The F1 cost cap breach scenario has played upon in a big way in the past weekend in Singapore involving Red Bull and Aston Martin.
The F1 weekend in Singapore had quite the off-track drams on display after news about a potential cost cap breach surfaced involving Red Bull and Aston Martin for the 2021 season. Other teams started to voice their opinions and the punishment discussions were on.
So much so that the FIA had to release a statement noting that they are in the process of finalising the assessment filed by the F1 teams and that the speculation of breaches is so far not a confirmed news, as they continue with their work inside.
“The FIA is currently finalising the assessment of the 2021 financial data submitted by all Formula 1 teams. Alleged breaches of the Financial Regulations, if any, will be dealt with according to the formal process set out in the regulations. The FIA notes significant and unsubstantiated speculation and conjecture in relation to this matter, and reiterates that the assessment is ongoing and due process will be followed without consideration to any external discussion,” the statement stated.
While the FIA is likely to reveal more details this Wednesday, various F1 teams started to speak on the matter and Red Bull chief Christian Horner was on the firing line about it. The Brit put down the matter and was visibly upset with the reports of huge breach.
Here’s what Horner stated on the topic:
Confident about being below the limit –
Horner: “Well, you know, obviously, as I said, we made the submission in March, we stand absolutely 100% behind that submission, that we are below the cap. Of course, you know, that submission has to be signed off by your auditors, obviously ours is one of the big three, and then it goes through a process with the FIA, a little bit like an audit, where there are questions and interpretations that are raised and discussed. That process is ongoing, you know, with the FIA, who haven’t obviously completed their process at this point in time. I think they made that clear in the statement they put out yesterday evening. So, you know, we await with interest to see the final outcome of that process, which hopefully is in the near future, but we remain absolutely confident that we’ve absolutely complied with the, you know, with the cap.”
Tricky being first year –
Horner: “On the whole, obviously, I think it is a positive thing that is going on in Formula 1 and it has had a direct impact on costs. Again, I heard numbers of up to 40 people being made redundant from one of our rival teams. At Red Bull we’ve made over 90 people redundant. And the cost control that has gone on has been absolutely stringent throughout the organisation. But of course, there are so many different constructions of companies, businesses, subsidiaries, that it is an elephant for the FIA to get their arms around. And of course, you know, Red Bull as an independent team, you know, is extremely transparent in the way that we go about our business. We’re not a subsidiary of an OEM.
“So, you know, I think that is it is something that the FIA can police, but inevitably there are going to be going to be learnings and we’re seeing clarifications that are coming out even subsequent to when the submission has been made that could have a material impact on the actual submissions that were made back in March. So, of course, there is always going to be a process of a learning curve, both for the regulators and for the participants. I mean, Jost even forgot to make his submission and got fined.”
Complicated matter for first year, so some compromise –
Horner: “Well, firstly, you know, we believe we’re fully compliant and within the cap. But then, of course, there is a preset regulation for whether it’d be a procedural breach like Jost had or a minor breach or a material breach and a suite of penalties that is open to the regulator with that. So it’s actually pretty prescribed what is, you know, what are the potential consequences for different variants and variables of breach. So, of course, it’s the first year and you know that’s why it has taken so long for, I think, the FIA to get to this point in time.”
Comments from rivals teams in the matter –
Horner: “Well, we were a little bit taken aback by comments that were coming from two of our rival teams yesterday. The submission between the team and the FIA is one that is confidential. I have no idea what the outcome of our rival submissions are, or their accounting treatment or so on. So I would be intrigued to know where their source of information for these fictitious claims have come from. And I mean, they’re hugely defamatory. And, you know, we take umbrage to them, and one can only assume… It’s not uncoincidental that this is a point where Max has his first strike at the World Championship. And, you know, how on earth do they have this information? Where do they have this knowledge? The FIA have even stated they haven’t even completed their process. So unless there is a clear withdrawal of those statements, we will be taking it incredibly seriously and looking at what the options available to us are, because it is absolutely unacceptable to be making comments of the type that were made yesterday, that is totally, as I say, defamatory to the team, to the brands, and even to Formula 1, and I’d be intrigued to know where their source of information has come from.”
Meanwhile, Aston Martin F1 chief Mike Krack was surprised his team getting named in the situation and that he was not made aware of any potential problem. He reckoned the team filed everything to their best and if there was anything, they will come to know soon.
Upset over being named –
Krack: “It is upsetting. I think the most important thing is to keep focus on the weekend. When the Thursday or Friday starts like that, it’s important not to distract the people. And from our point of view, it was good that we were not the only one mentioned, so you guys you concentrated on the other side of the paddock! It is unfortunate that these things come out like that, but it’s F1. This is typical paddock, the best defence is attacking. I think at the end of the day, we must not forget, we are significantly less people than most teams are. We need to look at ourselves. You will not have a war of words from us, we need to concentrate on making progress. This is much more important than using the press to make statements.”
