The history of Formula 1 is littered with law-bending acts and lawsuits. Claims range from technical violations, such as secret fuel tanks and hidden software settings, to deliberate risk-taking to win races, to off-track scandals such as espionage.
But until last week, no F1 team had been charged with financial breaches. That changed when the FIA found Red Bull had exceeded the 2021 spending limit.
‘Cheating’ is a strong word, but McLaren CEO Zac Brown didn’t shy away from using it in a letter to FIA president Mohammed Ben Sulaiman last week, and copied it to F1 president Stefano Domenicali to emphasize his view. Any group that violates the budget is “fraud.”
It has been 10 months since last year’s controversial World Championships in Abu Dhabi ended. Red Bull committed a ‘minor breach’ of the $145m budget cap – that’s how long it took the FIA to decide – which accounts for up to 5% of costs, up to $7.25m.
Red Bull committed a ‘disciplinary breach’, as did Aston Martin (and Williams in June). He insists the team that took Max Verstappen to the Drivers’ Championship last year was not over the limit. Red Bull’s statement It said its 2021 delivery was “well below the cost limit”, adding that it was “disappointed” by the findings and would “consider all options available to it”.
Nothing has followed in the nine days since. Questions hang not only over Red Bull’s alleged overspending in the 2021 season, but also over this year’s and future championships.
Before the announcement, many suspected the team of breaching the spending limit. Mercedes team principal Toto Wolff described it as an “open secret” in the paddock.
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Red Bull’s opposite number Christian Horner has strongly denied there is any truth to the allegations and has called on his rivals to withdraw the ‘false and defamatory’ claims.
“We made the submission in March,” Horner said. “We stand 100% behind our understatement.
“That entry has to be signed by your auditors – ours is obviously one of the ‘big three’ – and then it goes through a process with the FIA, like an audit, there are questions and interpretations. And discussed.
With Red Bull both found to have breached the spending cap, will the issue ultimately rest on interpretation of the rules? This is the first time the financial rules have been tested in this way, and new rules can be subject to unexpected interpretations or ‘loopholes’.
“There are always loopholes,” Haas team principal Guenther Steiner said before the FIA’s findings were announced, stressing that any team “must be considered innocent until proven guilty.”
“If there is a violation, if there are loopholes, we think about what they are, I say we have to get information.” [so] For everyone to understand.
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Steiner is particularly concerned that no group should be able to exceed the spending limit. “We have to make sure that we are not watering down the budget cap for the future,” he said. “I think this is the most important thing and I’m sure the FIA president will make sure it happens.”
However, Alfa Romeo boss Frédéric Vasseur has indicated that the rules have been discussed extensively with the FIA before teams leave to avoid any misunderstandings.
“We have now had two years to discuss with the FIA and ask for an explanation,” he explained. I think we have a clarification on the financial rules almost every week.
“Groups [were] They are responding to everyone by asking questions to the FIA. I think it’s our job to ask for clarification if we have a gray zone.
So if all the teams get formal explanations from the FIA, how can one team still find themselves in breach?
Ferrari’s Laurent Meccis was skeptical that there were any loopholes, suggesting the FIA had to regularly visit the team’s base to police their costs. “I don’t think gaps are a problem right now,” he said. “We have been in continuous discussions with the FIA for two years. It was a new regulation, the FIA was living with us in our factories, going back and forth with questions, and we had explanations every week.
“So I think it’s not an approach to try to find a loophole and exploit it and hope that nobody finds out. Whenever there are questions, we ask the FIA like every team and they answer.
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In a letter to the governing body, Brown urged the FIA to make the list of violations public as soon as possible so there would be “no room for loopholes” in the future.
Barring unexpected developments, questions about the budget ceiling will hang over this weekend’s race in Austin. The FIA said it is now “determining the appropriate action to be taken”. This puts a wide range of penalties on the table, from fines to forfeiture of championship points, and therefore doubts that past, present and future champions may influence their decisions.
Four months ago, when Williams was fined $25,000 for breaching its financial rules, the FIA announced the breach and the fine at the same time. The fact that no “acceptable infringement agreement” has yet been identified suggests that the row has some time to run.
Red Bull clearly believe that they have done nothing wrong. But rivals have warned of possible implications if the dispute over their 2021 spending led to changes in how the financial rules are interpreted, now at the end of year two under the budget cap.
“What we don’t want is for the rules to change in the middle of the season, to have an agreement and all of a sudden the rules of engagement are different,” McKee said. “It’s not just about the 2021 season, but as a result for 2022 and maybe even 2023. That’s the main aspect.”
In the first season of the Budget Cup, one F1 team breached the spending limit, putting it at odds with the sport’s governing body. The stakes are high and a protracted debate – and potentially a legal battle – is in store.
However this is resolved, clarity is needed. F1 cannot afford to repeatedly call the championship results into doubt 10 months after the championships.
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