2021 Cost Cap Rumours and Speculation

[e30ernest]

No, it is stated that marketing budgets (like driver salaries and top staff salaries) are outside of the budget cap.
So if the overspending is on something that one party regards as marketing but the other does not, it matters. If the overspending is on the salary of a tier of employees that is regarded as top level by the team but not by the FIA, it matters. It could be that there are certain development actions for the car of this year that the team accounted in the cap of 2022, but the FIA still regards as spendings in 2021. If that is the case, it matters.

This wasn't dreamt up on the back of a cigarette packet.

What you are suggesting is something that would've been ironed out inside of a month. This has been agreed by teams since the start of 2020 and formalised before that.

What strikes me is that only 1 team on the grid has breached the budget cap. A top tier team.
Why is it that Haas, Alfa etc all meet the requirements but it is RB that falls foul?
The more telling question is, why would Alpha Tauri which is Red Bull owned, be legitimate and Red Bull themselves not? They share parent companies and pretty sure the internal CFO's would use the same methodology and internal auditors according to the rule set.
If they had any appetite to follow the rules that is.

I am not suggesting that they did not due proper due diligence here at all - you are completely taking my comments out of context.

What I am saying is that, considering this is a sports with strong fan support and strong fan opinions, things should not be handled completely behind closed doors. If there is overspending, it should be transparant how much that was, what were the controversial items that led to the difference in opinion between RB and FIA on whether the cap was breached, and why did the FIA decide what they did.
It won't change any outcome, but since we are undoubtedly going to have heated debates about the breach itself and whether the yet to be announced penalty is proportional to the crime, we should at least know the, conditions, circumstances and criteria that were used to judge. Perhaps these details will follow once the penalties are communicated, but in any case the announcement today was completely underwhelming, as it provided no clarity on what was speculated already.

Yes, more transparency is good. I do not think they can say what it was spent on though (specifics) but at the very least, a $ amount would be a good thing to have.

So from how I understand this, is that RB can now accept a breach agreement with a set of penalties. However, this would mean admission they went over budget (which they are not admitting at the moment). If they do not accept, they can maintain their innocence and go to a panel which can end up with more severe penalties?

[Shakeman]

I see some people trying to write off the overspend like it might not have had any material impact, to those I ask if a team were to be found to have run a car 5% underweight throughout the season or were able to cheat 5% extra engine power would you be quite so quick to defend the practice?

If anyone seriously thinks a 5% additional level of funding doesn't translate directly into laptime reduction then you're completely deluded. F1 is a sport where competitors fight over fractions of a percentage gains across any given weekend to take victory and 5% gain is like a someone popping a PED and should be seen in the same way.

This makes the 2021 WDC outcome look even worse and an indelible stain on the sport.

[Just_a_fan]

I see some people trying to write off the overspend like it might not have had any material impact, to those I ask if a team were to be found to have run a car 5% underweight throughout the season or were able to cheat 5% extra engine power would you be quite so quick to defend the practice?

If anyone seriously thinks a 5% additional level of funding doesn't translate directly into laptime reduction then you're completely deluded. F1 is a sport where competitors fight over fractions of a percentage gains across any given weekend to take victory and 5% gain is like a someone popping a PED and should be seen in the same way.

This makes the 2021 WDC outcome look even worse and an indelible stain on the sport.

A car that is just 1% underweight is going to be almost 8kg underweight. That would get you thrown out of the race as it would be a real performance benefit.

5% - 40kg underweight would be so big a benefit that the car would romp away from everyone on track.

[SiLo]

To clear up some confusion there appears to be in this thread:

• There is only a single budget cap, and it covers most of the running costs (but not all) for all teams.

• It does not matter where the overspend is, as long as it's within the budget cap rules it should mean harsh punishment for any team.

• Spending an extra $500K on catering means you didn't have to cut $500K from aero development, or $500K from manufacturing and fabrication.

• Providing better employee benefits is a form of compensation, which is used by teams to gather better talent. Getting better employees may contribute to a performance gain.

• Other teams might have spent the same on vehicle development within a spreadsheet, but cut more in terms of salaries for employees and ended up with less qualified ones as a result. This may net lower performance yield (potentially) per employee.

If there were separate caps for different costs for a team, then yes, where it came from matters, but seeing as there isn't then it doesn't. Considering a lot of this noise about catering and maternity pay came from a single journalist who is close to the team reeks of optics control by RB.

To top it all off, most of the things that are rumoured to be overspent on, are not even included in the budget cap anyway.

It's poor from Red Bull when every other team has managed to stay under the cap. I expect them to get a nominal fine, and figure a potential budget cap reduction for the team for 2023 may come alongside it to deter other teams doing the same and just paying a fine (read: luxury tax) to get away with.

[dxpetrov]

To clear up some confusion there appears to be in this thread:

• There is only a single budget cap, and it covers most of the running costs (but not all) for all teams.

