2022 budget cap violations

[chrisc90]

Does a overspend on say catering automatically mean that there was more money to spend on something else?

How are are the FIA looking into the accounts? If they are looking into them in any significant detail, it would be very easy to see that a team spend £x on catering and £x on development. It would be pretty easy to see that the money has moved through departments, especially since there will be a paper trail.

Maybe all these finance officers in other teams are knocking out some CFD designs and then 10minutes before their break deciding that it’s going to cost £xx to produce.
Wonder if the FIA will go through a team of finance auditors and their backgrounds where that team is bigger than the actual team designing the parts. Almost becomes a little bit suspect for a relatively small team/operation.

Audit your own work… removed from the cost cap.

If you spend on catering thinking it is outside control only to find it is inside, then, yes, you've had more money to spend on the car..

This is the point I’m trying to make. DO you have more money to spend on the car?

Does the FIA not just look at car budgets, catering, electric, wages or whatever and look at all those bits seperately.

Who’s to say that team A has a car cost of 100million and £50million on wages (just 2 extreme examples) and team B has 75miles on on the car and 75million on wages.
Unless your saying there is a set car budget, which there isn’t, that overspend could have been on wages, powering the factory etc. it doesn’t mean it was directly involved in the expenditure for developing the car - despite what some people will want to make out to show there’s a advantage towards the car specifically.

[peewon]

You’re right and that’s my point, it should be binary to be effective otherwise you have a risk/reward scenario, especially since the FIA have now set a (dangerous IMHO) precedent of insignificant penalties for teams in “minor breach”.

So you've determined the penalty has been insignificant, but you know the breach was significant? As in you know the penalty has not had a significant effect but you know the breach definitely has had a significant effect on RB's current performance. How can you know this?

And using your explanation here. How do you think a $5000 breach should be punished? Specifically.

A breach is a breach. There should be no minor or major distinction otherwise it’s only “a bit of a non-compliance” isn’t it? But only a little one so that’s ok, right? I’m not claiming any inside knowledge but if you think the spend didn’t have an effect (positive or negative) then why overspend at all? Why not do what 9/10 teams did and comply with the cost cap?

Conversely if you want to argue that the penalty has been significant then what impact has it had on RB to date? Specifically.

Why do it at all? Because a breach can be accidental based on different interpretations of financial regulations. The accounting interpretations of Red Bull's auditors differed from the FIA. FIA really didn't raise any concerns till September when it was too late.

FIA changed a rule in June about how certain costs regarding unused parts for show cars will be treated as a part of the cost cap or not. They also did not receive a tax credit that they were expected to against some tax liabilities. Anybody who thinks they deliberately overspent by 400k to gain some sort of performance advantage is laughable and clutching at straws because their favorite team/driver cannot compete.

And as we know FIA has a history of applying selective interpretation of rules to benefit or hamper certain teams. Blown diffuser is a perfect example where only a minority of teams interpreted the rule a certain way but FIA ruled in their favor simply because the President at the time was at wars with Mclaren and Ferrari who hadn't interpreted the rules the same way.

Mercedes organized a whole illegal tyre test and the only punishment was to lose the young drivers test at seasons end. They then went on to win 8 titles after that.

I wish Horner would have come out and said RB would be okay if all other teams can exceed the cap by 400k or even more for the next season and lets see how much performance they can gain out of it. The FIA is turning this into a accounting championship.

[Stu]

Without a crystal ball it is impossible to determine the severity of outcome at the point of issuing the penalty (unless that penalty is DSQ from WCC).
I think that most teams would argue that a 10% reduction in any measured metric (WT/CFD or Budget Allowance) could not be considered insignificant and would have some effect on performance.

Well they would argue it's insignificant when they are lobbying for a more severe penalty for another team, as is their job. But if someone tried to take away 10% of their CFD and WT allocation they would scream to high heaven

10 people are building a bonfire
The bonfire will be used to burn a witch
Each of people are convinced that one of the others is a witch…

[Big Tea]

Without a crystal ball it is impossible to determine the severity of outcome at the point of issuing the penalty (unless that penalty is DSQ from WCC).
I think that most teams would argue that a 10% reduction in any measured metric (WT/CFD or Budget Allowance) could not be considered insignificant and would have some effect on performance.

Well they would argue it's insignificant when they are lobbying for a more severe penalty for another team, as is their job. But if someone tried to take away 10% of their CFD and WT allocation they would scream to high heaven

10 people are building a bonfire
The bonfire will be used to burn a witch
Each of people are convinced that one of the others is a witch…

So , no point taking a risk, burn all 9.

[Just_a_fan]

This is the point I’m trying to make. DO you have more money to spend on the car?

You have an allowed cost cap budget of £10m. You decide to spend all £10m on the car and you spend another £1m on sandwiches believing sandwiches aren't covered by the cost cap.

But the sandwich bill should have been taken from the cost cap budget, so by not counting it, you've used an extra £1m on the car.

If everyone else accounted for their sandwiches correctly, they spent £9m on their car and you spent £10m, thus you spent more than them.

That's why getting the correct criteria for everything you spend money on is now so important.

[Willy]

This is the point I’m trying to make. DO you have more money to spend on the car?

You have an allowed cost cap budget of £10m. You decide to spend all £10m on the car and you spend another £1m on sandwiches believing sandwiches aren't covered by the cost cap.

But the sandwich bill should have been taken from the cost cap budget, so by not counting it, you've used an extra £1m on the car.

If everyone else accounted for their sandwiches correctly, they spent £9m on their car and you spent £10m, thus you spent more than them.

