Cars, Yas Marina, 2019

Would the FIA strip a team or driver of a title for breaking the budget cap?

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The new 2021 Financial Regulations – euphemistically known as the ‘budget cap’ – are arguably the most contentious set of regulations to have been published in the 70-year history of Formula 1.

When first mooted, many warned F1’s governing body, the FIA, would be unable to regulate teams’ spending. The many checks and balances contained in the 41-page regulations have largely allayed those fears.

The logical questions which follow, then, are: Could a team (or driver) be stripped of a championship for breaking the budget cap?; And: ‘Could such an exclusion occur respectively given that the financial reporting for a given year is 31 March of the following year?

A glance at the regulations would seem to indicate both scenarios are possible. The potential penalties for breaching the spending limits, for instance, include stripping teams and drivers of championships up to five years after they were ‘won’.

The official championship classification is finalised at the FIA’s annual prize-giving gala in early December. But in such circumstances ‘final’ would clearly not mean ‘final’.

Jacques Villeneuve, Michael Schumacher, Jerez, 1997
Drivers have been excluded from the championship before
The regulations define the “Full Year Reporting Deadline” for teams to submit details of their season’s spending as: “19.00 CET on 31 March, or if such day is not a business day on the next business day, in respect of the Full Year Reporting Period ending on 31 December in the previous calendar year.” They note “the time limitation on the prosecution of infringements by the Cost Cap Administration is five years”.

Under the heading Sanctions, Article 9c provides for a number of stringent penalties in the event of a “Material Sporting Breach”, including:

  • Deduction of constructors championship points awarded for the within the reporting period, and/or
  • Deduction of drivers championship points within the reporting period, and/or
  • Exclusion from the championship

Lest there be any doubt as to which championship is referred to under “Exclusion”, the regulations define the “Championship” as “the FIA Formula One World Championship, which includes both the Constructors’ Championship and the Drivers’ Championship”.

There are precedents for either. Michael Schumacher was thrown out of the 1997 drivers championship for deliberately colliding with Jacques Villeneuve in the European Grand Prix at Jerez. And 13 years earlier the Tyrrell team was excluded from the constructors championship for several (strenuously disputed) technical violations.

On that basis it in entirely possible that under F1’s new rules for 2021 a championship-winning team and/or driver could receive the most hallowed of motorsport trophies and then face exclusion between four months and five years later. This would, of course, be extremely damaging to the reputation and image of the sport while equally being wholly unfair to the legitimate champions, whose achievements would be grossly devalued through undue delays.

How realistic is such a scenario, and what could be done to prevent such an undesirable outcome? Asked by RaceFans, F1 managing director Ross Brawn said there will be a “degree of penalties that will be applied [in the event of a breach]” by Cost Cap Adjudication Panel.

2018 FIA Prize Giving Gala
A championship could change hands after the formal prizegiving
“Let’s say a team has been found fraudulently to have breached the budget cap,” he explained, “then I think the consequences can be very serious, as they could be in any other area of the championship.”

“A team discovered to be fraudulently breaching the technical regulations and be doing it continuously, it would be the same,” he added.

Those in charge of the sport will take steps to reduce the chance of a violation being discovered after the season has finished. “We’re not going to wait until March to suddenly say ‘Right, you’re in’ or ‘You’re out’,” said Brawn.

“There will be checks done during the year, and if things look as though they’re going in the wrong direction, there will be audit teams paying special attention to them and advising them that we’re getting concerned about the situation.

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“So, it won’t just be waiting until March and seeing what they’ve got. There will be mid-season assessments, which will be less formal than the final check, but will be a health check part way through the season.”

Ross Brawn, Bahrain International Circuit, 2019
“We’re not going to wait until March to say ‘you’re out'”
Indeed, article two of the regulations states: “Each team must provide any information and documentation requested by or on behalf of the Cost Cap Administration relevant to any actual, potential (note) or suspected instance of non-compliance with these Financial Regulations”, which would appear to cater for such spot checks.

While Brawn’s comments are reassuring, the fundamental question, though, remains: Does such wording suffices in an activity as complex and visible as F1, or should a clarification be issued given that the regulations as they currently make no reference to compulsory interim reporting at the mid-point of a season?

Such reports should surely be available at the push of a print button by any financial director worth their title, and would alleviate any chance of major embarrassment should an overspending team go on to win the championship.

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Dieter Rencken
Dieter Rencken has held full FIA Formula 1 media accreditation since 2000, during which period he has reported from over 300 grands prix, plus...

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58 comments on “Would the FIA strip a team or driver of a title for breaking the budget cap?”

  1. Interesting reading and I like probably everyone else, also hope the outcome of a given season wouldn’t change afterwards because of something like this. It’s already weird to even contemplate that the team that wins the WCC in 2021 could yet lose it in 2026.

    1. Not really something new in sport. I.e. the Tour de France doping scandals has cost several their medals years later.

      My guess is that they put it there in case an earlier employee comes forward or something like that. I’d prefer no end date to the possibility of stripping cheaters of a championship, though (I guess they still can, just not the prize money).

