It’s “game over” if F1 fails first “vital test” of budget cap rules – Ferrari

2022 Singapore Grand Prix

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Formula 1 faces “huge” implications if it fails to enforce its budget cap, Ferrari have said, as the paddock awaits a decision on whether teams complied with the spending limit last year.

The FIA is due to issue certificates of compliance tomorrow to affirm teams adhered to the new Financial Regulations which were introduced for the 2021 F1 season. Reports emerged last week claiming two teams are in breach of the rules.

Ferrari and F1’s other leading teams had to bring down their spending and even lay off some staff in order to meet the $145 million cap which was imposed from last season. Any team which over-spent could have obtained a performance advantage last year and potentially this year and in subsequent seasons.

“It is a very vital test for the cost cap,” said Ferrari’s racing director Laurent Mekies. “And, as we said, if we don’t pass that test, it’s probably game over, because the implications are huge.”

The FIA has the power to fine teams, reduce their spending cap in future seasons or even confiscate points from them as punishment. Mekies said before any penalties are applied it is crucial teams share the same understanding of how the rules are applied.

“Should we talk about penalties now? Probably not. I know it’s probably what the people in the grandstands want to see and we respect that. But in fact we are much earlier in the process than that.

“Probably an even more key aspect of it is, is there a breach? Do we agree on the entity of the breach and that, as a result, confirm the rule everybody is obeying?

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“So, I think what is very much crucial now is that the FIA fully enforce rules as they are written now. And then after the penalties are a different matter.”

Ferrari are in no doubt about how they feel the rules should be applied, said Mekies. “At least for us there is no question on what is the interpretation of what we have done because it’s been continuous discussions with the FIA. And I think that’s how the process is intended to be.

“Then after, of course, you have that final check that we are talking about now, that we are all waiting for. But in fact, we see very little room for surprises in the way that we have been discussing non-stop in the last two years with them.”

A team can be found guilty of a “minor breach” if it exceeds the cap by up to 5%, which quates to more than $7 million. Over-spending by that much could make a significant different to car performance, said Mekies.

“If you think about the level of constraints that have [been] imposed on the big teams, then you realise how much lap time there is going to be if you don’t strictly enforce them. We’re massively constrained and therefore any million, any leak you allow in the budget cap, is going to turn into a few tenths of seconds on the car.”

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Keith Collantine
Lifelong motor sport fan Keith set up RaceFans in 2005 - when it was originally called F1 Fanatic. Having previously worked as a motoring...

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39 comments on “It’s “game over” if F1 fails first “vital test” of budget cap rules – Ferrari”

  1. “Probably an even more key aspect of it is, is there a breach?” but we’re going to comment about it anyways.

    1. Just like RBR and Max did when Ferrari was suspected of cheating, before anything was proven. Yet I’m guessing you didn’t have a problem with it then.

      1. I wouldn’t become a gambler, if I was you.

      2. I think Red Bull could proof it with numbers…. That is why Max said it …. The Dutch aren’t afraid to say something.
        Al teams are keeping a eye (electronic) each other and strange power increases is something noticeable.

  2. Red Bull have shown an utter desperation since last season to win at ANY cost and to bend/break the rules in any way necessary to win the DRIVERS championship (they clearly don’t care about the constructors, given their blatant favouritism and handicapping of their 2nd driver). Sadly however, the FIA and Liberty Media, both desperate to overhaul the tedious Mercedes dominance in order to appease sponsors and fans, will no doubt protect RB once again tomorrow.

    1. You nailed it

    2. Strange i had more the feeling that Mercedes was trying to do that as they were starting the season very bad. Trying to come back costs a lot of money…

    3. Hugh: “given their blatant favouritism and handicapping of their 2nd driver”

      Did you watch last weekend’s race meeting, where Max’s car was underfilled in qualifying and ended up way down the grid, and Perez won the race? DOn’t worry, I’m not asking you to explain how this fits into your world view. I’m more interested to know why people come up with this type of conspiracy theory year after year, that a team would spend all that money designing and building cars, and then deliberately mess up the season for one of their two drivers. I think we hear this every year, whether it be Verstappen-Perez, Hamilton-Bottas, Rosberg-Hamilton, Button-Barricello,… the list is never ending, and tedious.

  3. Pass me the popcorn…

    1. You want salt and butter on that popcorn?

  4. “Should we talk about penalties now? Probably not. I know it’s probably what the people in the grandstands want to see and we respect that. But in fact we are much earlier in the process than that.
    “So, I think what is very much crucial now is that the FIA fully enforce rules as they are written now. And then after the penalties are a different matter.”

