Over spending penalty

[Dare]

I'm starting to think if we watch 20+ races for
false results what's the use of wasting our time.

[Andy B]

That's not just F1 though Dare cycling is probably the most cheated sport and F1 does not want to become that but it's on the same road!

[Scott]

When the championship was won last year by such a razor thin margin by the only team deemed to have breached the budget cap, I see no reason why not to take that championship away (by points reduction) as a penalty, combined with either a massive fine or budget reduction of a similar amount. 

[John S]

When the championship was won last year by such a razor thin margin by the only team deemed to have breached the budget cap, I see no reason why not to take that championship away (by points reduction) as a penalty, combined with either a massive fine or budget reduction of a similar amount.

Max in a Red Bull won the drivers championship but crucially Merc won the constructors in 21.

Now if you follow Toto, Binotto & Brown et al's supposed/crazy logic of it giving the cars up to 0.5secs advantage, with that overspend, then RBR really should have aced the WDC.

Anyway if it gives both cars in team an advantge the only fair deduction is constructors points from the season concerned. Changing drivers championships can open a can of worms for the future. Who of us wants to wait til the cap oversight commitee issues certificates several months after season end to know who the Drivers champ is? 

[Alianora La Canta]

We may never know whether Red Bull's overspend was $1 or $7.25 m (even if one assumes that the FIA is being honest about it being a "minor" overspend - there has been, shall we say, reason to believe the FIA would pretend there was a major overspend if given the opportunity to do so).

At the $1 end, obviously a 0.5 second gain is impossible. However, Force India gained 0.6 seconds from changing a front wing and a couple of components behind it in 2009, which would not even have been $0.5 million, let alone $7 million plus. It's all about knowing which change to do. Granted, Mercedes is speaking with the benefit of hindsight - it may well have needed more than $0.5 million to actually get that time back because the cost of wrong directions in development needs to be included. However, it would be considered unsporting to assume a rival would automatically go the wrong direction first - and note Alfa Romeo's entire development budget for 2021 was a bit under $2 million (it improved by around a second over the course of the year).

Especially since the FIA is now giving Red Bull the chance to say "sorry" and spend $25,000 to make it all go away, despite this not being provided for in the financial cap regulation. (I have severe doubts as to whether it is appropriate to use the provisions that are laid down in the relevant regulation, but the FIA is only allowed to use a reprimand, testing restriction or reduction of the 2023 cost cap limit, not a straightforward fine, to make the complaints go away).

[Monty]

The amount of overspend is almost irrelevant. Like the old saying goes; you cannot be ‘a little bit pregnant’!
All through last season and this season, I was questioning how RBR could be doing things that long established teams could not (including luring key staff from the long established teams with fantasy benefits packages). It had to be that they were using ‘fair value accounting techniques’. For those of you that haven’t come across the term, this normally means hiding costs under inappropriate headings in the balance sheets; i.e. cheating!
Maybe their cheating didn’t provide any advantages at all but maybe, if the other teams had spent the same, they could have found speed, reliability, consistency, etc.
RBR must be penalised and it must balance any potential advantage they had/have over the other teams in both the Constructors and Drivers Championships. Think of the draconian on-track penalties levied for false starts, lack of fuel at the end of a race, cutting a corner, fitting the wrong tyres, etc., etc. How would it be fair or acceptable to allow a significant overspend to go unpunished??

[Andy B]

If it does go unpunished the floodgates will open.

[rmassart]

If it does go unpunished the floodgates will open.

I'm sure it will be punished even really harshly, just the punishment will have no real sporting effect. Eg knock 100 points off Red Bulls 2021 constructors campaign. It's not the driver that's at fault, so they will argue there is no point in docking points from Max. Job done. Harsh punishment, no harm done!

[Monty]

Many penalties that hit the driver are ‘not their fault’ but if the team do something to give them an advantage it is only fair for all the other drivers that the penalty imposed balances both championships.
I have already suggested that a proportionate reduction in points for both drivers is imposed for steps of overspend.
I really do not care if this means that a driver loses the WDC because any level of cheating means that the Championship has already lost any credibility! (true for any team and any driver).

[Andy B]

I saw this headline and it made me laugh: -
FIA ‘make an offer’ in negotiations with Red Bull over budget cap breach

How does that work?
Hey judge I disagree with that make me another offer!
Unbelievable!

https://www.planetf1.com/news/fia-make-an-offer-in-negotiations-with-red-bull-over-budget-cap-breach/

[rmassart]

I really do not care if this means that a driver loses the WDC because any level of cheating means that the Championship has already lost any credibility! (true for any team and any driver).

Me neither and probably neither will most long-term fans. Cheating is cheating.

But I think the FIA do! They will want to avoid the controversy of changing last year's record books, by causing even more controversy this year.

What surprises me is that no one seems to have planned for the eventuality that someone is caught overspending. It's like they all assumed no one would do this. For example, why not being forced to announce the amount of the overspend? If it were like 100k I think there would be few in pits too bothered with anything more than a financial penalty and slap on the wrists. The fact that the amount has not been announced implies to me that the amount is closer to the upper end of the minor breach. And at least in the "millions" region.

