2021 Cost Cap Rumours and Speculation

[dans79]

[bonjon1979]

Gosh, you can see how messy this could be. ‘We made these extra wings that we didn’t use, it cost us £15 million…so that gets knocked off right?’. I’m exaggerating for effect, but one can see how doomed this cost cap idea is because all times will try and do something sneaky. Feel like we need to have some sort of confirmation soon from FIA about how much is actually being argued over here. The longer it goes on, the more it feels like there is something to hide.

I’m not sure where the benefit would be. If they spent £15m to build some wings that they never used then they’ve wasted resources to build those wings. Sure they get the material and manufacturing cost back, but that’s resources that have been wasted instead of being used with something that will be used.

Unless you say it cost 15million to make but it actually only cost 2. I imagine all teams are over-estimating what their ‘unused inventory’ cost. It just seems like a blooming minefield to me, I’d hate to be the one having to sort through it all and come up with something fair.

[littlebigcat]

Unless you say it cost 15million to make but it actually only cost 2. I imagine all teams are over-estimating what their ‘unused inventory’ cost. It just seems like a blooming minefield to me, I’d hate to be the one having to sort through it all and come up with something fair.

This is addressed in the rules. They are aware of the cost of manufacturing parts. Doing as you say would be fraudulent and a major breach, and unlike the situation Red Bull appears to be in, actual cheating.

It would surprise me if other teams were not doing the same; it seems strange state of affairs though, is development time for these unused parts logged, if so how?

Any development time or cost for an unused part is not exempt from the cap, its solely the manufacturing cost.

[hollus]

You sure they don't get to divide the development cost between all the manufactured parts? So that a made but unused part could dilute some development costs? Just speculating, but there is a certain sick logic to it.

[dans79]

You sure they don't get to divide the development cost between all the manufactured parts? So that a made but unused part could dilute some development costs? Just speculating, but there is a certain sick logic to it.

This is from the Capital Expenditure section.

(ii) the cost of an item of Inventories must comprise:

(A) all costs of purchase, determined on the same basis as that used by
the F1 Team in its Audited Annual Financial Statements in respect of
the previous Full Year Reporting Period;

(B) costs of conversion (including fixed production overheads allocated on
a basis that is appropriate to the nature of the product and method of
production and on the basis of the entity's normal level of activity, and
applied consistently from one Reporting Period to another); and

(C) other costs incurred in bringing the item of Inventories to its present
location and condition

[hollus]

Covered, then. Thanks.

[littlebigcat]

Zak Brown and Christian Horner are on the same Team Principal Press Conference

[dans79]

Bottas
https://www.racefans.net/2022/10/20/red ... ap-bottas/

“I feel like the rules are the rules and if you don’t follow them, there should be a penalty that really hurts,” he said.

“You don’t want anyone to have the appetite to maximise something for one year and risk it with the budget cap,” he said. “I personally hope that it’s going to be a strict and harsh penalty because that shouldn’t happen. The rules are the rules.

“There’s many rules in F1 and it should [not] be any different in terms of penalties. Let’s hope so that it’s a good penalty that really, really hurts them because I was in the fight last year for the constructors, yes we got that, but we missed the drivers’ title by a few points and a few millions can make a big, big difference.”

Hamilton
https://www.autosport.com/f1/news/hamil ... /10387122/

“I do think the sport needs to do something about this,” said Hamilton.

“Otherwise, if it’s quite relaxed, if they’re relaxed with these rules, then all the teams will just go over.

“And spending millions more and then only having a slap on the wrist is obviously not going to be great for the sport. They might as well not have a cost cap for the future [in that case].”

[dans79]

https://www.autosport.com/f1/news/red-b ... /10387107/

More details of Red Bull's alleged overspend have begun to emerge, although nothing has been officially confirmed by the FIA or the team.

The overall figure involved is believed to be around $1.8m, which puts the offence well within the “minor breach” limit of 5% over the cap, or just over $7m.

The team appears to have fallen foul of several areas of the FIA's financial regulations, which have regularly been updated by amendments that have not been published on its website or made public.

One is the allocation of the cost of catering at the factory and at the track. In addition, there are believed to be redundancy and sick pay issues related to key employees.

