed by UK law.

Tricky, isn't it?

I mentioned in my earlier post, the FIA rules for exclusion of drivers/individuals doesn't mention of "employee" anywhere in the rule book.

In which case Newey's employment status isn't the issue that has caused RBR to breach the cost cap and this discussion is just killing time.

May be! We might just be banging heads based on a rumour from AMUs.

[Just_a_fan]

It's going to set a terrible precedent if they allow it. Imagine all the people suddenly being "employees" but actually working for another firm that are effectively outside of the remit of the FIA.

Regulations doesn't necessarily say, ONLY EMPLOYEES are allowed to be in the group of 3 excluded from the cost cap.

https://www.fia.com/sites/default/files ... -02-18.pdf

3. EXCLUSIONS
3.1 In calculating Relevant Costs, the following costs and amounts within Total Costs of the Reporting Group must be excluded ("Excluded Costs"):

(a) All costs Directly Attributable to Marketing Activities;

(b) All costs of Consideration provided to an F1 Driver, or to a Connected Party of that F1 Driver, in exchange for that F1 Driver providing the services of an F1 Driver to or for the benefit of the F1 Team, together with all travel and accommodation costs in respect of each F1 Driver;

(c) All costs of Consideration provided to an Other Racing Driver, or to a Connected Party of that Other Racing Driver, in exchange for that Other Racing Driver providing the services of an Other Racing Driver to or for the benefit of the F1 Team, together with, all travel and accommodation costs in respect of each Other Racing Driver;

(d) All costs of Consideration provided to the three individuals (other than any individual in respect of whom all costs of Consideration are excluded pursuant to any other subArticle of this Article 3.1) in respect of whom the highest aggregate amount of Consideration has been recognised in Total Costs of the Reporting Group during the Reporting Period (the "Excluded Persons"), or to a Connected Party of any Excluded Person, in each case in exchange for that Excluded Person providing services to or for the benefit of the F1 Team, together with associated employer’s social security contributions and all travel and accommodation costs in respect of each Excluded Person;

To simply, cost cap allows the exclusion of driver payments where a driver can be an employee or a contractor from another firm who lends driving services to any F1 team. The fees for his services paid to his employer if he is a contractor, is excluded.

Same thing applies to anyone providing service to the F1 team, whether an employee or a contractor from another firm. In this case, Newey. This person(s) can be put into the group of 3 excluded, other than drivers.

How can such a straight forward statement be ambigous?

Does the above enlarged text imply that the person has to be an employee? An employer's social security payments would only be paid for an employee. Unless it means that if the excluded person is a company then the payments they make to their own employee. That's one for the lawyers to thrash out.

[Just_a_fan]

https://racingnews365.com/red-bull-in-t ... budget-cap

Marko gives an update
Team advisor Marko has reiterated that Red Bull believe they are innocent.

"I don't want to say too much, just this: We are still of the opinion that we have not violated the cost-capping rule at all," Marko told German publication F1-Insider.

In terms of what happens next, the Austrian has stated that the team remain in discussion with the FIA.

"The talks with the FIA are still going on. Let's see what the final outcome is," Marko added.

It has been suggested by Marko that the issue may lie in certain expenses being interpreted differently by the team and the FIA; for example, areas such as sick pay for staff.

They had only to ask the FIA for clarification early on. So they have only themselves to blame for their own interpretation.

Whatever they exclude is money that can then be used on the car's performance. That's why it's a big deal.

[ArcticWolfie]

https://racingnews365.com/red-bull-in-t ... budget-cap

Marko gives an update
Team advisor Marko has reiterated that Red Bull believe they are innocent.

"I don't want to say too much, just this: We are still of the opinion that we have not violated the cost-capping rule at all," Marko told German publication F1-Insider.

In terms of what happens next, the Austrian has stated that the team remain in discussion with the FIA.

"The talks with the FIA are still going on. Let's see what the final outcome is," Marko added.

It has been suggested by Marko that the issue may lie in certain expenses being interpreted differently by the team and the FIA; for example, areas such as sick pay for staff.

They had only to ask the FIA for clarification early on. So they have only themselves to blame for their own interpretation.

Whatever they exclude is money that can then be used on the car's performance. That's why it's a big deal.

You obviously don't work with contracts and/or accountants...

[mendis]

It's going to set a terrible precedent if they allow it. Imagine all the people suddenly being "employees" but actually working for another firm that are effectively outside of the remit of the FIA.

