Salary cap, Shmalary Cap

[Richard C]

Originally Posted by peebee2

As another example, what can you tell us about teams who receive engine discounts - how does that work then?

I might not be remembering it correctly, but I think because engine costs are already regulated, that teams can't get discounts. Or if they do, their budget may need to reflect the larger number.

I may try to read the regulations later.

Richard

[peebee2]

Originally Posted by Richard Casto

I might not be remembering it correctly, but I think because engine costs are already regulated, that teams can't get discounts. Or if they do, their budget may need to reflect the larger number.

I may try to read the regulations later.

Richard

You're broadly right. Their cap is reduced if they get free or subsidised engines. There's supposedly more differences on additional units which can be exploited though.

Another big area is where you supply controlled parts to other teams. While declaring a profit may not beneficial, shipping out some R&D and tooling costs may very well be.

[Richard C]

Originally Posted by peebee2

Another big area is where you supply controlled parts to other teams. While declaring a profit may not beneficial, shipping out some R&D and tooling costs may very well be.

I understand that point. I would think that maybe the FIA should ask (force) teams to segregate out when the supply controlled parts. So off the top of my head I know of the McLaren electronics. But I think that is provided by a totally different legal entity that is not the F1 team. I thought that one of the teams made the internal Halo component, but Google tells me that is not correct. What teams are making controlled parts for other teams? Are you talking spec parts (like the McLaren electronics) or more like the suspension parts that Ferrari sells to Haas?

Richard

[Tourer]

Well, it's official now - but in reality we don't know all that much (yet). AM procedural breach but RB both procedural and minor overspend breaches.

As I understand it, the teams now have two choices:
1. decide to accept the finding of the FIA cost cap crew - in which case a penalty is applied but loss of championship points can't be included in that penalty
2. decide to argue against or discuss the finding, in which case a judicial panel is formed and the range of potential penalties is wider.

So, we may be about to know the final outcome of all this OR it could drag on for some time. I suspect that there is a lot more information to come out in either case.

[crmalcolm]

Originally Posted by peebee2

LOL, it is if the rule isn't clear on what constitutes hospitality and what doesn't for example. It's a classic problem, the more you try to write very tight rules, the more questionable gaps appear between them.

Except only RB seems to not find the rule to be clear?

[Akrapovic]

Originally Posted by crmalcolm

Except only RB seems to not find the rule to be clear?

Maybe the rule had the word any in it instead of all. Christian has issue with these words.

[Akrapovic]

I hope it's a financial penalty for violating the cost cap. Proving you can indeed spend your way through a cost ceiling.

[bathurst77]

i think a fitting penalty would be a sizable reduction in 2023 spending cap

[AndreasDavour]

The problem with an overspend is that it's not just for one year. If you can develop more one year, you will have an advantage the next year as well. So, the punishment need to cover multiple years.

[Anyopenroad]

A fine has to be greater than the overspend and it has to come out of this or next year’s budget. Otherwise, as Akrapovic says, it becomes cost-efficient to cheat.

[peebee2]

Originally Posted by Akrapovic

I hope it's a financial penalty for violating the cost cap. Proving you can indeed spend your way through a cost ceiling.

I'm sure there will be a fiscal penalty.

[AnnoyedMoose]

One (of many) potential issues for RB is that they seem to be convinced that they were several million under the budget cap (as do their auditors) so if they've decided to spend up to the "limit" this year they could be way over already.

[Akrapovic]

Originally Posted by Anyopenroad

A fine has to be greater than the overspend and it has to come out of this or next year’s budget. Otherwise, as Akrapovic says, it becomes cost-efficient to cheat.

Exactly. So we allow teams to overspend for a rule change to learn everything and then...fine them after they win the title? Like, lol.

Originally Posted by peebee2

I'm sure there will be a fiscal penalty.

Being able to spend your way out a budget cap is the least effective way of enforcing rules since Michael Masi was left in charge.

[AndreasDavour]

Originally Posted by AnnoyedMoose

One (of many) potential issues for RB is that they seem to be convinced that they were several million under the budget cap (as do their auditors) so if they've decided to spend up to the "limit" this year they could be way over already.

I think we can bet they have overspent this year. Binotto have been pretty clear on how they have had to stop spending, and the fact that RBR have talked about a new lightweight chassis that have not been revealed is quite telling.



While we have seen teams cheat before, I would chalk this one up to the crappy rules writing by the FIA, though. Which still means they have to get the penalties right.

[peebee2]

Originally Posted by AndreasDavour

I think we can bet they have overspent this year. Binotto have been pretty clear on how they have had to stop spending, and the fact that RBR have talked about a new lightweight chassis that have not been revealed is quite telling.



While we have seen teams cheat before, I would chalk this one up to the crappy rules writing by the FIA, though. Which still means they have to get the penalties right.

A problem is that pretty much all teams in all series push the boundaries all the time.

