Today is the day when the FIA is set to reveal which teams have complied with the 2021 Formula One budget cap limit of $145m. There have been speculations Red Bull Racing blew its spending cap by $10m if German publication AMuS is to be believed. The matter has not been helped by the FIA delaying three times the “compliance certification” day which has merely fuelled conspiracy theories as to who is in breach and by how much.

The FIA audit process has been ongoing since March and extended several times which has not helped matters, yet this iOS the first tile Formula One’s governing body has been required to police complicated accounting matters and should probably therefore not be surprising.

The Vice President of the FIA, Robert Reid, sought to cool matters down during the Japanese GP weekend when he met with motorsport.com

 

 

Litigation possible

“I think the unfortunate thing for me is there’s been so much speculation, and wild speculation,” he said. “And that’s caused situations where potentially there’s even some reputational damage now, which is unfortunate. There’s been too much talk.”

Following Toto Wolff’s accusations of Red Bull “massively” overspending at the Singapore GP, Christian Horner threatened litigation for defamation if the Mercedes team boss did not cease and desist his “wild claims”

“Monday will come and go, and I’m sure we’ll quickly move on to the next year’s analysis. And we’ll see what comes,” added Reid.

“Personally, I actually don’t know the figures. It is a process, we do have a department who are doing that, they will come with various steps in the process.

 

 

Breaches procedural or overspend

Reid appears to suggest if there are any breaches they will either be procedural or minor in nature. The Williams team already committed a procedural breach earlier this season when they failed to submit their documents relating to the cost cap in time.

This resulted in a $25,000 fine.

“I don’t know if there will be some procedural breaches, or there might even be some overspends. So let’s wait and see and deal with it at that time,” said Reid.

The regulations are in their infancy and given company accounting law in the UK alone takes years to develop and refine there are clearly some unintended consequences in how the FIA framed the regulations as the FIA Vice President reveals.

“Potentially there are some unintended or unrealised consequences in the way things are written. It’s the old classic. If you push the balloon down here, it’s going to pop up somewhere else that you’re maybe not aware of. We had a trial run in 2020, so this is our first proper one.

“We still have situations from a sporting perspective that people say, ‘Oh, we’ve never seen that before.’ Now, how long has the sport been going on? So I’m sure we’re going to see the same, not just for the ’21 analysis, but ongoing in financial regulations as we go forward.

“It’s a complicated set of regulations, so a complicated process to try and achieve. But I think everyone agrees it’s absolutely essential for the future of the sport that we have some control on the on the costs.”

 

 

Cost cap could be scrapped

There have already been suggestions if the teams lose faith in the FIA’s ability to manage this process the entire cost cap concept will merely fall into disrepute.

Formula One would then merely return to the days when the teams with the biggest budgets dominate the sport for years to come.

Interestingly Former Toro Rosso chief financial officer is now the governor of the FIA regulations and Reid suggest rather than criticise all parties need to trust him and his team. 

“Having said that, the teams had a huge part to play in creating the regulations. And we’re all working together because there is a common objective that we’ve to got it right.”

 

 

FIA audit time will reduce

In the UK the audit of  larger organisations may take anything between 6-10 weeks and Reid believes the original timescales set by the FIA to conclude the cost cap audit in 3 months should be possible in future.

“We certainly hope in years to come that it happens quicker than that has happened, now that we’ve walked through.

“But the clarifications that happen on the ’21 results are obviously valid for ’22 and ’23.

“By the law of physics, we’re kind of narrowing down where we can interrogate. There’s a huge chunk of it that is absolutely clear, and clearly within the cost cap, or clearly outside the cost cap. 

“And the grey area is hopefully getting smaller and smaller as we go forward.”

 

 

Teams will be in the grey area

The process is likely to conclude that certain teams have strayed into “grey” areas which were not properly codified by the FIA and as Reid suggests these will be tightened up as part ongoing development of the cost cap audit.

That said, given the delay in concluding their audit, the FIA will have allowed those grey areas to exist for much of the 2022 season too.

So in reality it’s unlikely any team is going to receive any kind of major punishment until the regulations have been tightened to clearly include and exclude those items of expenditure which at present are in the ‘grey’ zone.

READ MORE: Wolff suggests court action over FIA budget cap decisions

The FIA are reviewing the incident that saw Pierre Gasly narrowly escape a collision with a recovery vehicle at the Japanese Grand Prix ⬇️ pic.twitter.com/hPayAHwMHq

— Sky Sports F1 (@SkySportsF1) October 10, 2022