The FIA has fined Red Bull for breaching Formula 1’s financial regulations for the 2021 season.
The sport’s governing body announced on Friday that it had entered into an acceptable breach agreement with the team as outlined in its financial regulations. Red Bull has been fined $7m (£6.059m) and will have a 10% reduction in the wind tunnel and liquidation variable development period limited to 2023.
The FIA confirmed that Red Bull exceeded the £118.036m spending cap for 2021 by £1.864m, which is 1.6%. Therefore, it was found that “minor” overspending occurred, which the regulations state is less than 5%.
The FIA has revealed that Red Bull wrongly excluded 13 different items from its bid for the 2021 season, totaling £5.607m.
However, there is no allegation or evidence that FIA said “RBR. [Red Bull Racing] At no time did he intend to act in bad faith, dishonestly or fraudulently, or willfully withhold any information from Coast Cap management.
Red Bull’s “minor” overspeed was announced by the FIA on October 10. It was the only team to come out above the cap, having been introduced for the first time last year.
Red Bull has up to 30 days to decide whether to pay the fine.
The team finished second behind Mercedes in the 2021 Constructors’ Championship. Red Bull’s Max Verstappen won the drivers’ championship ahead of Lewis Hamilton.
FIA statement about Red Bull budget cap penalty
Following the submission of all necessary documents by the ten Formula One teams, the Coast Cup management has carried out the first review process of the financial rules of the FIA Formula One World Championship. These new financial rules are very complex rules that competitors have to adapt to for the first time.
Red Bull Racing was found to be in violation, but the price cap management noted that Red Bull Racing cooperated in the review process and attempted to provide additional information and evidence in a timely manner when requested, this being the first year. Full implementation of the Financial Regulations and that there is no allegation or evidence that RBR at any time sought to act in bad faith, dishonestly or fraudulently and did not willfully withhold any information from the Price Cap Administration.
In these circumstances, Coast Cap Management has submitted an ABA to RBR to address this issue. That offer was accepted by RBR.
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An Acceptance Agreement (“ABA”) was entered into on 26 October 2022 between the Price Cap Administration and Red Bull Racing pursuant to Article 6.28 of the FIA Formula 1 Financial Regulations. Below is a link to a summary of the ABA Terms as referred to in Article 6.32 of the Financial Regulations.
An Acceptable Infringement Agreement (“ABA”) entered into on 26 October 2022 by the Price Cap Administration and the Red Bull Racing F1 Team (“RBR”) pursuant to Article 6.28 of the FIA Formula 1 Financial Regulations (“Financial Regulations”). . The financial regulations are issued by the FIA and form part of the terms and conditions of participation in the FIA Formula One World Championship.
CostCap management acknowledged that RBR was cooperative throughout the review process and endeavored to provide additional information and evidence when requested in a timely manner, recognizing that this was the first year the complex financial regulations were fully in place. There is no allegation or evidence that RBR has at any time sought to act in bad faith, dishonestly or fraudulently, or willfully withheld any information from the Price Cap Administration.
Given the limited nature of the procedural violation at issue and the potential for a minor overspending violation, the Price Cap Administration has determined that under these circumstances it is appropriate to issue an ABA to RBR to resolve this matter on the terms set forth below. Bottom end [less than] 5% minimum overspending, and RBR’s willingness to accept the violations and cooperate with price cap management. That offer was accepted by RBR.
ABA deals with:
• RBR proposed related costs reported in 2021 full year reporting document £114,293,000;
• According to Article 8.2(e) of the Financial Regulation, the procedural violation committed by the RBR is due to the submission of incorrect full year reporting document regarding the findings of the Expenditure Cap Management for the full year reporting document ending on 31 December. In the year And
• Therefore, a minor overspending breach by RBR under Article 8.10(b) of the Financial Regulation because the relevant expenditure, subject to the FIA adjustment, exceeded the 2021 value of £118,036,000 by less than 5%, i.e. by £1,864,000 (i.e. 1.6%)
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Summary of ABA Terms and Conditions
Based on the findings of Cost Cap Management, RBR admitted that the reporting document provided by it included the following erroneously excluded and/or adjusted costs:1. In accordance with Article 3.1(a) of the Financial Regulation (regarding food service), inflated excluded expenses; 2. Expenses according to Article 3.1(w) of the Financial Regulation (in relation to estimates and social security contributions of the employer); 3. Costs In accordance with Article 3.1(h)(i) of the Financial Regulation (regarding non-F1 activities), these costs were previously fixed in the total costs of the reporting group. Expenses in accordance with Article 3.1(k) of the Financial Regulation (regarding bonus and related employers’ social security contributions); 5. By not making the necessary upward adjustment, reducing the relevant costs in relation to the gain on disposal of fixed assets; 6. Expenses (regarding coaching fees) in accordance with Article 3.1(q) of the Financial Regulations; 7. Article 3.1(h)(ii)(i) of the Financial Regulation (taking into account the employer’s social security contributions and related) ); 9. Expenses according to Article 3.1(h) (i) of the Financial Regulation (taking into account the employer’s social security contribution); 10. 4.1 (f) (i) (b) of the financial regulations in relation to the reduction of costs related to the provisions (regarding the use of goods);
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11. Skill error in calculating RBR of certain expenses paid by Red Bull Power Trains Limited; 12. Certain travel expenses in accordance with Article 3.1(r) of the Financial Regulation; 13. maintenance costs in accordance with Article 3.1(i) of the Financial Regulation.and further that the relevant expenditure for the 2021 reporting period exceeds the 2021 expenditure cap by £1,864,000 (1.6%). RBR therefore accepted that it had breached: (i) Article 8.2(e) of the Financial Regulations for failing to file an accurate full year reporting document for the 2021 full year reporting period and (ii) Article 8.10(b) of the Financial Regulations for failing to maintain relevant costs for the 2021 reporting period. The FIA acknowledged RBR’s correct treatment when it submitted a full-year reporting document at £2021. 1,431,348, the administration of the expenditure cap was deemed to comply with clause 4.1(b) of the Regulations so RBR related costs for the 2021 reporting period exceeded the 2021 expenditure cap by £432,652 (0.37%).
Accordingly, RBR accepted the imposition of the following sanctions:
a) RBR must pay a fine of USD 7,000,000 to the FIA within 30 days from the date of execution of the ABA (Article 9.5 of the Financial Regulations);
b) RBR will receive a minimum sporting penalty for a period of 12 months from the date of ABA implementation, limiting RBR’s ability to conduct climate testing by applying a 10% Coefficient C reduction to the restricted wind tunnel applicable to each team as defined in Annex 7 Article 6 of the FIA Formula 1 Sporting Regulations. Experiment (RWTT) and Compute Constrained Computational Fluid Dynamics (RCFD) constraints. For example, if the Coefficient C based on the RBR championship position is 70%, the effective new C value is: CNEW=70% x (1-0.10) = 63.0%; And
c) RBR shall bear the costs incurred by the administration of the cost cap in connection with the ABA arrangement.
The cost cap administration’s decision to enter the ABA is the final decision to resolve this matter and is not subject to appeal. Failure by RBR to comply with any of the terms of the ABA will result in an additional procedural breach under Articles 6.30 and 8.2(f) of the Financial Regulation and automatic referral to the Coast Cap Adjudication Panel.
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