A subject more directly involved to the cost of running the cars is the allocation of the value of unused spare parts. They were passed to the heritage department at the end of the season for use on show cars and any testing of the 2021 model in 2022, which falls outside the cap restrictions.

[Big Tea]

https://www.autosport.com/f1/news/red-b ... /10387107/

More details of Red Bull's alleged overspend have begun to emerge, although nothing has been officially confirmed by the FIA or the team.

The overall figure involved is believed to be around $1.8m, which puts the offence well within the “minor breach” limit of 5% over the cap, or just over $7m.

The team appears to have fallen foul of several areas of the FIA's financial regulations, which have regularly been updated by amendments that have not been published on its website or made public.

One is the allocation of the cost of catering at the factory and at the track. In addition, there are believed to be redundancy and sick pay issues related to key employees.

A subject more directly involved to the cost of running the cars is the allocation of the value of unused spare parts. They were passed to the heritage department at the end of the season for use on show cars and any testing of the 2021 model in 2022, which falls outside the cap restrictions.

We keep hearing of ' Ah it was not spent on speed, it was on toilet paper' etc.
There are not separate budgets.
Money spent goes on the car because if they had not bought the toilet paper it would have gone on speed.
If all the teams have a bog roll allowance above the spend, that's fine. If not, then it contravenes the rule and is to be penalised accordingly.

I would like to say at this point, having read previously a point that 'cheating' is not the same as inadvertently busting a rule, and I quite agree. But-- it should be penalised above passing the spend limit, not instead of it.

I do believe there was no intention to cheat, but that is not the point. A driver may not intend to cross the white line, but if he does, he is penalised.

[cheeRS]

https://www.autosport.com/f1/news/red-b ... /10387107/

More details of Red Bull's alleged overspend have begun to emerge, although nothing has been officially confirmed by the FIA or the team.

The overall figure involved is believed to be around $1.8m, which puts the offence well within the “minor breach” limit of 5% over the cap, or just over $7m.

The team appears to have fallen foul of several areas of the FIA's financial regulations, which have regularly been updated by amendments that have not been published on its website or made public.

One is the allocation of the cost of catering at the factory and at the track. In addition, there are believed to be redundancy and sick pay issues related to key employees.

A subject more directly involved to the cost of running the cars is the allocation of the value of unused spare parts. They were passed to the heritage department at the end of the season for use on show cars and any testing of the 2021 model in 2022, which falls outside the cap restrictions.

We keep hearing of ' Ah it was not spent on speed, it was on toilet paper' etc.
There are not separate budgets.
Money spent goes on the car because if they had not bought the toilet paper it would have gone on speed.
If all the teams have a bog roll allowance above the spend, that's fine. If not, then it contravenes the rule and is to be penalised accordingly.

I would like to say at this point, having read previously a point that 'cheating' is not the same as inadvertently busting a rule, and I quite agree. But-- it should be penalised above passing the spend limit, not instead of it.

I do believe there was no intention to cheat, but that is not the point. A driver may not intend to cross the white line, but if he does, he is penalised.

Well said. This fact needs to be highlighted more. There is one 'budget', one cost cap. It sounds innocent when the team says, for example, 'we went over because of some sick pay and catering costs.' No, that's not how a budget works. You spent too much money on the car/performance/engineering, and didn't have enough left for the other costs.

[dans79]

Well said. This fact needs to be highlighted more. There is one 'budget', one cost cap. It sounds innocent when the team says, for example, 'we went over because of some sick pay and catering costs.' No, that's not how a budget works. You spent too much money on the car/performance/engineering, and didn't have enough left for the other costs.

Agreed, A budget is a budget, and anyone who is a responsible person knows sticking to one takes work and planning.

[e30ernest]

I really hope they publish the overspend amount. $1.8M is not a trivial amount if that is real.

I agree that there is only 1 cost cap so classifying the overspend as catering, sick leave or whatever does not change the fact they overspent.

[hardingfv32]

This is F1. Without any doubt $1.8M is a trivial amount.

Brian

[gcdugas]

For those who are eager to jump on the bandwagon against Red Bull for their pushing the grey area in the accounting rules, I'd like to remind us all of a statement from one of the patron saints of F1...

"Rules are for the obedience of fools and interpretations of smart men."
--Colin Chapman