      1. Whoah, it was actually only Lance Armstrong. I was convinced that at least Bjarne Riis was stripped as well after he admitted it on camera and in book, but apparently not.

        Oh well, a few less examples, but my point stands.

        1. Plenty of Olympic medalists have had to give back their medals years later though. It’s not at all extraordinary.

          1. True but while it is not uncommon, it is still the vast minority that have had a medal stripped. Why? Because they police for this sort of thing as best they can as time goes along and it takes extreme measures to try to get away with something like this. In the case of Russia it has been the federal government itself that has backed the doping of it’s athletes, even rigging a lab that tests the athletes. Now that’s extreme. And they got caught. And are being excluded.

        2. I a lower level of sports, being Fixed Gear Racing on bicycles, we had a few riders being caught by the French anti doping agency. They take quite some time to make sure they have their facts straight but in a serious case of doping, a rider is urged to step back during investigation, months after the catch the official statement and punishment becomes public. We had two riders being caught in France, and our biggest racing series immediately stripped both riders of any podiums and banished them from our sports. So i think for F1 budget caps, teams should be abled to investigate and report on all teams, and external agencies could do regular check ups. 5 years seems lenghty but i guess paper trails are pretty hard to follow. So if a team is caught overspending, it could become an instant step back. Possibly retirement from the season. That would be strange…

        3. @losd Tour de France is a really good example. I am American, but not into cycling at all, so don’t confuse me for a butthurt American that’s mad lance got stripped of his titles… but as you say,
          Doping was rampant in competitive cycling… yet only lance got punished.

          Which is exactly what’s wrong with rules open to interpretation… but Ferrari isn’t gonna open its books to the public, so we are left trusting the FIA to police them. The same FIA somewhat commonly known to be way too friendly with Ferrari?

          Yeah this is gonna be lame.

    2. Biskit Boy (@sean-p-newmanlive-co-uk)
      27th December 2019, 13:03

      This is just one of the many reasons why the budget cap is such a bad solution, it just becomes an accountancy exercise and so far removed from sport its ridiculous. Sure @losd, losing titles years later might be necessary and nothing new in sport, but its not a good thing is it? It will be such bad PR for F1.

      I can’t believe F1 may still be doing sums 5 years after the fact. Whats the point? lets have a sport when the winner stays the winner. Of course to do this the rules need to be right. Budgets caps are stupid. Sure big spending teams will always spend big, but provided small teams on a tight budget can be competitive they we will have a SPORT.

  2. Could they afford not to …

  3. You gotta ask yourself the question…. why did Force Point filed for an official investigation over ‘Renault-gate’, it led to disqualifying the teams results for one race, opposite to RBR asking the FIA certain questions which only led to a Technical Direction?

    Ferrari stopped doing what they where doing which clearly showed in their sector times (apart from poor results), but no team or the FIA felt the urge for an official investigation…. what was really at stake?

    1. Matn, this post almost looks like it was meant for another article instead.

      In the case of Racing Point and the disqualification of Renault in Japan, the team formally raised an objection on technical grounds by making a specific allegation against Renault and providing evidence to support their challenge to Renault.

      In the case of Red Bull, they never specifically challenged Ferrari over what they were doing as, unlike Racing Point, it seems they didn’t know what exactly Ferrari were doing. Even now, people assume that Ferrari stopped what they were doing, but we don’t know for certain if they have changed something – it’s suggestive, but I don’t think it is entirely conclusive (some might point to slower straight line speeds but in some races, such as Abu Dhabi, photographs from that race seem to show they used one of their higher downforce aero configurations, whereas Mercedes and Red Bull opted for a medium downforce package).

      The FIA does seem to have been active in the background, carrying out various checks during the season, but to some extent some of those involved might not want full investigations as they might be concerned about more scrutiny being brought to bear on them as well.

      It is worth noting that, whilst the FIA did temporarily impound some equipment from Ferrari during the Brazilian GP, what was not always mentioned is that Honda seem to have also had equipment impounded for a similar investigation at the same time. It raises the question of whether some teams might not want a full bore investigation in case it brings increased scrutiny onto them as well, as some other teams might not have been quite as honest as they might want to present themselves as being in public.

      1. “Would the FIA strip a team or driver of a title for breaking the budget cap?”
        The FIA didn’t bother investigation Ferrari while Mercedes and RB collected various data that showed, the least, remarkable progress almost overnight. I am among the believers such progress isn’t ‘just’ there, neither does it ‘go’ form one session to another. It was clearly a loophole, with the budget cap I expect numerous loopholes, wealth team will always have an advantage over mid-budget teams… salaries fe. is such an advantage, not only for the drivers, but also for aero development and so on.

  4. Poorly written article with the overt bias dripping nay gushing off right from the start.

    1. By asking a question and attempting to address concerns by seeking a response from someone high up in the organisation? In the interests of the health of the sport. I mean, it makes a lot of sense that publications that are passionate about motorsport would have some bias in that direction.

    2. Bias against (or in favour of) whom, exactly? I read this as a discussion of the procedural/regulatory aspects of the budget cap, and fail to see the bias you’re referring to.

