The much debated Formula One financial regulations were discussed for years before they were finally implemented for the 2021 season.

As expected the bigger teams with budgets of several hundred million dollars were in opposition to any restrictions yet the FIA eventually regulated forcing them into compliance.

 

 

Red Bull refuse cost cap dry run

During the 2019 season the Paris based authority announced the cost cap rules were now part of the provisional 2021 regulations. Due to the global pandemic the proposed technical rules changes for 2021 were delayed by a year but the new financial rules remained.

Excluding marketing costs, race driver fees and costs of the teams’ three highest-paid personnel, the cap was set at $175 million for the 2021 season. This was later reduced during the Covid pandemic to $147.4m on May 27, 2020.

The 10 F1 teams no face an annual “Full Year Reporting Deadline” which runs from Jan 1 to Dec 31 each year. To deliver a soft landing the FIA suggested teams perform a drug run during the 2021 season to understand how costs should be accounted for and all 9 teams except Red Bull participated.

Ironically it was Red Bull’s failure to understand how to categorise certain expenses which then led them to be found in “minor breach” during the first year the rules were enforced. Improper treatment of a tax refund and the proper accounting for other expenses caused them to fall foul of the letter of the law.

 

 

Rumours 3 teams in cost cap breach

These were technical breaches rather than performance related over spend yet the world champions were hit with the second biggest fine in F1 history ($7m) and a punitive reduction in their aero testing time allowance.

Red Bull racing have brought far less upgrades to their RB19 this year while McLaren and Mercedes have found time to release B-Spec car configurations.

The cost cap topic is sort to dominate F1 headlines in the near future as the FIA are expected to report their finding s for the annual accounts for the teams from 2022.

Rumours have emerged in recent that three teams have been intensively quizzed over aspects of their financial submissions with Toto Wolff admitting Mercedes have been interrogated far more than they were last year.

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Wolff confirms Mercedes under the microscope

“The work that the FIA has put into auditing us was big work and big effort, and I have no doubt that they are going to do the same with the other teams. If someone has been cavalier or has cheated, then they’re going to find out.”

The FIA issued a new directive TD45 which seeks to prevent the larger team’s with non-F1 operations from gaining intellectual property from other projects that is transferred for free into their Formula One development programmes.

A number of teams are believed to have struggled to balance the books because TD45 was introduced with a retrospective element applied to spending before the regulation was initiated.

Red Bull are rumoured to be amongst the three teams suspected by the FIA to be using their non-F1 subsidiaries in contributing towards their racing programme.

 

 

Marko confirms FIA suspicious of Red Bull

This was practically confirmed by the team’s advisor Dr. Marko when he revealed Red Bull have been questioned at length by the FIA auditors about their RB17 hypercar project being built under the supervision of Adrian Newey.

The hypercar is believed to be using the ground effect principles now introduced into Formula One where the underfloor delivers around 50% of the downforce and therefore grip.

Marko admitted the lengthy list of additional questions Red Bull had been asked to answer was, “specifically about the RB17.”

“There were people who worked partly here [hypercar], partly there [F1]. How do you separate that? That’s also a procedure,” explained the Austrian.

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FIA beefed up inspection team

F1’s financial regulations are in the infancy and will clearly take some time to develop and close the many loopholes the teams may yet exploit as Marko concludes.

“The whole cost cap is still too much interpretation and not enough facts. That’s why there are discussions and that needs to be sharpened.”

There was a certain amount of criticism of how small the FIA audit team were which consequently saw them deliver the results of their deliberations in 2022 almost three month late.

But with the advent of TD45 they appear to have beefed up their inspection team and are leaving no stone unturned with talk of “raids” and “ruthless searches” now emerging from De Telegraph’s F1 expert Erik Van Haren.

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“Raids” reported at F1 teams HQ

“Red Bull and Mercedes, in particular, have received many questions about their submitted data”, which have in turn led to raids according to Van Haren.

“During these ‘raids’,” he claims, “drawers are pulled open ruthlessly and everything was examined. Even Whatsapp messages and e-mails are viewed to see the conversations between two people and to see whether or not they have discussed something related to the Formula 1 team.”

The original June deadline self imposed by the FIA for each years deliberations to be announced has again come and gone.

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FIA dampen cost cap breach claims

At this weekends Belgium Grand Prix the FIA have responded to the rumours that three teams are in breach of the cost cap. A statement issued reads:

“In light of recent reporting, we’d like to reiterate the ongoing process preceding financial regulation certification for the teams – none of which have been informed of their certification status,” said an FIA spokesperson.

“The auditing fieldwork is still ongoing and is scheduled to conclude in the upcoming weeks, after which there will be a period required for the finalisation of the review.

F1’s governing body now refuted there is a requirement for them to report the previous years spending audit by a certain time.

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F1 Cost cap reporting deadline too long

“There is not, and has never been, a specific deadline for certification, and any suggestions of delays to this process or potential breaches are completely unfounded – the Cost Cap Administration will formally communicate its findings according to the procedure set out in the Financial Regulations.

“The timeframe is intentionally not fixed in order not to prejudice the robustness and the effectiveness of the review.”

Yet there is a problem when the cost cap reporting runs late into the following season and it was clearly demonstrated during the weekend of the USA Grand Prix late last year.

Leaks will occur due to the hundreds of people questioned by the FIA and these quickly turn into accusations of cheating being made – whether founded or not – and this is just not a good look for the sport of Formula One.

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What a lap from @OscarPiastri! 😍#BelgianGP #F1Sprint @McLarenF1 pic.twitter.com/qkoKp0OmBT

— Formula 1 (@F1) July 29, 2023