• It does not matter where the overspend is, as long as it's within the budget cap rules it should mean harsh punishment for any team.

• Spending an extra $500K on catering means you didn't have to cut $500K from aero development, or $500K from manufacturing and fabrication.

• Providing better employee benefits is a form of compensation, which is used by teams to gather better talent. Getting better employees may contribute to a performance gain.

• Other teams might have spent the same on vehicle development within a spreadsheet, but cut more in terms of salaries for employees and ended up with less qualified ones as a result. This may net lower performance yield (potentially) per employee.

If there were separate caps for different costs for a team, then yes, where it came from matters, but seeing as there isn't then it doesn't. Considering a lot of this noise about catering and maternity pay came from a single journalist who is close to the team reeks of optics control by RB.

To top it all off, most of the things that are rumoured to be overspent on, are not even included in the budget cap anyway.

It's poor from Red Bull when every other team has managed to stay under the cap. I expect them to get a nominal fine, and figure a potential budget cap reduction for the team for 2023 may come alongside it to deter other teams doing the same and just paying a fine (read: luxury tax) to get away with.

Well, you are wrong there. It does matter where the overspend comes from as the team and FIA have obviously different positions on related costs. Some of the expenses that were not listed in the budget cap, RB didnt consider as ''related''. Hence the issue came up.

[chrisc90]

Yeah, it’s those grey areas that are going to be discussed at great length in the months to come.

RB said this isn’t covered, FIA says it does with no reference to it in the rules.

It’s going to be a long drawn out process, and we will probably have to wait until the ABA report comes out to know where the issue is exactly. Unless RB take the FIA’s ‘offer’ of a fine and we will hear no more about it.

[selvam_e2002]

To clear up some confusion there appears to be in this thread:

• There is only a single budget cap, and it covers most of the running costs (but not all) for all teams.

• It does not matter where the overspend is, as long as it's within the budget cap rules it should mean harsh punishment for any team.

• Spending an extra $500K on catering means you didn't have to cut $500K from aero development, or $500K from manufacturing and fabrication.

• Providing better employee benefits is a form of compensation, which is used by teams to gather better talent. Getting better employees may contribute to a performance gain.

• Other teams might have spent the same on vehicle development within a spreadsheet, but cut more in terms of salaries for employees and ended up with less qualified ones as a result. This may net lower performance yield (potentially) per employee.

If there were separate caps for different costs for a team, then yes, where it came from matters, but seeing as there isn't then it doesn't. Considering a lot of this noise about catering and maternity pay came from a single journalist who is close to the team reeks of optics control by RB.

To top it all off, most of the things that are rumoured to be overspent on, are not even included in the budget cap anyway.

It's poor from Red Bull when every other team has managed to stay under the cap. I expect them to get a nominal fine, and figure a potential budget cap reduction for the team for 2023 may come alongside it to deter other teams doing the same and just paying a fine (read: luxury tax) to get away with.

so, basically you are saying that, other team can follow RB foot print for next year and get fine instead of reduction in point or eliminate from WDC and WCC.

If we keep it like that, then what about 2008 SG race? and 2007 Mclaren case? As it is RB so they can come out from any breaches. Renault and Mclaren cannot.

RB should be excluded from 20221, and 50% of Point should be reduced to gain advantage in 2022. If we give this penalty, every team in F1 afraid of doing same in future.

[Shakeman]

I see some people trying to write off the overspend like it might not have had any material impact, to those I ask if a team were to be found to have run a car 5% underweight throughout the season or were able to cheat 5% extra engine power would you be quite so quick to defend the practice?

If anyone seriously thinks a 5% additional level of funding doesn't translate directly into laptime reduction then you're completely deluded. F1 is a sport where competitors fight over fractions of a percentage gains across any given weekend to take victory and 5% gain is like a someone popping a PED and should be seen in the same way.

This makes the 2021 WDC outcome look even worse and an indelible stain on the sport.

A car that is just 1% underweight is going to be almost 8kg underweight. That would get you thrown out of the race as it would be a real performance benefit.

5% - 40kg underweight would be so big a benefit that the car would romp away from everyone on track.

A fitting fine would be for every 1% over budget the competitor should run their car 1% overweight for the subsequent season. Happy racing at the back of the grid for rule breakers.

[Wil992]

Some of the expenses that were not listed in the budget cap, RB didnt consider as ''related''. Hence the issue came up.

The most charitable possible reading of that is that RB misunderstood the rules, even though every other team didn’t.
If they were unsure of anything, they had ample time and opportunity to seek clarification, but they didn’t.
This is a team who have proved themselves to be masters of understanding rules and staying just the right side of them in order to come out on top, and all credit to them for that. But to imply that the same team can’t understand some financial restrictions that appear to be perfectly clear to everyone else, I just don’t buy it.
Of course if we had the details we could have a better informed debate, so I guess I should end this with the caveat that we are working on incomplete information and things could change if/when we get more.