      1. The first line of the “article” says enough really. Tehre is not truth finding here.

    3. The question Dieter (@dieterrencken) raised was very important. I think the example Ross Brawn gave was on the extreme end of things, I suspect the problems the auditors will find won’t be the deliberate “evasion” type flouting of the rules, but be much more “avoidance” issues like the Renault Disqualification this year, in that the team didn’t know they were breaking the rules, or again like Renault’s Qualification Disqualification because of some unknown about microsecond transient voltage spikes that happened when the car hit the curb. Is the FIA going to destroy a team’s reputation based upon what might amount to a few cents per race? I hope not.

      1. @drycrust The question is not the issue. The way he starts the “article”.

        It’s just the same lame stuff he’s been blowing all the time: “It will be difficult to police, so we can’t do it”. It’s no different from the technical regulations. Also difficult to police. So what

        1. Many years ago I did a night class course on journalism. While I’ve forgotten most of it, one point I do recall is an article should have a hook at the start of the article. Like a good song, the hook is there to keep you interested. Also, 98% of people who start reading an article won’t finish it, e.g. me this morning, so, unlike an Agatha Christie novel, you need to make sure the important facts are in the first half of the article and not at the very end, and you should try to get the most important of those facts mentioned in your first paragraph. One of the reasons for this is the editor may cut out one or more of the paragraphs at the end of the article.
          I once heard some guys on Radio New Zealand talking about “segway” (actually spelt “segue”), which is the smooth transition from one thing to another. In this case Dieter (@dieterrencken) does a very nice segue from talking about the 2021 Financial Regulations to the driver on the podium and the thought someone besides the Stewards might take their well earned trophy away from them.

          1. @drycrust Try he starts with a disgusting nonsensical rant about how the budget cap is all wrong. Then he starts arguing from that agenda. He would flunk journalism school right there. Kicked out with his daft rhetoric.

            How much nonsense do we still see about how the “fair distribution” of prize money was going to change anything? He kept harping on and on and on about that. Well now we will have that and pretty much nothing changes. So he needs to keep on with his agenda pretending nothing else will work either. It’s depressing to have such poor opinionated pieces on this blog.

  5. To answer the question posed in this article’s title, it sounds like yes they would, but it is not likely as there will be spot checks along the way, and the FIA and F1 will work with teams on issues well before it would come to a future disqualification seemingly out of the blue. They would want to avoid that embarrassment to the sport, so I think it would have to be an awfully extreme and diligently hidden abuse of the cap for that to happen.

    As to excluding a driver? I find that a very interesting concept. Cited above is the Schumacher ‘exclusion’ for hitting JV at Jerez 97. That was really just a joke penalty, and for me confirmed how badly Mosley and BE wanted MS to be F1’s icon post-Senna. They excluded MS from the Championship, but not the team, so by letting Ferrari keep everything Constructors-wise, that allowed MS to retain his wins and poles. Excluded from the Championship, but really no penalty to the driver MS other than a bit of community service, and of course the embarrassment that will always remain, along with the suspicions about his whack on Hill.

    So for me a precedent was set that a driver can keep his record in the history books in spite of exclusion from the Championship as long as his Constructor was not excluded. In the case of the topic at hand, and budget cap, I fail to see how a driver could be excluded for that, so presumably they’d have to exclude the Constructor, which would then have to include both drivers, no? MS only got to keep his wins and poles for 97 because they didn’t exclude Ferrari, so to me excluding a team is also excluding both drivers.

    1. @robbie, as an aside, would you also complain that the manipulation between McLaren and Williams that went on during that race should have also seen their drivers and their teams being excluded from the championship?

      At the time, both McLaren and Williams were accused of colluding with each other to manipulate the race results to assist each other, with McLaren agreeing to help Williams to beat Schumacher and Ferrari in return for Williams assisting McLaren.

      Now, at the time Mosely claimed that both Williams and McLaren were investigated and denied that any such deal existed between the two teams. However, David Coulthard went on record in 2014 to explicitly state that is exactly what Ron Dennis and Frank Williams had agreed to do, with both teams colluding with each other to fix the result of that race and the championship itself.

      Is colluding with a rival behind the scenes with the intention to fix the result of a race, and ultimately the championship, followed by the act of deliberately deceiving the FIA (which you have to assume they did, unless Mosely was somehow involved in covering up such an agreement) really any more morally justifiable than what Schumacher did on track?

      1. Curious to see the answer to this as well.

        1. @anon https://www.google.ca/amp/s/www.independent.co.uk/sport/motor-racing-formula-one-hands-schumacher-a-pointless-punishment-1293640.html%3famp

          I also saw DC’s quote and he does not use the word fix. Nothing was ‘fixed.’ He says they didn’t know about it at the time. All that happened was Mac agreed to not stand in the way of Williams in their fight with Ferrari, and that is as one would expect for the Championship contenders anyway, and not an unusual thing to do at all.

          Near the end of the race JV was limping his way home and just needed to finish sixth or better and was in no shape and in no need of fighting with both Macs and risk hurting his damaged car further, or colliding for the sake of defending a spot he didn’t need. He let them go.