    Always nice to hear a more realistic mature view on matters. Some others will take whatever straw they can get to polarise even more without taking any accountability for their behavior rubbing off on the audience.

    1. Hang on, he’s contradicted himself there, the few sentences of the interview were a direct reference to penalties:

      “It is a very vital test for the cost cap,” said Ferrari’s racing director Laurent Mekies. “And, as we said, if we don’t pass that test, it’s probably game over, because the implications are huge.”

      1. I don’t think he has – he’s just saying if there is a breach against how the rules are written now, there should be a severe punishment. He’s also clearly said that at this time, we don’t know if there has been a breach or the nature of it so it’s not the time to be talking about specific penalties.

        What they don’t want is for a team to find a creative way around the budget cap and gaining an advantage. They want everyone playing by the same interpretation of the rules.

        1. Yeah, that is exactly what I read in Mekies comments as well @petebaldwin. And that makes sense. IF there is a breach found, it has to be punished so that it has a meaninful effect and can act as a deterrent, otherwise the cap becomes a farce.

          So the first thing is to wait for what the FIA finds – as will now be published in the next hours/days. There will almost certainly be some discussion about the substance of the FIA’s finding, I think we will see some “in depth” looks bubbling up looking at potentially hidden cost etc too.

          And only then we get to the next step, which is to discuss any potential penalties for issues found (the FIA is the one deciding on penalties, if any).

  5. I’m genuinely surprised that numerous F1 teams and fans can’t appreciate that the budget rules would have been contested to the same rigorous level as the sporting regulations.

    It may surprise some but accounting and tax legislation can be debated by two parties with both being correct. As with F1’s sporting regulations, it’s whether the rules are open to any alternative interpretation that matters. If they are, blame the rule-makers.

    1. Andy (@andyfromsandy)
      4th October 2022, 15:11

      Based on the interpretations of the rules last year anything is possible. Based on some of the penalties being given at present for transgressions on track as well and this is all a damp squib I suspect.

      A leak created just to stir the pot.

    2. I can only assume it’s people who haven’t watched another sport with a budget cap before. If you follow football, you’ll know that most teams are trying to find creative ways around financial fair play. The owners can’t just pump crazy amounts of money into clubs so the owners of Man City use a company they have control of to sponsor the team at vastly inflated sums – same result but it gets them around the rule…. Other teams sell their stadium to someone connected to the owner, again at a vastly inflated sum. This gives them a nice load of money through “legitimate” means and they are free to go crazy with transfers etc….

      If anything, the financial rules will be more hotly contested than the sporting ones as it will have an even larger impact.

    3. @joshgeake If that’s the case, then it should be the rule-maker who has the final say, as is often the case with the sporting regulations.

  6. Tell me more about the fancy engines your team principal oversaw, Laurent.

    Tell me more about the suddenly disappearing tens of kilowatts, Laurent.

    Tell me more about secret backroom deals, Laurent.

  7. I am with Williams Principal, Jost Capito (https://us.motorsport.com/f1/news/alfa-romeo-no-room-for-flexibility-on-budget-cap-breaches/10376866/). The problem is the advantage RB developed during last year and the long last effect of that, as we see this year. It is ok if they got the extra performance by abiding to the rules. Mercedes, for example, let go 40 employees last year to keep the cost inside the cap. Knowing FIA history, they do not have the guts to give the proper punishment. Look at the Ferrari fuel flow incident. Pretty much, NOTHING was done.

    1. Mate, they were neutered and spent two years without a hope of winning, a whole season behind the mid pack plus the humiliation. All in spite the FIA not being able to actually prove guilt.

    2. Yet Red Bull let go even more employees the Mercedes.

      1. Yet Red Bull let go even more employees…

        …to Alpha Tauri’s MK design shop, to RB Powertrains or to work in the external contracting teams. Just like how Ferrari shuffled a load of people to (officially) work within Haas, these people didn’t actually leave.

        It’s more fool on Mercedes for playing by the spirit of the rules and not creating a third-party support company for customer teams or some other transparent means of paying people to work for you without officially paying them.

  8. I can only assume it’s taken this long for this to potentially come to light as there has been some serious underhand stuff going on.

    1. Andy (@andyfromsandy)
      4th October 2022, 18:19

      This shouldn’t have come to light yet though for public consumption. Either a leak or a rumour it is destabilising.

      Plenty of comments that think the overspend is true by ORBR.

