The FIA announced today that Aston Martin and Red Bull were in breach of the cost-cap regulations for the 2021 audit just completed. The statement read:
“The FIA Cost Cap Administration is currently determining the appropriate course of action to be taken under the Financial Regulations with respect to Aston Martin and Red Bull and further information will be communicated in compliance with the Regulations.
“Procedural Breaches can result in Financial Penalties and/or Minor Sporting Penalties (in case of aggravating factors) as detailed in the Financial Regulation. “Minor Overspend breach (<5% Cost Cap) can result in Financial Penalties and/or Minor Sporting Penalties”
This means that Red Bull spent more than the allotted $145 million limit for 2021. It also stated that all teams had been certified except for Aston Martin, Red Bull and Williams. It seems Williams was late in submitting their documents and the team were fined for that infraction.
According to Jonathan Noble over at Motorsport, Aston Martin and Williams were deemed to have had a procedural breach of the regulations while Red Bull had a breach in both procedure and spend. Aston Martin ere very keen to point out that they did not overspend as alleged by some in the paddock last week.
The penalties for a breach under 5% are a fine, limiting of aero testing, a possible deduction of driver’s or constructor’s points, exclusion from events or a public reprimand according to Noble’s article.
This will no doubt lead to calls for exclusion from last year’s championship or a points deduction which would give Mercedes and Lewis Hamilton the driver’s title for 2021. There will be scrutiny on how the FIA handles this situation and the timing isn’t good given the recent debacle at the Japanese Grand Prix and the heavy criticism the FIA is facing for it’s missteps in 2022.
Should the FIA apply stiff penalties for a sub-five percent breach, some will consider the harsh given the cost-cap regulations are brand new and the sport is trying to get its first audit and process completed.
Others will feel that severity for breaches is the only way to make these regulations work regardless of if it was under 5% or not. If the penalty is light, teams will opt to overspend up to 5%. Or that might be the thinking at least.
Team bosses Toto Wolff of Mercedes and Mattia Binotto of Ferrari have been very vocal that even slight over-spending can lead to car performance increases that are now homologated for the next several seasons. I argued a similar situation with the 2014 engine regulation changes that were heavily in Mercedes favor as it was a baked-in advantage for 8 years running. Could that be similar for Red Bull with a car that is better than the rest in terms of weight, aero or performance? It seems Binotto and Wolff certainly believe so.
Much of that could depend on what the overspend was for and if that is evident in the audit. Toto argued that Red Bull would try to suggest they overspent on sandwiches and he wasn’t buying it. That will be an important element in regards to the penalty.
Many will call for transparency of the audit and where Red Bull spent its money and how much. Fair enough but I am more interested in how Toto Wolff knew that Aston Martin or Red Bull had overspent as he called it an “open paddock secret”.
If we are calling for transparency, I’d like to know who is leaking this information to Toto or the media? That, to me, is a bigger issue than the overspend in many ways because it came from the very organization that is supposed to be the arbiter of the regulations, the auditor and regulator of the races. This adds more egg on the face of the FIA who is currently having a bit of a PR crisis at the moment with its nose stud debate, tractors on track, inconsistent penalties, penalty review delays and much more.
This is most likely a no-win situation for the FIA who are under serious pressure already and no matter how they adjudicate this issue, they will take incoming fire over their decision. Other teams will go after this issue like vultures at a kill trying to devour Red Bull and its pace advantage in 2022.
For the record, I have never been a fan of the cost-cap regulation, I didn’t see how it could be managed effectively, I didn’t feel the teams would welcome independent auditors plowing through the financials of a private company and in the end, what happened is exactly what I feared and stated several years ago when the ideas was being crafted.
These teams are independent, private companies and 3rd party audits that then leak information is a death blow to the sport. You cannot have internal people leaking information about how or where Ferrari might spend on their racing program. It would erode all credibility in the sport if Aston Martin was told what Mercedes were doing with their P&L or what accounting procedures they were using.
There was also the question I had back then about how manufacturer teams could bury R&D costs in their road car divisions and I warned that business process is business intelligence and that is intellectual property of each team. Having the FIA plow through this in a ham-fisted manner and then leak findings to other teams is the very reason I would suggest they cancel the cost cap regulations and design a more elegant solution to the problem.