[John S]

What surprises me is that no one seems to have planned for the eventuality that someone is caught overspending. It's like they all assumed no one would do this. For example, why not being forced to announce the amount of the overspend? If it were like 100k I think there would be few in pits too bothered with anything more than a financial penalty and slap on the wrists. The fact that the amount has not been announced implies to me that the amount is closer to the upper end of the minor breach. And at least in the "millions" region.

I kinda see what you're referring to Monty, however most teams, especially big ones, probably feared going over the limit and so refused to sign up to really big punative penalties. Now at least some of the objectors to cost cap having real teeth are smugly demanding draconian action, massively hypocritacal I reckon, and also not in line with minor overspend rules. 

We all have to remember how big the drop in spending has been in the last 2 years, some teams were spending $400m or $500m a season prior to that. IMHO It's more suprising that most have come in at budget cap rather than one being over. I still think this RBR situation is probably more about interpretation of accounting rules rather than a truly intentional attempt to outspend rivals.

Now is that cheating? Well maybe, we'll have to see if it goes to appeal. FIA seem to already be into usual blackmail strategy by reports of threatening possible championship loss if appeal process followed and lost by RBR. Now is that about stopping FIA looking foolish or are they trying to put a lid on whole saga quickly - or something else? I'll leave you to decide.   

As for so called transparency most are looking for I think it's rather similar to tax audits when no figures can be talked about until all appeal procedures are exhausted and fines/penalties become set in stone. Even then some details are considered business/competition sensitive so remain confidential.

[Jericoke]

As for so called transparency most are looking for I think it's rather similar to tax audits when no figures can be talked about until all appeal procedures are exhausted and fines/penalties become set in stone. Even then some details are considered business/competition sensitive so remain confidential.

Transparency is certainly where things get interesting.  Red Bull, both the drinks company and the racing team are private corporations, which means their budgets don't need to be part of the public record.  On the other hand Mercedes is a publicly traded company, which means in the interest of shareholders, certain budgetary elements must be in the public record.  I'm not expert enough to understand how a joint venture, such as Mercedes F1, would fit into this, but given the large investment Daimler has made, I would expect that Toto's company would have to agree to the same levels of transparency for the team.

There is no legal reason to keep the budget (or income tax filings) private.  However if the budget (or taxes) haven't been certified correct, then any published in public must be taken with the proverbial grain of salt.

Just for fun (after a quick internet search, feel free to point out where I'm wrong):

Public F1 Teams:

• Mercedes
• Alpine
• McLaren
• Ferrari
• Williams

Private F1 Teams

• Red Bull
• Alpha Tauri
• Alfa Romeo (Alfa Romeo, which is public, sponsors the privately held Sauber team)
• Aston Martin (Aston Martin the car company is public, and sponsors the renamed Racing Point team, however Aston Martin the public company is run by Lawrence Stroll, who also owns Aston Martin, the private F1 team)
• Haas

[John S]

Jeri think you can move both McLaren & Williams to the private company status.

Macca is mostly owned by Bahraini wealth fund with a portion still owned by family of the man who created TAG. Ron Dennis share was bought out when he was ousted and I'm pretty certain the race team is not listed anywhere on a share index. Zak may have some sort of financial stake as well.

Williams once had a listing on Singapore exchange as part of stock floatation in a public offering, however I'm pretty certain Doriltan made a full buyout offer for all share capital when they purchased it and took it back private. Seem to remember Toto had to give up his last small Williams shareholding around the time of takeover, he had reduced his holding from 20% over the years after he went to run Merc.

Merc F1 team may also be considered a private company now since Daimler-Benz only hold a third of the equity, probably only reports limited info in main company figures on profit, loss, extra investment or liabilities that they guarantee.

Ferari & Alpine are I believe fully owned subsiduries of a parent company so more info may have to be published, I suspect however it will be as little as possible.

Funnily enough there may be more published figures from Red Bull if Red Bull Advanced Technologies, Red Bull Racing & Red Bull Powertrains are seperate entities they will need to file accounts at Companies House if they are incorporated as limited liability entities. I suspect that Racing & Powertrains may be direct wholly owned subsiduaries of RB technologies. so may make one filing.
Same filings will be necessary for any other private teams who have limited liability, in Britain anyway.

[Alianora La Canta]

If it does go unpunished the floodgates will open.

Thanks to the delays, the floodgates will definitely have opened. Hence my dislike of budget caps for F1.

Note that the possibility of the rules being breached was accounted for, along with multiple possible reasons (accidental and deliberate). That's why (in principle) there's two categories, and why there's five possible penalties (that can be combined) in each (note that some overlap, so an accidental major breach could receive the same penalty as a deliberate minor one). Yes, I believe all financial problems need to be penalised, but I believe doing it on purpose intuitively warrants a bigger penalty.

Unfortunately, that depends on a trustworthy judge, and with the FIA's falsehoods getting more and more blatant (the report about the misdeeds of Japan can't even get its "The Facts" to be facts), someone independent would have to test anything it says before anyone other than the media reliant on the FIA's graces for their passes, Red Bull and fans of the aforementioned believe the truth is as minor as the FIA says it is.