          MS literally made a penalty-worthy mistake of iconic proportions in the history books of F1, and nothing Mac or Williams did that day takes that away, caused him to do it, nor comes anywhere close to a violation such as fixing a race that saw neither driver affected enough, for their agreement to stay out of the fight to have mattered. There was no obvious blatant appearance of collusion let alone anything that one could point to as some race altering turning point of suspicion such that the Championship result might have been different, other than between the two Macs, RD having decided to place their own drivers as they saw fit, but certainly he didn’t put JV or MS anywhere they didn’t belong all on their own.

          1. @robbie, Do you really think that it was “normal” for McLaren to agree to assist Williams? Don’t you think that it is somewhat abnormal for two teams which were major rivals at the time and would go on to fight multiple battles for the WDC and WCC against each other to suddenly agree to co-operate between each other?

            Why not render that service to Ferrari then and say to Ferrari “OK, we will not stand in your way as you are in the championship fight and we are not”? After all, if they’re in the fight for the championship as well, why not, by your logic, make it fair to both and not interfere with the battle for either team?

            It is more than just a case of JV deciding to “let them go” by himself – the radio transmissions during the race involved the team reminding Jacques how “helpful” Hakkinen had been to the team. The phrase “Hakkinen has been very helpful. Jacques, position two. Don’t let me down Jacques. We’ve discussed this.” was uttered as part of a stream of instructions to Jacques – now, saying “We’ve discussed this” rather undercuts the claims that the drivers were not in the know about this deal, and Hakkinen has also indicated that he knew of the deal and was deliberately holding back from attacking the Williams drivers, especially Jacques, in the earlier stages of the race.

            Even at the time, when people heard the radio transmissions between Jacques and his pit crew, they described Jacques’s behaviour as “unusual” and thought that the idea of a private deal between Williams and McLaren stank.

            To say “oh, it was all fine in the end” is rather whitewashing the scenario – the offences of one person or team does not absolve the sins of another. However, it does feel a little like you want to brush this off because of your known dislike of Schumacher and therefore want to excuse what others were doing because it was to the benefit of somebody competing against him.

            It would be rather interesting if you had something similar happening now – suppose, say, if in 2020 you had a similar deal with Verstappen fighting for the title with one of the Ferrari drivers, and if Mercedes were then to then cut a deal with Ferrari not to fight with their drivers but agreeing to continue fighting with Verstappen. I can’t imagine that you would tolerate such a deal under those circumstances…

          2. @anon I don’t think it is unusual at all for teams to agree to not interfere with the two drivers who are left fighting for the WDC in the final race of the season. They have these sorts of conversations with the drivers in pre-race meetings all the time. Let the contenders settle it themselves on the track. The ‘assistance’ was merely to not fight with the contenders, and that is what most fans would expect, no? What business would Mac have had giving either JV or MS a hard challenge on the day when everything was on the line for them?

            In researching for info on this discussion I did run across the story that Todt went to the drivers at Ferrari powered Sauber to insist they hold up JV if at all possible during the race. So there’s a little collusion going on on the Ferrari side, only not to collude by Sauber staying out of the way, but by actually interfering if the opportunity presented itself.

            Why not, as Mac, offer the service to Ferrari as well? Can’t answer that, but they certainly did not impede MS, did they? And if Williams approached Mac to ask for non-interference, why would Mac then go to Ferrari to ‘offer a service’ that they themselves didn’t offer to Williams, but rather the other way around, that Williams requested of them.

            You can surmise all you want what the radio comm infers, but DC himself said they didn’t know about the agreement ahead of time. So which is it? Is DC lying then or if you are going to lean on his ‘testimony’ that there was collusion, then don’t you have to also accept that he didn’t know about it ahead of the race? Or are you just selecting the portion of DC’s 2014 admission that suits your argument?

            The only ‘collusion’ that was of any issue was what took place during the race after MS took himself out and it changed the landscape for Mac, not just JV. Without MS’s hit, the two contenders would have continued on racing till the end without ever seeing another Mac. So MS’s hit and the subsequent damage he caused to JV’s car meant that JV had to slow down on occasion to ward off overheating from having a damaged sidepod rad. So when the non-interfering Mac drivers came up on the limping JV, JV didn’t try to race them and risk a dnf. That he was being coached about that on the radio would be part of their plan to get JV home with the WDC intact in a now damaged car. Reminding him of Macs non-interference was fair game and part of the comm that I’m sure JV didn’t need to be reminded of nor was going to argue with as he was already not going to challenge them as his car was damaged and not able to run at full tilt, nor did he need to risk it for the win.

            And again, whereas MS-loving Mosley did punish MS, as gently as he could of course, he found no evidence of collusion between Mac and Williams, when, if one were to take your opinion to heart, one would think should have meant equally draconian measures towards Mac and Williams as what MS got…yet nothing. Mosley could have really taken some heat off MS by nailing Mac and Williams, yet nothing.

