The FIA has clarified a key part of Formula 1’s Financial Regulations in an update issued to teams last month.
TD45, a technical directive and cost cap administration clarification, provides added detail on how the sport’s governing body interprets the distinction between teams’ F1 activities and non-F1 activities.The difference between the two is important because non-F1 activities are excluded from teams’ spending under the budget cap. If any team was able to gain benefits for its F1 programme through non-F1 activities, they could gain an advantage from spending outside of the budget cap.
Several teams are involved in businesses outside of F1 and in some cases began doing so long before the budget cap was introduced in 2021. Others formed technology businesses and later sold them.
Mercedes has an Applied Science division which has developed technologies for use in the America’s Cup sailing race. Red Bull’s Advanced Technologies, which supplies both the world champions and AlphaTauri, has contributed to another entrant in the same competition and is developing the RB17 road car. Aston Martin’s comparable division, Aston Martin Performance Technologies, was set up in 2021. No team has been accused of breaking any rules.
However the FIA’s clarification indicates it is alert to the potential for problems to arise in this area. The Financial Regulations are still relatively new. The first submissions made by the 10 teams under it were evaluated last year and led to three penalties for breaches. Red Bull were fined and penalised for over-spending by £1.8 million, and Aston Martin and Williams were fined for procedural breaches.
The Financial Regulations detail a list of costs which may be excluded as part of teams’ non-F1 activities when the expenditure on them can be identified as being separate from their F1 activities. They include costs relating to employees’ social security payments, consumption of electricity, gas and water, use of equipment and costs of parts plus consumables and outsourced services.
F1 teams were due to submit details of their spending during the 2022 season by March 31st this year. Last year the FIA issued certificates of compliance to those whose spending was found to be in line with the cap on October 10th.
FIA president Mohammed Ben Sulayem said this week they are “progressing well with the review of 2022 Financial Regulations submissions.”
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Proesterchen (@proesterchen)
23rd June 2023, 14:58
Isn’t the intrigue beautiful? What could be more interesting than a Technical Directive on accounting practices?
drmouse (@drmouse)
23rd June 2023, 15:57
What could be more interesting than a regulation specifying to the mm the precise dimensions of a certain piece of bodywork? Or the precise time and position a driver must be for a ceremony?
F1 runs on details like this. They are dull as dishwater, but they are important.
Lewisham Milton
23rd June 2023, 16:09
Tyre management?
SteveP
23rd June 2023, 16:23
I’ve seen guys from the finance dept. get flushed faces and sweaty palms while talking about the distinction between revenue and capital spend.
They should probably get out more, but…
NS Biker (@rekibsn)
23rd June 2023, 18:18
Brings to mind the classic Monty Python Lyon Tamer skit. One of my favourites.
T
23rd June 2023, 17:22
Realistically speaking, how could this be patrolled and governed?
I mean gardening leaves are barely serving their purpose(s) cough cough Aston Martin
If Newey ‘discovers’ a development path while overseeing the RB17 road car, who and what exactly can be done to hinder or even slow down transference into the RB20. I mean as I understand, the RB17 road car is basically a no holds barred ground effect track car. In what universe would the mere existence of this project not have any (developmental) effect whatsoever in Red bull’s F1 tech tree
Fer no.65 (@fer-no65)
24th June 2023, 10:36
It can’t. All the engine manufacturers develops engines outside F1. They are at the top of the technological game there too. Whatever knowledge they get, they can apply to the engines they build in F1. They can’t ban you for knowing stuff from outside
br47
24th June 2023, 14:42
Exactly…Mercedes were able to develop certain parts of their hybrid V6 years before anyone else (ERS ideas they pulled from their truck division). Unfortunately for all the other teams, the FIA in their infinite wisdom decided to bring Merc into the fold and help them actually write the new engine regulations or at least they used certain aspects that Merc had already developed and made it part of the regulations which gave them a massive head start.
This was squarely the fault of the FIA and shouldn’t have happened and gave Mercedes a championship run of almost a decade with a brand new team. Not saying it shouldn’t be allowed at all, but they need to figure out a way to minimize the damage that can happen from this (maybe a longer pause between engine regulation changes).
Pete
24th June 2023, 13:49
True although you’re picking on a company that makes a very small number of cars. How can we say a company as big as Mercedes or Audi that build a huge number of both road cars and racing cars don’t transfer anything at all to F1? Same for Ferrari – what’s the mechanism for ensuring that there is 0 knowledge transfer between the road car team and the F1 team? Is that what we even want….?
It’s one of the huge issues with the budget cap – there are millions of grey areas and with F1 being F1, the teams will actively explore which of those grey areas they can exploit.
Tifoso1989 (@tifoso1989)
23rd June 2023, 18:14
This has been discussed thoroughly on this proper forum where discussions about potential budget cap rules were first held.
Jonathan Parkin
23rd June 2023, 18:31
I can’t help but think there is a much simpler way to have a Cost Cap and enforce it.
In fact I know there is as someone posted a much much easier way on this very site last year
Tristan (@skipgamer)
24th June 2023, 6:45
I’d love to see the content of the directive. I just don’t understand how it could possibly work. At the end of the day the companies that own the big teams are bigger than the teams themselves. Even if you completely isolate the team from the company and account for every working hour, how can you police employees personal time?
Cheating is a part of life. As long as it’s easier to get around the rules than to follow them, then it will happen. Creative paper trail generation is a lot easier than genuinely complying with the spirit of the regulations while trying to push performance to the limit.
A cost cap has never been the answer to closer racing, not while the teams are owned by companies worth tens of billions of dollars. They will find a way to spend the money they need to win.
Ultimately, and it’s always come down to this, F1 needs to decide what it wants to be. Is it a playground for technological development, or a racing show? The former will always be at odds with the latter. If F1 wants close racing between the worlds top drivers, give them a stock car. If F1 wants a development series where engineers push technology to the limit, then let them do that.
Pete
24th June 2023, 14:10
Yep – as you say in the last paragraph, F1 has a major identity problem. The Driver’s Championship seems to be the only thing most fans care about but in reality, it’s just a side-show… The big prize in F1 is the Constructors Championship because that’s what F1 is inherently about.
If a team wins 5 Constructors Championships in a row, that tells you that they were the best team for 5 years. There’s no denying it. The combination of staff, car, drivers and so on were better than the rest so they won the Championship. It may be down to having more money, better drivers, better facilities, a better car, a better engine or whatever else. They had the best combination that makes up a team and therefore, they won the title.
If a driver wins 5 Drivers Championships in a row, what does it really tell you? Obviously they performed better than their team mate but does it really tell you anything else? Was Hamilton better than everyone else for years? Is Max now considerably better than him? Who knows….?
They seem to desperately want F1 to behave like a spec series whilst not being one but that’s never going to work.
MichaelN
24th June 2023, 20:38
F1 has decided that a long time ago. They are a racing show that has relatively small openings in the rules to attract manufacturers by enabling them to further their marketing aims. In recent times that mainly focussed on hybrid engines. Now it’s… eh… rear suspensions and venturi tunnels. Yay.
MichaelN
24th June 2023, 20:35
The whole reason Red Bull partnered with Ford is to benefit from their not-F1-related research and experience on electric technology. This obviously doesn’t just work for engines…
However, it also doesn’t necessarily mean all that much. F1 cars are very specific things due to their near endless regulations. It doesn’t take a genius to make a car that exploits ground effect for downforce, or to make an electric motor. The basic concepts aren’t that complex. But fitting that into an F1 car and making it work as part of the whole package is where it becomes a challenge.