That's why getting the correct criteria for everything you spend money on is now so important.

May be others spent less on sandwiches and spent £10m on development. All kinds of probabilities exist.

[clownfish]

I find it amusing that people think the penalty wasn't enough. The continued success of a team shouldn't qualify if the punishment was enough. If Red Bull had lost advantage, would we then have assumed 10% was enough? What is the guarantee that 20% could have been enough or even 30% for that matter?

Imagine if Aston Martin breaches cost cap in 2022 and gets 10% wind tunnel penalty and then goes right back to being a back marker. Would we then say, it was too much? That's why rule making and penalties cannot be subjective.

I don't see why that's amusing. I think it's entirely reasonable to look at the results when deciding if a penalty has been effective.

If the team that exceeded the cap has been able to continue with no notable loss of performance, then there has effectively been no punishment.

[Willy]

I find it amusing that people think the penalty wasn't enough. The continued success of a team shouldn't qualify if the punishment was enough. If Red Bull had lost advantage, would we then have assumed 10% was enough? What is the guarantee that 20% could have been enough or even 30% for that matter?

Imagine if Aston Martin breaches cost cap in 2022 and gets 10% wind tunnel penalty and then goes right back to being a back marker. Would we then say, it was too much? That's why rule making and penalties cannot be subjective.

I don't see why that's amusing. I think it's entirely reasonable to look at the results when deciding if a penalty has been effective.

If the team that exceeded the cap has been able to continue with no notable loss of performance, then there has effectively been no punishment.

What is the reference for notable loss of performance? Potentially, FIA might have done their math and 10% suggested as a severe punishment.

[Just_a_fan]

Yes and no. If you didn’t realise something by was part of the budget, or later was, then there is no guarantee that the overspend was on the ‘car’.

Yes - if you should have accounted for that money in the budget cap but didn't, then you had more money to spend on the car. Note that "the car" includes, designing it, building it, repairing it, developing it - so R&D spending is included, for example. It's all stuff that allows a team to develop more performance in the car they take to the race track.

If it wasn't thus, there would be no point in having a cost cap in the first place.

[Just_a_fan]

This is the point I’m trying to make. DO you have more money to spend on the car?

You have an allowed cost cap budget of £10m. You decide to spend all £10m on the car and you spend another £1m on sandwiches believing sandwiches aren't covered by the cost cap.

But the sandwich bill should have been taken from the cost cap budget, so by not counting it, you've used an extra £1m on the car.

If everyone else accounted for their sandwiches correctly, they spent £9m on their car and you spent £10m, thus you spent more than them.

That's why getting the correct criteria for everything you spend money on is now so important.

May be others spent less on sandwiches and spent £10m on development. All kinds of probabilities exist.

It's an analogy.

"Sandwiches" is a place-holder for any activity that should be included in the cap budget but might be left out by a team (either by mistake or by deliberate action).

Every £ you spend on the car that should have been accounted for on something else under the cap budget is a £ that your competitors aren't spending on their cars and thus potentially brings an advantage. That's why it's policed and that's why there are penalties.

[McL-H]

It doesn’t matter who violated the budget cap. The only acceptable punishment is a full disqualification from both 2022 championships a points reduction for 2023 and a reasonable reduction in wind tunnel and CFD time for 2024.

[ValeVida46]

It doesn’t mean it goes directly on the car though, that’s the point.

With no transparency it is highly likely the catering spiel was just PR spin and damage limitation from both the FIA and Red Bull.
People took what Red Bull said as gospel.
However, we have statements from their team principal days before being found guilty of the breach saying:

We’re absolutely confident in our submission. Our audit was signed off by our auditors. We believe we are comfortably within the cap.
They’re hugely defamatory. We take umbrage to them. And one can only assume it’s not coincidence that this is the point where Max has his first strike at the world championship. How on earth do they have this information? Where do they have this knowledge?
It was totally unacceptable to make a completely unfounded allegation.

https://www.theguardian.com/sport/2022/ ... -cap-rules

https://the-race.com/formula-1/red-bull ... p-remarks/


Obviously given Horners track record here, if we can't verify the record, stories about sandwiches should be taken with a pinch of salt in my opinion.
A transparent model alleviates this problem.

[Stu]

Gentle reminder - this discussion is around 2022 budget cap breaches, the 2021 discussion was closed months ago, please do not relive it again.

No names have yet been either released or leaked…
No possible offences have yet been either released or leaked…

[f1jcw]

Mercedes organized a whole illegal tyre test and the only punishment was to lose the young drivers test at seasons end. They then went on to win 8 titles after that.

A test that had previously got authorisation from both the tyre manufacturer and FIA.

[AR3-GP]

I find it amusing that people think the penalty wasn't enough. The continued success of a team shouldn't qualify if the punishment was enough. If Red Bull had lost advantage, would we then have assumed 10% was enough? What is the guarantee that 20% could have been enough or even 30% for that matter?

Imagine if Aston Martin breaches cost cap in 2022 and gets 10% wind tunnel penalty and then goes right back to being a back marker. Would we then say, it was too much? That's why rule making and penalties cannot be subjective.

I don't see why that's amusing. I think it's entirely reasonable to look at the results when deciding if a penalty has been effective.

If the team that exceeded the cap has been able to continue with no notable loss of performance, then there has effectively been no punishment.

RB would be further ahead than they are now without the penalty. Loss of performance does not equate to loss of positions in the WCC. If a team has a 5 second per lap advantage and their penalty cost them 3 seconds per lap, they still have a 2 second per lap advantage.

This is known...