            The scenario you evocatively present regarding Max, because you know I’m a fan, doesn’t fly, because in order to compare to Jerez 97 we would have had to see Mac fight MS, and they didn’t. So you are unfairly not presenting an apples to apples scenario by saying Merc drivers would still fight Max but not Ferrari. Nobody fought MS or JV at Jerez, and as I said before, when it comes to races where the WDC is on the line, the unspoken or common sense ‘rule’ is to not interfere with the one’s who have the WDC opportunity. One would think that would go without saying, but in spite of that they do point out to the drivers in the pre-race meetings of these WDC deciding races, to let the contenders have their space to settle the title for themselves. What fans want a WDC decided by someone not in contention, interfering? Although it does seem Ferrari didn’t mind if a Sauber driver actually would have helped by interfering, not just by staying out of the way.

          3. @robbie, if it is so normal for teams to agree not to compete with the championship contenders in the final race of the season, why then have we seen other teams choose to continue fighting with championship contending drivers in the last race of a season in other years?

            There have been multiple races where the outcome was decided precisely because other teams took the idea of “Let the contenders settle it themselves on the track.” and threw it into the nearest bin. They had no intention of “letting the contenders settle it themselves”, they wanted to get the best result for themselves – just ask Petrov about Alonso in 2010, for example.

            Equally, we saw how, a couple of years later, nobody agreed to “Let the contenders settle it themselves on the track.” during the 2012 Brazilian GP – drivers chose to fight with Vettel during that race, with drivers such as Hulkenberg and Kobayashi quite happily passing Vettel and pushing him back down the order, and they could be rather forceful in both offence and defence there. Indeed, Hulkenberg had no qualms about contesting position with either driver in the WDC fight and was completely involved in it, even though he quite clearly had no chance of the title, because he was out to get the best finish for himself and his team, not meekly stepping out of the way because he should “Let the contenders settle it themselves on the track.

            Yes, I deliberately chose that situation with Verstappen because I knew that it would lead exactly to the sort of response you put – that, if it involved a situation where your known personal favourite was involved, you wouldn’t happily accept that “it’s perfectly normal” and, since I suspect you would object to it, have instead chosen to duck out of answering the question rather than wanting to admit that is the case.

            It was provocative because I wanted to put the question to you plainly – are you letting your emotions about the situation and your personal dislikes overrule things here? Is it a more comforting explanation to tell yourself that, because the outcome is more appealing to you, that it therefore becomes acceptable and you want to find a narrative that makes it excusable?

            Would you reason to yourself that “it’s perfectly normal and completely acceptable” if you had to accept that such a pact was being implemented against a driver whom you admire instead? You’ve already indicated in the past that you wouldn’t accept such a situation, and again your behaviour now gives me the impression you wouldn’t accept such a deal if it was against a driver you admire instead (i.e. letting your emotional attachments dictate your response here).

            I have seen a lot of people state that they thought that such a deal was wrong, but took the attitude that “well, it involved Schumacher, so I will accept it is wrong because I thought that he was worse and therefore didn’t deserve to win”.

            It shows a strangely flexible morality that, when normally they would be outraged by such a deal, they instead go “well, the ends justify the means” and think it is acceptable to bend the rules for that case – and that is the impression you are giving me here: that principals can be ignored because you prefer the final outcome when normally you would object to such behaviour.

  6. @dieterrencken What about Prize payments in such case? Would it be realistic to redistribute money entirely afterwards if it has already been done, should a team be excluded?

    1. @spoutnik – I’m curious to see Dieter’s response.

      To me, from past cases, it seems like that wouldn’t be written into formal regs, but will be addressed at the time such an event occurs. Spygate is one instance that comes to mind.

      It’d be interesting if the cheating team in question has upped stakes and left the sport in the intervening five years, and is no longer a going concern. That would further complicate any attempts to recover prize monies, or levy a penalty.

      1. I don’t believe it will take five years – the regulations are such that it will become evident by March if not before. If you consider the instantaneous outcry about Ferrari’s increase in engine power, I doubt teams will wait five years to raise suspicions. Indeed, I doubt they’ll wait 5 seconds…

        As for prize monies: Any team found guilty of a ‘terminal’ event – which exclusion effectively is – forfeits the right to prize money, which is redistributed amongst the rest. As the money based on championship standings is paid from March the following year in ten payments and any possible cheating should be evident by then, at worst a month is at risk – and that can be clawed back via legal intervention. After all, every team is worth more than its single month payment…

        If I may pass an observation with a qualification: I was as cynical as anyone – and had been since a cap was first proposed in 2004ish by Ford/Jaguar, but have come to accept that the checks and balances are such that cheats WILL be found out – yet sense that fans are utterly convinced that every team is out to cheat on the budget cap despite the draconian punishments and massive reputational risks involved.

        1. I don’t think the 5 years is about making sure the numbers stay under the cap. So during the season if a team can not keep its budget within the cap then they get a penalty. In other words if it can be found out it will be. But the 5 years is not for making sure the team did not over spend but to give time for whistleblowers to come forward to admit the books were cooked or if there was some financial trickery that is not just against f1 budget gap but financial laws. Or if information comes out later in other investigations like in ecclestone-gribkowsky case.