[codetower]

I think the whole idea that they “overspent” on entertainment and food is a bit misunderstood. Those categories are just buckets that the accounting team puts finances into. Let’s assume that the entertainment expense rumor has some validity to it. If so it’s much more likely that Red Bull spent more on one area, say aero, and failed to disclose sufficient account for catering and food. that’s where the discrepancy comes in. Either way you're over the budget cap.

[Quantum]

Well, you are wrong there. It does matter where the overspend comes from as the team and FIA have obviously different positions on related costs. Some of the expenses that were not listed in the budget cap, RB didnt consider as ''related''. Hence the issue came up.

Totally devoid of any substance.

It's not for any team to tell the FIA what should and shouldn't be "related".
If they run an illegal part on the car, your argument supposes that any team can argue it's legitimate because they interpret it so, therefore it is legitimate without question.

Only the FIA have officially said Red Bull have breached the budget cap.
That's according to parameters set that 9 other teams have managed to work with.

Team "consideration" must fall within the rules, or simply, they are inconsiderate of the rules, and should be dealt with accordingly.

[SiLo]

To clear up some confusion there appears to be in this thread:

• There is only a single budget cap, and it covers most of the running costs (but not all) for all teams.

• It does not matter where the overspend is, as long as it's within the budget cap rules it should mean harsh punishment for any team.

• Spending an extra $500K on catering means you didn't have to cut $500K from aero development, or $500K from manufacturing and fabrication.

• Providing better employee benefits is a form of compensation, which is used by teams to gather better talent. Getting better employees may contribute to a performance gain.

• Other teams might have spent the same on vehicle development within a spreadsheet, but cut more in terms of salaries for employees and ended up with less qualified ones as a result. This may net lower performance yield (potentially) per employee.

If there were separate caps for different costs for a team, then yes, where it came from matters, but seeing as there isn't then it doesn't. Considering a lot of this noise about catering and maternity pay came from a single journalist who is close to the team reeks of optics control by RB.

To top it all off, most of the things that are rumoured to be overspent on, are not even included in the budget cap anyway.

It's poor from Red Bull when every other team has managed to stay under the cap. I expect them to get a nominal fine, and figure a potential budget cap reduction for the team for 2023 may come alongside it to deter other teams doing the same and just paying a fine (read: luxury tax) to get away with.

Well, you are wrong there. It does matter where the overspend comes from as the team and FIA have obviously different positions on related costs. Some of the expenses that were not listed in the budget cap, RB didnt consider as ''related''. Hence the issue came up.

If you read my second point, you will find that what you have said is covered by my original post.

Now if Red Bull are saying they spent money on something not within the budget cap regulations, that's fine, but clearly the FIA think otherwise which is why we are all here. I was just pointing out that IF it is within the cap regs, it should be punished, and also it doesn't matter WHERE the money is spent if it is considered under the cap regs too.

[Quantum]

I think the whole idea that they “overspent” on entertainment and food is a bit misunderstood. Those categories are just buckets that the accounting team puts finances into. Let’s assume that the entertainment expense rumor has some validity to it. If so it’s much more likely that Red Bull spent more on one area, say aero, and failed to disclose sufficient account for catering and food. that’s where the discrepancy comes in. Either way you're over the budget cap.

The rumour was spread from a Dutch journalist according to Twitter.
And they actually don't form part of the budget the FIA inspect, AFAIK.

[Giblet]

This whole thing kind of irks me. I know all teams push the rules until the breaking point, but Red Bull does it as a way of being it seems.

Their first thought seems to be "how can we beat the rules" not "how can we beat other teams?". Obviously beating the rules will help you beat the other teams.

I found their previous skirting of front wing tests for multiple seasons infuriating, the flexing was observable, and when they finally were caught with rumoured carbon leaf springs in their front wing, their entire punishment was a single qualifying session disqualification for both cars.

Now with this "oops catering" manure, it makes me call into question the legality of this years car, and how it can seem to just pull away on every straight but not suffer in corners. What others rules have they "beaten"?

[ringo]

IMO people are reading way waay too much into this.
This won't be settled for weeks. So just relax. We can't know for sure if RBR is quilty of anything at all until then.

Financials can be manipulated, filtered and assigned in so many different ways. It doesn't surprise me at all that a team has calcuated a different outcome than the FIA.

Now they'll have to go over it together, find the differences and let the lawyers decise what the regulations actually say, if anything at all. There might be both grey-zones, different interpertations as well as unspecified areas and complete loop-holes which might come to light.

Given it's the first time with the budget cap, I think its just as likely that the FIA has got it wrong than that Red Bull got it wrong.

You are right, but your suggestion is misplaced because this period has passed prior to issuance of a certificate. An auditor or finance person can correct me if I am wrong.

I thought you resigned from this place a while back?

viewtopic.php?p=1091683#p1091683

Yes i did. I am not on staff anymore. I am on contract now. lol