Regulations doesn't necessarily say, ONLY EMPLOYEES are allowed to be in the group of 3 excluded from the cost cap.

https://www.fia.com/sites/default/files ... -02-18.pdf

3. EXCLUSIONS
3.1 In calculating Relevant Costs, the following costs and amounts within Total Costs of the Reporting Group must be excluded ("Excluded Costs"):

(a) All costs Directly Attributable to Marketing Activities;

(b) All costs of Consideration provided to an F1 Driver, or to a Connected Party of that F1 Driver, in exchange for that F1 Driver providing the services of an F1 Driver to or for the benefit of the F1 Team, together with all travel and accommodation costs in respect of each F1 Driver;

(c) All costs of Consideration provided to an Other Racing Driver, or to a Connected Party of that Other Racing Driver, in exchange for that Other Racing Driver providing the services of an Other Racing Driver to or for the benefit of the F1 Team, together with, all travel and accommodation costs in respect of each Other Racing Driver;

(d) All costs of Consideration provided to the three individuals (other than any individual in respect of whom all costs of Consideration are excluded pursuant to any other subArticle of this Article 3.1) in respect of whom the highest aggregate amount of Consideration has been recognised in Total Costs of the Reporting Group during the Reporting Period (the "Excluded Persons"), or to a Connected Party of any Excluded Person, in each case in exchange for that Excluded Person providing services to or for the benefit of the F1 Team, together with associated employer’s social security contributions and all travel and accommodation costs in respect of each Excluded Person;

To simply, cost cap allows the exclusion of driver payments where a driver can be an employee or a contractor from another firm who lends driving services to any F1 team. The fees for his services paid to his employer if he is a contractor, is excluded.

Same thing applies to anyone providing service to the F1 team, whether an employee or a contractor from another firm. In this case, Newey. This person(s) can be put into the group of 3 excluded, other than drivers.

How can such a straight forward statement be ambigous?

Does the above enlarged text imply that the person has to be an employee? An employer's social security payments would only be paid for an employee. Unless it means that if the excluded person is a company then the payments they make to their own employee. That's one for the lawyers to thrash out.

The way I read, together with social security contributions of the employer of that contractor working for F1 team! When an invoice from a Contractor comes (ABC Consulting Company), for the services of their employee working for F1 team (Red Bull/Mercedes/Ferrari), the social security contributions being made by ABC Consulting for their employee, also need to be included in the invoice.

You need to consider the basic fact that, mostly none of the drivers are employees of a racing team! They have a contract to drive and the driver is associated with a management company. It's the same with people like Newey and Mario Illien (employee of Ilmor). The cost cap regulations allow people like Newey and Illien to offer services to an F1 team and their payments go to their company and that cost comes under the cap. The regulations say, the social security contributions being made by Ilmor to Mario Illien, should also come under cost cap for the team he is providing services to. If Ilmor's fee is very high and figures in the top 3 for a racing team consuming his services, they can put him in their "top 3" exclusion list.

[Sieper]

The European GAAP describes what is meant by employee.
Someone who works with his one-person company for a large company and does that more than two days a week
for an extended period and earns at least 2/3 of the minimum wage is an employee of that large company.

From an RBR perspective they are right and he is an RBR employee, but the FIA ​​maintains that he is not an RBR employee as he is not on their payroll but they pay his monthly bills.

But under UK law he isn't an employee. And both Red Bull Racing and Newey's personal company are UK-registered and governed by UK law.

Tricky, isn't it?

But if local laws in Italy would allow for it that would mean Italian based teams would potentially be better of than UK based teams. So should local law then take prevelance, indeed, very tricky.

[Wil992]

The European GAAP describes what is meant by employee.
Someone who works with his one-person company for a large company and does that more than two days a week
for an extended period and earns at least 2/3 of the minimum wage is an employee of that large company.

From an RBR perspective they are right and he is an RBR employee, but the FIA ​​maintains that he is not an RBR employee as he is not on their payroll but they pay his monthly bills.

But under UK law he isn't an employee. And both Red Bull Racing and Newey's personal company are UK-registered and governed by UK law.

Tricky, isn't it?

No, it’s not tricky. The word employee doesn’t appear at all in the definition of an excluded person, so their employment status is not relevant. They are simply an individual or a connected party (eg a ltd co owned by that individual).

[bonjon1979]

https://racingnews365.com/red-bull-in-t ... budget-cap

Marko gives an update
Team advisor Marko has reiterated that Red Bull believe they are innocent.