        2. Thank you for your answer! I am personally positive about the budget cap. Anyone having faced financial audits know it is really tricky even for finance professionals so I think it can work to a certain extent.

        3. I suspect our opinions are based on history showing that teams will use every single trick in the book to gain or maintain an advantage in F1.

          The addition of a cost cap, particularly one with a list of exclusions, for the top teams is much like any other regulation that designers have for years examined in forensic detail in the attempt to find loopholes that can be exploited.

          This doesn’t mean that teams will breach the cost cap, but may lead to some fairly interesting disputes over “interpretation” of costs and exactly what bucket the cost falls under.

          I’m sure also that each team will be forming its own opinions as to whether one of its competitors performance is as a result of excessive spending resulting in a few behind the scenes dramas.

          To me, that will only server to make some aspects of 2021 and beyond even more interesting. The true test of Liberty/FIA will be whether they take swift and fair action on any team found to be in breach, or whether it becomes a bit of a toothless tiger when it comes to upsetting some of the major name teams as it has been prone to do in the past when they have sailed close to the wind.

  7. While I am broadly in favor of a budget cap I also believe that at some point it is going to cause a really big mess because I honestly believe that somebody is going to find a loophole (Or just push things a bit too far) as that’s just part of F1, Always has been & always will be & no amount of (Over) regulation will do away with that.

    1. A loophole is to be expected and by itself is not too serious in sports because you can cover it just like you can’t have a giant loophole in technical without it being plugged.

      The real problem is, what would it take to plug said financial loophole? Because if it takes unanimous consent by all teams, then the teams taking advantage of the loopholes will surely not vote for it.

  8. A more complex situation that surely must have been considered is the knock on effects of over spending into subsequent seasons.

    Ie. My incredibly wealthy team decides we want to focus on 2036, so in both 2034 and 2035 we forego our championship positions (and, we assume, ALL prize monies) by spending triple the cap. In 2036 we dominate the championship with development from the last two years, well within budget. How is it demonstrated that our 2036 car was the result of over spending?

    I’m not a critic of the cost cap. It’s an absolute requirement now. But there’s gonna be interesting teething problems that I think will need strong policing.

    1. I’d be interested to hear your input on that scenario @dieterrencken. If you have any.

      1. Utterly hypothetical and predicated upon the team not being excluded after year 1 so not even making its to year 2 to compound the cheat.

    2. I’d be surprised if a team’s many sponsors would go along with your hypothetical 2034 and 2035 seasons. And from the verbiage above I would say the spot checks would take care of this intentional overspending, and if a team were to say ‘oh no that’s just our plan, please exclude us and we’ll carry on with 2036 in mind,’ then if I’m the FIA I would exclude them from the information they would need to develop a legal 2035 and 2036 car until the last possible reasonable moment such that they would have just barely enough time to develop said 2036 car. In other words if a team were obviously and blatantly spending triple the cap, with no defence for that other than it’s their plan, I’d stop them in their tracks so that they wouldn’t know how to proceed with said plan. With the spot checks done each season, it is not like finally in 2038 they would figure out what the team did in 2034 and 2035 and only then retroactively penalize them for those seasons that they were willing to throw out anyway, and leave them with their theoretical 2036 titles.

    3. You are thinking way too complex about this, @gongtong.
      I’ll give you a simpler example:
      Assume some altruistic Williams fans set up various independent companies to develop different F1 design directions each at a significant cost.
      At the end Williams acquires the company with the most promising design direction, and will report only the cost that that specific company made.
      As long as they don’t cover the costs of the other companies, then there is nothing FIA/FOM can do.

      1. Ross Brawn wants to know your location, @coldfly

        1. Sorry, just attending a call from Claire.
          @phylyp

          1. I feel I’ve been (perhaps rightly) verbally battered here for my attempt at playing devil’s advocate. Just to be clear I’m certainly not in the band of anti budget cap folks. I’m massively in favour and have every confidence it will be well enforced.

            But it sounded from this:

            “The potential penalties for breaching the spending limits, for instance, include stripping teams and drivers of championships up to five years after they were ‘won’.”

            That complete exclusion from the championship wasn’t on the table. That the maximum penalty was stripping of titles.

            I’d love to see teams completely disgraced and banned for a scenario I’ve aluded to. But I’d be surprised if they actually took such a hard stance.

  9. One more point why it either won’t work or ruin the sport.

    Costs were never a problem, unfair money distribution was, is and will be.

    1. Nice try, @dallein.
      ‘Unfair money distribution’ is an issue and ‘unfair’ but nothing more than that.

      Even if the money distribution would have been flat over the past decades (say $30-50M/year more for each smaller team), then still the big teams would have raked in all the prizes. Their ‘overspend’ is much more than the ‘unfair’ part of extra monies they received.

      1. @dallein Costs have indeed been one big problem, amongst the several issues we are familiar with, for quite a while…at least a couple of decades…but costs have been a particularly problem in the hybrid era, the introduction which moved the goal posts mid-game for the lesser teams, and is why they have struggled so much to budge from their ‘standard’ placings since 2014, and need the better money distribution you speak of. And that’s only a help to the lesser teams, but not the whole solution from a costs standpoint.