Their submission –
Krack: “It’s a process where you give your submission, and then the FIA is analysing this, and comes back with questions. And this process is still going on. So we don’t really know what will be the result. There is a discussion going on. We have questions about interpretation, they have questions about interpretation. And we were surprised to read our name in this thing. So, let’s see. We don’t think that we have done anything majorly wrong.”
Mercedes’ Toto Wolff, meanwhile, was evidently vocal about the situation on the whole with regards to the F1 cost cap and potential breach. He expanded on the sanctions for the breach and that FIA needs to be strong on this, while responded to defamation claims.
Breach not dealt severely –
Wolff: “I have no reason to doubt that the FIA will not 100% act in following their own governance and their own regulations, because they know how important that is going forward. So we are all aware that regulations, whether it’s technical or sporting, and now financial regulations, have to be regulated, policed in the right way. I’ve 100% confidence in the process and n the FIA. And that’s why everything else is noise.”
Possible sanction –
Wolff: You know, this is just not a moment in time where suddenly you discover a breach or not. But there’s a long, the audits have been going on for a long time, every team has collaborated with the FIA, discussions forward and backwards about how the interpretation go. So it’s over many months that you come to certain conclusions. So the point is, you need to find out what the case is. Actually, we have no visibility of that. Is it a so called minor breach, I think the word is probably not correct. Because if you’re spending 5 million more, and you’re still in the minor breach, it still has a big impact on the championship. To give you an idea, we obviously monitor closely which parts are being brought to the track from the top teams every single race – 21 season and 22 system.
“And we can see that there are two top teams that are just about the same and there is another team that spends more. So we know exactly that we’re spending three and a half million a year in parts that we bring to the car. And then you can see what difference it makes to spend another 500,000 – it would be a difference. We haven’t produced lightweight parts for the car in order to bring us down from a double digit overweight because we simply haven’t got the money. So we need to do it for next year’s car. We can’t homologate a lightweight chassis and bring it in, because it’s just 2 million that we will be over the cap.
“So you can see every spend more has a performance advantage. So in terms of the penalties, there is a catalogue of penalties that the FIA needs to decide what’s appropriate or whether this goes to the cost cap adjudication panel which is the governance and we have no say in this. We shouldn’t have an opinion on this either. We need to see what the outcome is and then one can comment. But again all the stakeholders in the sport, all the teams that have complied to the regulations FIA, Formula One, need to make sure that these regulations have teeth because of the reasons, aforementioned reasons, you can gain a real competitive advantage.”
Horner’s comments –
Wolff: “Sued for defamatory? I didn’t see that interview. So maybe I should spend time watching it. Noise. It’s noise, you know, at the end, there’s a process on Wednesday, there’s going to be certificates of compliance that are going to be issued or not. And then if somebody has not complied, there’s a process and a governance that’s in place. And, for me, I’m 100% sure that the FIA is going to do the right thing. So everything else is all chatter until then. And then for us, it’s important that the cost cap is being complied with. They are a cornerstone of the new regulations. And I very much hope that all the teams have done that.”
The Ferrari camp had similar thoughts where Mattia Binotto actually met Wolff over the F1 Singapore GP weekend to potentially discuss about the cost cap matter. It is not often that they converse on matters privately one-on-one. Laurent Mekies spoke at length about loopholes and sanction against it.
Cost cap loopholes problem –
Mekies: “I don’t think loopholes are issues right now, for the reasons that Fred explained: we have been discussing nonstop with the FIA for two years. It was a new regulation, we have pretty much the FIA living with us in our factories, going back and forth with questions, clarifications every week. So, I think it’s not the approach of trying to find a loophole and exploiting it and hoping that nobody finds out about it. It’s about whenever there are questions, we will ask the FIA, as will every team, and they will give an answer. And that’s how we have moved forward. This is why it’s key now that we do not move the goalposts of what is allowed and what is not allowed. And this is why it is said whatever has happened, we are looking at it in the light of the regulations as they are written today.”
Vital test –
Mekies: “So it is a very vital test for the cost cap. And, as we said, if we don’t pass that test, it’s probably game over, because the implications are huge. Should we talk about penalties now? Probably not. I know, it’s probably what the people in the grandstands want to see and we respect that. But in fact, we are, we are much earlier in the process than that, and probably an even more key aspect of it, is there a breach? Do we agree on the entity of the breach and that, as a result, confirm the rule everybody is obeying. So, I think what is very much crucial now is that the FIA fully enforce rules as they are written now. And then after the penalties are a different matter.”
Sanction –
Mekies: “This is unknown territory right now so it will be down to the… There is a clear governance that is written by the FIA on how they will deal with that and there will be a panel that will have to decide on an answer to your question. You are very right and this is pretty much one of the main reason why we are we are banging about transparency and severity because if it is… if it turns out to be something that a team can bet on in order to gain a competitive advantage then the whole system collapses, and this is why especially in the framework of the very first instance of the budget cap being challenged, you need that amount of severity.”