"I don't want to say too much, just this: We are still of the opinion that we have not violated the cost-capping rule at all," Marko told German publication F1-Insider.

In terms of what happens next, the Austrian has stated that the team remain in discussion with the FIA.

"The talks with the FIA are still going on. Let's see what the final outcome is," Marko added.

It has been suggested by Marko that the issue may lie in certain expenses being interpreted differently by the team and the FIA; for example, areas such as sick pay for staff.

I would also draw attention to the fact that Marko said that they have six points where they are in disagreement with the FIA - he also said, and I quote '...nothing has come back yet. If these points, six in total, if only two are tken into account, then we are under the budget cap, even massively.'

These are his words, not mine, and if he's being honest - if two of their points would bring Red bull massively under the budget cap, then the inverse must also be true. Ie that at the moment, they are massively over the budget cap. It also stinks to high heaven - no way would they be massively under the budget cap by design. They would've spent everything they could - so if they had all this headroom? Why didn't they use it? It's obvious to me from this statement that they've tried to fiddle this after they realised they were going over. It's the only explanation.

[djones]

https://racingnews365.com/red-bull-in-t ... budget-cap

Marko gives an update
Team advisor Marko has reiterated that Red Bull believe they are innocent.

"I don't want to say too much, just this: We are still of the opinion that we have not violated the cost-capping rule at all," Marko told German publication F1-Insider.

In terms of what happens next, the Austrian has stated that the team remain in discussion with the FIA.

"The talks with the FIA are still going on. Let's see what the final outcome is," Marko added.

It has been suggested by Marko that the issue may lie in certain expenses being interpreted differently by the team and the FIA; for example, areas such as sick pay for staff.

I would also draw attention to the fact that Marko said that they have six points where they are in disagreement with the FIA - he also said, and I quote '...nothing has come back yet. If these points, six in total, if only two are tken into account, then we are under the budget cap, even massively.'

These are his words, not mine, and if he's being honest - if two of their points would bring Red bull massively under the budget cap, then the inverse must also be true. Ie that at the moment, they are massively over the budget cap. It also stinks to high heaven - no way would they be massively under the budget cap by design. They would've spent everything they could - so if they had all this headroom? Why didn't they use it? It's obvious to me from this statement that they've tried to fiddle this after they realised they were going over. It's the only explanation.

100%

There is no way any team would aim to be under the budget cap. So if these mythical points can sway it to under then there are some shenanigans at play.

[Wouter]

https://racingnews365.com/red-bull-in-t ... budget-cap

Marko gives an update
Team advisor Marko has reiterated that Red Bull believe they are innocent.

"I don't want to say too much, just this: We are still of the opinion that we have not violated the cost-capping rule at all," Marko told German publication F1-Insider.

In terms of what happens next, the Austrian has stated that the team remain in discussion with the FIA.

"The talks with the FIA are still going on. Let's see what the final outcome is," Marko added.

It has been suggested by Marko that the issue may lie in certain expenses being interpreted differently by the team and the FIA; for example, areas such as sick pay for staff.

.
I would also draw attention to the fact that Marko said that they have six points where they are in disagreement with the FIA - he also said, and I quote '...nothing has come back yet. If these points, six in total, if only two are tken into account, then we are under the budget cap, even massively.'

These are his words, not mine, and if he's being honest - if two of their points would bring Red bull massively under the budget cap, then the inverse must also be true. Ie that at the moment, they are massively over the budget cap. It also stinks to high heaven - no way would they be massively under the budget cap by design. They would've spent everything they could - so if they had all this headroom? Why didn't they use it? It's obvious to me from this statement that they've tried to fiddle this after they realised they were going over.

It's the only explanation.

.
Is it?

Why are you quoting words from an old interview, from before the FIA came with their statement?
.

Red Bull: 'Some points interpreted differently by FIA'
2 October - 13:04

Speaking to the German branch of Sky Sports, Marko reveals that there are "no concrete figures" yet. "From our point of view, there are some points where we see the situation differently from the FIA in terms of interpretation. And that has to be discussed," the Red Bull adviser indicated.

He continued: "We have issued a statement. Nothing has come back yet. If these points, six in total, if only two are taken into account, then we are under the budget cap, even massively. So what's floating around is complete nonsense."

Ahead of the Japanese Grand Prix, the FIA will announce the outcome of the investigation.