    2. @dallein

      Costs were never a problem, unfair money distribution was, is and will be.

      We have seen what the “fair” money distribution is going to be. The smaller teams get at best 30 million extra. Renault perhaps 50 million. That’s a drop in the bucket of a 300 to 400 million spending gap.

      1. The ‘performance’ spend delta drops to maximum $50m or around 40% budgets from 2021, whereas it is presently up to 250%

        1. @dieterrencken Way to dodge the issue. You pretended that the bonusses being distributed “fairly” would be the end of all inequality. Then you showed that in fact it does basically nothing. Even with your fake inflated numbers.

          You can cry all you want about the budget cap being difficult to police, but it’s clearly the only realistic option to bring the team budgets closer together.

          This scare mongering about how applying rules might end up in damaging teams is just sad. Like the current sets of regulations don’t have that effect. If teams break the rules or skirt too close they can be caught out. It’s their choice.

    3. Cost caps are more important that unfair distribution. Cost caps means teams can’t just spend a gazillion dollars to make a powerful car like they are doing now.

      If you change money distribution but put no cost caps, guess what, Ferrari and Merc are still going to have the top spending on cars because they are backed by already rich entities. Their cost-per-performance ratio is super high but when you have a lot of money it doesn’t matter.

      This is not to say the distribution is not a problem, but rather it is still secondary to actual cost caps.

  10. Call me a sceptic, well because I am one, but I cannot see how this can be policed.

    In the case of Red Bull Racing, will Red Bull Technologies be subject to the FIA’s auditors? Ferrari? Mercedes?

    F1 teams with large parent corporations, like Merc, Ferrari, RB and possibly Renault, it will be so easy to slip a 10 million here and there. Have you ever known anyone in F1 not to exploit a loop hole?

    1. @jaymenon10 I don’t think the default here should be that the teams will all be plotting to game the system at risk of huge embarrassment and penalties. Will they try everything legal possible? Sure. But let’s not make them all sound like they don’t want to win fair and square overwhelmingly. The teams have bought into Liberty’s new F1, and I really don’t see abusing things too much.

      1. @robbie, in the past, teams have pretty openly pushed the regulations to breaking point by doing things that were, on paper, legal, but were a pretty blatant way of cheating the rules.

        As it so happens, the entire purpose of Red Bull setting up Red Bull Technologies was to evade the ban on customer cars – don’t forget the short lived Spyker team, as well as Williams, both brought forward formal complaints against both Super Aguri and Toro Rosso for breaking the regulations on customer cars at the time.

        The FIA’s regulations at the time ostensibly blocked teams from selling customer cars or from selling the designs of a car, but there were gaps in the regulations that could be exploited. If it so happened that a team was to acquire the IP rights to a car from a third party, and that third party had just happened to have acquired that design from another team, on paper it was still above board as the “constructor” was that third party.

        In the case of Honda and Super Aguri, the workaround was that Honda officially sold the rights to the RA106 to a separate company, PJUU Inc, which then sold the design and IP rights to Super Aguri for a nominal price. Everybody knew the SA07 was a lightly modified RA106, but officially it wasn’t a customer car because Super Aguri were buying the rights from that third party, which just so happened to have acquired and then sold the IP rights and drawings to Super Aguri for a very reasonable price.

        In the case of Red Bull, their way of replicating that process was to set up Red Bull Technologies. Officially, Red Bull Technologies would be the party that held the IP rights, which they would then sell to Toro Rosso and Red Bull Racing – the race teams being legally separate entities to the design centre.

        In that situation, Red Bull Technologies could sell the rights to the design of the RB2 to Toro Rosso, which became the STR2, without breaking the rules – because, on paper, the IP rights had belonged to Red Bull Technologies, not Red Bull Racing, and RBT was selling the IP rights to Toro Rosso.

        If anything, Spyker suggested that RBT wasn’t just selling the previous season’s designs either – the head of the team presented design drawings that showed the STR2 and RB3 had identical parts, and it was literally just the design logo that was changing on the drawings. However, because on paper the way in which the IP rights were being sold by RBT met the rules on customer cars, even though everybody could see through the legal fiction, Spyker lost the case because Toro Rosso was technically complying with the rules.

        In that case, even though it was an open secret that those teams were breaching the rules on customer cars, the teams had created a convenient legal fiction that allowed them to publicly cheat the regulations. The “risk of huge embarrassment and penalties” didn’t deter them at all, as those teams continued with those tactics even though there were negative headlines about them being dragged to arbitration – Williams even went as far as threatening to bring a case in the civil courts – and it was only an amendment to the regulations that finally stopped those teams from pulling that trick.

        I feel, therefore, that you might have a rather optimistic view of the honesty and integrity of the teams and a rather optimistic assessment that they have fully bought into Liberty Media’s plans for the future.

        1. @anon The key words here are your first ones…’in the past.’ Of course there are many many examples of teams pushing the limits of the regs throughout the years. And of course I am not naive and think the teams are all angels now.