      This is possibly going to end as a non event.

      I did see but can’t find it now that the FIA may now not release any information on Wednesday.

      1. Can’t really understand what O stands for in orbr.

  9. Something harsh should be done. But it obviously won’t be.

    If anything, this rule will ceasee to make any sense if they fail to properly penalyze those who went over budget.

  10. Red bull can easily cheat and launder expenses using its multiple subsidiaries and hide behind the Japanese conglomerate Honda with their complex and convoluted relationship. RB spent insane money to poach top talent from Mercedes on massive wages and build a new factory in Milton Keynes whilst fighting a championship and still managed to keep everything in budget?

    Its clear that RB has beached the budget cap by a huge margin but the FIA wanting to save face and Liberty Media’s drive to Americanize the sport post ‘out of touch’ bernie/’questionable history mosley’ to appeal to a younger diverse viewer with reddit tier drama and hype will bend the rules again and not punish them.
    Lewis domination was too ‘boring’ for Liberty plus his politics was turning off fans and sponsors so they done everything possible to give RB the advantage to catch up.

    How is this any different to the end of the 2021 farce season? FIA meddle in the race (100% convinced that Masi was forced by someone high up to make the call) and will just say lesson learned and move on..

  11. FFP Rules can and are enforced in football (soccer). Yes – some have tried sponsoring their own teams for inflated fees, selling the leasehold on stadiums etc. but within 5 years it has settled down dramatically (except Real Madrid who have beef with PSG and Man City at present, but nobody is taking seriously).

    I actually think it’s been policed quite well, there were always going to be those who pushed the limits early on – and yea they weren’t heavily if at all punished. But we’re at a stage where everyone now knows what the rules are.

    That doesn’t happen overnight – it took time, and yes some will win or lose in the short term – but relatively quickly it settles down.

    Newcastle Utd know right now what they can and can’t get away with, and they’ll abide. If their take over was 5 years ago, it’d have been a free for all and see what they get hit with.

    This whole process will take time.

  12. If any team is found breaking the budget cap then they need punishing harshly. Better to get it dealt with now then create bigger potential problems further down the line.

  13. Just like the 10 car length rule behind the safety car, I could care less if there is a cost cap or there isn’t a cost cap, but if you’re going to have it in the regulations, then it needs to be enforced. When a rule is created, the methods for enforcing the rule need to be determined, along with the penalties for breaking the rules.

  14. I think strict punishment needs start at the 1% level, not 5%, and by strict punishments I mean drop in championship position. Every 1% over should drop the team and both drivers by one place.

    1. Of course, but in that case, I would suggest to also include unnecessary engine replacements to be added. If you replace an engine that has failed, I’m OK-ish, but teams that replace engines for performance reasons only, and have been lobbying to get Engines out of the “cost cap” are also playing dirty. What’s the difference between replacing a broken wing with a fixed design and replacing a worn engine? Can you see why the cost cap logic is a bit silly? And who needs to pay the bill for a stupid crash taking out a few competitor cars?

      1. Engine supply costs aren’t included in the cost cap.

        1. @Optimaximal: And you don’t find that a bit hypocritical? Cost cap issues arising from crashes outside your own influences are included, but you can swap multiple engines in a single weekend for no other reason than extra performance? Key personnel is excluded from the cost cap, but the guy cleaning the floor in the shop is kicked out because he’s too expensive? However you’re looking at it, it feels wrong, if you ask me.
          How do they calculate the price of a self-produced component anyway? Labour costs in Italy are not 1-one-1 comparable with those in the UK, USA or India for instance… Material costs depend on the deals brokered between the team and the source, but Ferrari, Mercedes and Alpine can use side deals to get bargains for their race-team by placing compensation orders in their other departments.

      2. It has always been the case in motorsports that damage to your car during an event is part of the cost of going racing, no matter whose fault it was.

        Also, unless there is one driver who is causing significantly more accidents than others or someone intentionally causing accidents, it’s all swings and roundabouts. Overall, it levels out.

        Do remember, too, that there are still several teams operating on a total budget below the cost cap. They’ve had to accept that they will encounter accidents which cost them money, even if they weren’t their fault, and budget accordingly. This makes it sound particularly funny to hear the “big boys” complaining about it and admitting that they can’t budget for unexpected occurrences…

  15. Well, remembering how the vital technical regulations were enforced regarding fuel injection, I’d estimate major breaches of the rules will be resolved behind closed doors and without admitting one or more teams did anything wrong.

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