2021 Cost Cap Rumours and Speculation

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yamahasho
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Re: 2021 Cost Cap Rumours and Speculation

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chrisc90 wrote:
28 Oct 2022, 18:02
Out of interests… what updates have we seen that have brought 0.2 second in lap time?
Not sure about this year, but in years passed, plenty, mass dampers only cost like $20k these days, party modes, interlinked suspensions, flexi wings, none of these cost much but have significant advantage.

We'll never know, Red Bull needs to release where they overspent and why they think they had no competitive advantage.

Does it really matter?
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dans79
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Re: 2021 Cost Cap Rumours and Speculation

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TimW wrote:
28 Oct 2022, 18:07
The bad thing is however that this will only really affect them in 2024. This year they had their normal tunnel time. So the penalty has a big delay in its effect.
according to the aba (if i'm reading it right) the reduction starts today.
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.
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dans79
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Re: 2021 Cost Cap Rumours and Speculation

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mendis
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Re: 2021 Cost Cap Rumours and Speculation

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https://www.motorsport.com/f1/news/red- ... /10391646/

Introducing the list, the FIA notes that "in accordance with the findings of the cost cap administration, Red Bull has acknowledged that the reporting documentation submitted by it included the following incorrectly".
So here is a closer look at what regulations are concerned:

1. Overstated excluded costs pursuant to Article 3.1(a) of the Financial Regulations (concerning catering services)

This is related to catering costs at the factory, and the inability to separate costs of feeding employees who don't come under the cap, such as admin and marketing, and those who do. The FIA insisted on including the total catering costs.

2. Costs pursuant to Article 3.1(w) of the Financial Regulations concerning consideration and associated employer's social security contributions)

This relates to excluding the costs of an "employee that has been formally placed on indefinite sick leave or disability leave". It's understood there was a disagreement relating to costs connected to a senior employee who was both ill and at the same time involved in a redundancy process.

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.

This rule outlines the exclusions of "all costs directly attributable to non-F1 activities".

4. Costs pursuant to Article 3.1(k) of the Financial Regulations (in respect of bonus and associated employer's social security contributions)

This rule relates to the exclusion of employee bonuses, which RBR staff would have received after Max Verstappen's title success.

5. Understatement of Relevant Costs in respect of a gain on disposal of fixed assets by failing to make the necessary upwards adjustment.

The FIA has given no information on what assets were sold.

6. Costs pursuant to Article 3.1(q) of the Financial Regulations (concerning apprenticeship levies)

This rule relates to the exclusion of social security contributions and in this case apparently involved apprentices working at Red Bull.

7. Costs pursuant to Article 3.1(h)(ii)(i) of the Financial Regulations (concerning consideration and associated employer's social security contributions)

This rule relates to exclusion of "social security contributions incurred in respect of any personnel engaged in both F1 activities and non-F1 activities".

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)

This rule states that 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.

9. Costs pursuant to Article 3.1(h) (i) of the Financial Regulations (concerning consideration and associated employer's social security contributions)

As with item 3, this relates to excluding costs directly attributable to non-F1 activities.

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)

This relates to allocating the costs of unused spare parts to the heritage department and thus taking them out of the cap. It is believed to be the single biggest item in this list, with Horner suggesting in Austin involves a seven-figure sum.

11. Clerical error in respect of RBR's calculation of certain costs re-charged to it by Red Bull Power Trains Limited.

This relates to the sister Powertrains division that was being set up during 2021.

12. Certain travel costs pursuant to Article 3.1(r) of the Financial Regulations

This rule relates to the exclusion of all flight and hotel costs in connection with a competition or testing of current cars by personnel.

13. Costs of maintenance pursuant to Article 3.1(i) of the Financial Regulations

This relates to the exclusion of "all costs directly attributable to human resources activities, finance activities or legal activities.

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west52keep64
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Re: 2021 Cost Cap Rumours and Speculation

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mendis wrote:
28 Oct 2022, 18:17
https://www.motorsport.com/f1/news/red- ... /10391646/

Introducing the list, the FIA notes that "in accordance with the findings of the cost cap administration, Red Bull has acknowledged that the reporting documentation submitted by it included the following incorrectly".
So here is a closer look at what regulations are concerned:

...

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)

This relates to allocating the costs of unused spare parts to the heritage department and thus taking them out of the cap. It is believed to be the single biggest item in this list, with Horner suggesting in Austin involves a seven-figure sum.

...
This is factually incorrect, Article 4.1(f)(i)(B) is nothing to do with unused spare parts.

Image
Last edited by west52keep64 on 28 Oct 2022, 18:25, edited 1 time in total.

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dans79
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Re: 2021 Cost Cap Rumours and Speculation

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mendis wrote:
28 Oct 2022, 18:17
https://www.motorsport.com/f1/news/red- ... /10391646/

Introducing the list, the FIA notes that "in accordance with the findings of the cost cap administration, Red Bull has acknowledged that the reporting documentation submitted by it included the following incorrectly".
So here is a closer look at what regulations are concerned:

1. Overstated excluded costs pursuant to Article 3.1(a) of the Financial Regulations (concerning catering services)

This is related to catering costs at the factory, and the inability to separate costs of feeding employees who don't come under the cap, such as admin and marketing, and those who do. The FIA insisted on including the total catering costs.

2. Costs pursuant to Article 3.1(w) of the Financial Regulations concerning consideration and associated employer's social security contributions)

This relates to excluding the costs of an "employee that has been formally placed on indefinite sick leave or disability leave". It's understood there was a disagreement relating to costs connected to a senior employee who was both ill and at the same time involved in a redundancy process.

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.