          But I do believe this is no longer the BE F1 of the past that you think suffices for comparison. The teams have certainly all agreed on the 2021 regs be they technical or sporting, and they are unprecedented. Even just including all the teams has been unprecedented.

          I see no reason not to be optimistic, when ‘in the past’ there was never any hope of F1 making itself more sustainable, nor the cars closer racing. It’s a new chapter, there will be bumps along the way, things will still get tweaked, never perfect for all parties completely, but yeah I’m sooo looking forward to an entirely new chapter like we have not seen before.

          There are now regs to try to cap spending where there weren’t ones before. So even if teams were to try to play as dirty as they possibly can by hiding expenditures etc, there is now a potential penalty there for that, so even if they are (extreme case) just feigning buying into Liberty’s way, they won’t likely get away with it or are certainly now risking a great deal whereas there has been no penalty at all for the top teams to spend themselves into oblivion other than the penalty that creates to the entity of F1 itself by making it skewed, predictable, and unsustainable, which is why F1 needed rid of BE and why the change has been so necessary as agreed by all the teams.

          Yeah, that they have agreed caps were needed, and have agreed how to go about that, tells me the teams are quite on board, and likely to do little more than exploit loopholes that they then will all exploit equally until the regs are tweaked to close the loophole. But hardcore, blatant cheating or manipulation? No I have no concern of that at all.

  11. It only has to happen once. One year of curb stomping anyone doing any funny business, that’s all it takes. Even (or especially) the major teams can afford the humiliation, loss of income and media scrutiny of being excluded from the championship only once.

    As someone who has been arguing for a budget cap ever since Max Mosley brought it on the plate back in 2009, I would be perfectly willing to accept 2021 World Champion Romain Grosjean for the sake of getting this done. F1’s expenditure is unsustainable, as evidenced by the fact that a sport that used to have people fighting for one of the 26 spots on the grid nowadays cannot sustain a 10-team grid. I do not labour under any delusion that this will make the sport competitive (hell, I’d be amazed if 2021 sees McLaren or Renault so much as annoy the big three, let alone any minor team gaining more relevance), but it is necessary for the survival of F1 itself.

    I just hope the FIA have sufficient desire to execute what must be done. Show no mercy, in this topic it’s better to disqualify someone fraudulently than to risk the integrity of the new rule. Professional sports teams do not deserve the benefit of the doubt.

    1. @klon, when you say that “it’s better to disqualify someone fraudulently than to risk the integrity of the new rule”, would not the act of wrongly disqualifying a team in itself be an act that could potentially undermine the integrity of the new rule?

      If a team were found to have been incorrectly disqualified, then it would bring about serious questions about whether the FIA was competent enough to administer that part of the rules and erode trust in the FIA – a commodity that the FIA finds hard enough to earn at the best of times.

      It would cast doubt on the credibility of the financial review process, as then people would be less inclined to trust it if it was throwing up false positives – if you had a second case, people would then be more likely to side with the team that was accused if there had been a wrongful disqualification previously, as they’d be more inclined to think the FIA got it wrong again and can’t be trusted.

      Indeed, in such a situation a false accusation could potentially be even more damaging to the sport. If you had the scenario of a driver being stripped of a title, only for the validity of that disqualification to be cast into doubt, can you imagine how easily that could be turned against the sport?

      It would be a breeding ground for conspiracy theories and could make people think that any such penalties were signs of favouritism by the FIA – particularly if it were applied several years down the line, when people might believe that any such move might be linked to recent political arguments.

      Equally, if you were a potentially interested party, how might you react if you saw another team being dragged through the mud and subjected to all sorts of penalties, only to then see the awkward aftermath if it turned out that the penalty was wrong? Would you want to take the risk of seeing your own team going through the same process if you were also wrongly accused?

      Furthermore, might there not be a risk that, if it turned out the FIA had made a mistake, it could invite legal action outside of the sport? How might a team be recompensed if they were wrongly punished – the sport might be able to offer a refund in terms of prize money, but if a team lost a couple of major sponsors due to a wrongful accusation, I could imagine that they’d want to claim recompense from the sport for loss of earnings on top of any prize money they would have otherwise received.

      I can understand why some might want a “take no prisoners” attitude, but I would argue that having a team wrongfully punished in a draconian way could backfire horribly and also be extremely damaging to the sport – it’s a very fine line and being too far in either direction could be equally damaging.

      1. Magnus Rubensson (@)
        27th December 2019, 15:24

        In that case, perhaps it is time to turn F1 into a full blown spec series.
        One spec engine and one spec chassis.
        Spec tyres are already in place courtesy of Pirelli.
        Cost cap sorted.

        1. @magnusrubensson, well, the 2021 regulation package does partially have the effect of doing that, as some of those who have been looking at it have found it to be even more restrictive than first thought.

          It was interesting that, over on F1 Technical, they have created their own prototype 2021 car and found that the way that the regulations are phrased were, to quote, “funnelling the teams into a particular specification” – for example, although the underfloor might appear on paper to be somewhat open to development, in reality the design is effectively a spec part in all but name.

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