99% of them are never spotted and 99% of those that are spotted are kept private.

[PhilipR]

The interesting question I have is if RB acted in good faith, what is to say they have not done the same this year as well - Seeing it is October it might be difficult to make amends now - so we might have same situation next year as well

Also FIA must be going crazy that they have had breaches in the 1st year of the cap and from the winning team as well - this is not going to be easy

Also overspend- of course teams will try to defend overspend on other items - no one will just say it was for performance - so rumours of catering and sick pay is what I expect

Also - why did RB not clarify with FIA if how they account can be considered within cap? If you are not sure I am pretty certain you can enquire and get clarification. Or RB tried to push the limits and see what they do when they got caught

Seeing that FIA was in touch with the teams about their submissions - and a decision was due last Wednesday - I imagine RB was aware of the breach and use the extra time to justify expenses or find "non performance" reasons for these

All in all whilst I find it all amusing it is not good for the sport - also feel for Verstappen(love him or hate him) he has driven brilliantly and now his accomplishments might always come with the caveat of Michael Masi and Overspend and he does not deserve that - he did not make Masi break rule or RB overspend

[PhilipR]

Also - slight offtopic but it seems 2021 is coming back to bite FIA and F1

I found the entire fan situation really toxic last year and F1 seem to have been more than happy to milk it for publicity, for the show, for the attention
All the build up to the last race - bending rule for 1 lap show finish - allowing fans to be accusatory of each other - publicising team personnel talking bad about their counterparts - and now with the cost cap / Seems it is a bit of their own making

Also curiously journalists that are in the f1 paddock seem to be quite constrained on the Budget cap issue just as with AD last year - whilst the most outspoken are the ones that are not in the paddock - makes me wonder if there is some kind of embargo on what journalists can say without losing their paddock credentials.

[AndreasDavour]

Originally Posted by peebee2

A problem is that pretty much all teams in all series push the boundaries all the time.

99% of them are never spotted and 99% of those that are spotted are kept private.

Of course everyone is up at the limit, that's how it works if you want to win. That's why it's such a facepalm every time FIA gets involved and looks amateurish. I mean, they should be able to expect it, as we do.

[AndreasDavour]

The whole cost cap idea feels badly thought through. If teams can overspend "by mistake" they clearly has not been given good directives.



That being said. Only two teams got noted for not being compliant, so some blame must be laid at their feet. All the others managed, so why not them?

[peebee2]

Originally Posted by AndreasDavour

That being said. Only two teams got noted for not being compliant, so some blame must be laid at their feet. All the others managed, so why not them?

Three out of ten did.

[Akrapovic]

Originally Posted by peebee2

Three out of ten did.

This isn't what he meant. 2 teams overspent. The third, Williams, complied with the cost cap and did not overspend, but submitted last years documents late. They complied with the spending limits.

Only one team has been deemed to have overspent outside of an actual error, however.

[AnnoyedMoose]

They still might not have overspent though. It's all a matter of interpretation. According to the FIA's understanding of the rules they have gone over. According to Red Bull (via their auditors) they haven't gone over. The next stage, assuming Red Bull don't agree with the FIA, is for it to go to a panel where the majority make a decision and even that can be appealed. It's always the problem with these things. So many grey areas. It's no different to double diffusers in many ways.

[AndreasDavour]

Yeah, that was what I meant.



The crux of the biscuit is still that most teams managed to not get noted for overspending. Even if RBR manage to make it clear they did stay within the limits, it's still a hot mess that it could even be unclear! If it's that fuzzy, more teams are going to game the system and then we can just forget about it all.



I imagine next year it will be a total circus of discussions in courts about many more teams. That's the last thing we need.

[PhilipR]

Another theory of mine - I wonder if RB saw a grey area in the accounting - however had they clarified it with FIA then it would have been disclosed to all teams meaning they would lose the theoretical advantage from it.

As such they did not go for clarification and tried to explain it through other costs when the reviews are being made and maybe this is what caught them off . A case of pushing boundaries and hoping it sticks same way one does with technical regulations

Now we do not know the actual sum but in my limited knowledge I understand there can be different approaches to accounting techniques - however can these differences make up to 1.8 million as the sum is rumoured. I would understand a few thousand dollars, but almost 2 million? - If true either RB accountants are geniuses or the other teams accountants are not that good

[Akrapovic]

Originally Posted by AnnoyedMoose

They still might not have overspent though. It's all a matter of interpretation. According to the FIA's understanding of the rules they have gone over. According to Red Bull (via their auditors) they haven't gone over. The next stage, assuming Red Bull don't agree with the FIA, is for it to go to a panel where the majority make a decision and even that can be appealed. It's always the problem with these things. So many grey areas. It's no different to double diffusers in many ways.

If 9 teams and the FIA read it one way, and RBR reads it another way, it isn't a grey area.