This rule outlines the exclusions of "all costs directly attributable to non-F1 activities".

4. Costs pursuant to Article 3.1(k) of the Financial Regulations (in respect of bonus and associated employer's social security contributions)

This rule relates to the exclusion of employee bonuses, which RBR staff would have received after Max Verstappen's title success.

5. Understatement of Relevant Costs in respect of a gain on disposal of fixed assets by failing to make the necessary upwards adjustment.

The FIA has given no information on what assets were sold.

6. Costs pursuant to Article 3.1(q) of the Financial Regulations (concerning apprenticeship levies)

This rule relates to the exclusion of social security contributions and in this case apparently involved apprentices working at Red Bull.

7. Costs pursuant to Article 3.1(h)(ii)(i) of the Financial Regulations (concerning consideration and associated employer's social security contributions)

This rule relates to exclusion of "social security contributions incurred in respect of any personnel engaged in both F1 activities and non-F1 activities".

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)

This rule states that 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.

9. Costs pursuant to Article 3.1(h) (i) of the Financial Regulations (concerning consideration and associated employer's social security contributions)

As with item 3, this relates to excluding costs directly attributable to non-F1 activities.

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)

This relates to allocating the costs of unused spare parts to the heritage department and thus taking them out of the cap. It is believed to be the single biggest item in this list, with Horner suggesting in Austin involves a seven-figure sum.

11. Clerical error in respect of RBR's calculation of certain costs re-charged to it by Red Bull Power Trains Limited.

This relates to the sister Powertrains division that was being set up during 2021.

12. Certain travel costs pursuant to Article 3.1(r) of the Financial Regulations

This rule relates to the exclusion of all flight and hotel costs in connection with a competition or testing of current cars by personnel.

13. Costs of maintenance pursuant to Article 3.1(i) of the Financial Regulations

This relates to the exclusion of "all costs directly attributable to human resources activities, finance activities or legal activities.
Some of those seem like "did you even read the rules" issues. #1 for example
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GrizzleBoy
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Re: 2021 Cost Cap Rumours and Speculation

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So they purposely undervalued their power units because Honda supplied them?

yamahasho
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Re: 2021 Cost Cap Rumours and Speculation

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This rule states that 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.

They got free engines? So even volunteering services would have to accessed at market value, pretty strict.
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MadMax
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Re: 2021 Cost Cap Rumours and Speculation

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dans79 wrote:
28 Oct 2022, 18:13
TimW wrote:
28 Oct 2022, 18:07
The bad thing is however that this will only really affect them in 2024. This year they had their normal tunnel time. So the penalty has a big delay in its effect.
according to the aba (if i'm reading it right) the reduction starts today.
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.
Having won the titles early and thus with no need to spend any more money on the RB18, the penalty going in to next year is less than if they were in 2021 where they were working the RB16B right though the season. RBR can park the current car and put everything in to the RB19 so somewhat less of a punishment than it might be in other years.

Of course, the big question is: what have they spent in 2022?

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markc
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Re: 2021 Cost Cap Rumours and Speculation

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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);

So that's this year... so are we going to see another penalty for next year due to this additional overspend?
Presumably the fine is also included in the cost cap?

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dans79
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Re: 2021 Cost Cap Rumours and Speculation

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west52keep64 wrote:
28 Oct 2022, 18:24
This is factually incorrect, Article 4.1(f)(i)(B) is nothing to do with unused spare parts.
The depends greatly on what version of the rules you are reading. remember they published 12 versions/issues this year alone.


https://www.fia.com/sites/default/files ... iss.11.pdf
Article 4.1(f)(i)(ii)
the cost of an item of Unused Inventories must not be recognised in
the Reporting Period; and
That's why i try to remember to always link to the rules when quoting them.
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mendis
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Re: 2021 Cost Cap Rumours and Speculation

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GrizzleBoy wrote:
28 Oct 2022, 18:27
So they purposely undervalued their power units because Honda supplied them?
Honda gave it for free, but FIA has a basic market value associated with it and wouldn't consider it to be free.

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dans79
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Re: 2021 Cost Cap Rumours and Speculation

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MadMax wrote:
28 Oct 2022, 18:29

Having won the titles early and thus with no need to spend any more money on the RB18, the penalty going in to next year is less than if they were in 2021 where they were working the RB16B right though the season. RBR can park the current car and put everything in to the RB19 so somewhat less of a punishment than it might be in other years.
I'm talking about the tunnel and CFD time reduction. That takes effect today (if i'm reading it right), so that will hinder their agility to develop next years car starting today!
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dans79
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Re: 2021 Cost Cap Rumours and Speculation

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markc wrote:
28 Oct 2022, 18:30
So that's this year... so are we going to see another penalty for next year due to this additional overspend?
Presumably the fine is also included in the cost cap?
fines are excluded from the cost cap, it's in the rules.

https://www.fia.com/sites/default/files ... iss.11.pdf

in the exclusions section
(m) All Financial Penalties in respect of any breach of these Financial Regulations;
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mendis
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Re: 2021 Cost Cap Rumours and Speculation

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dans79 wrote:
28 Oct 2022, 18:33
MadMax wrote:
28 Oct 2022, 18:29

Having won the titles early and thus with no need to spend any more money on the RB18, the penalty going in to next year is less than if they were in 2021 where they were working the RB16B right though the season. RBR can park the current car and put everything in to the RB19 so somewhat less of a punishment than it might be in other years.
I'm talking about the tunnel and CFD time reduction. That takes effect today (if i'm reading it right), so that will hinder their agility to develop next years car starting today!
It's not a daily or weekly spread of reduction! They would go at the same speed that they are now, but would reach the end sooner than they were supposed to.