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F1 cost cap loophole closed off by FIA

The FIA has closed off a potential loophole in Formula 1’s cost cap regulations to prevent teams from making use of staff outside of spending restrictions, Autosport has learned.

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As part of what sources have suggested is a ramped-up effort by motor racing’s governing body to ensure compliance with the cost cap rules, it has now stepped in regarding the use of special project divisions outside of F1 teams that some suspected were being used to help find performance gains.

In recent years it has been common for F1 teams to employ senior technical staff to work in separate divisions on technical projects to exploit knowledge gained in grand prix racing and sell it to the wider business world.

As examples, Red Bull has its Advanced Technology division, McLaren has Applied Technologies, Mercedes has Applied Science and Aston Martin has Performance Technologies.

These have all been successful and worked on multiple projects involving road cars, America’s Cup yachts, bicycles and other designs.

But in the wake of suspicions that some were perhaps gaming the system and using these divisions to further F1 knowledge on the side outside of the cost cap, before passing that information back to their teams free of charge, the FIA has stepped in.

In a technical directive that was originally drafted earlier this year but has recently been revised and put in to force, the FIA has made clear to teams that they will not be allowed to transfer any Intellectual Property from projects running outside of their F1 operations back in to the squad without that work falling under the cost cap.

TD45, as it is known, states that while teams remain free to run these special projects divisions, any IP from them that is used by F1 teams must be accounted for under the cost cap, so cannot come from free sources within the same company.

Max Verstappen, Red Bull Racing RB19, Lewis Hamilton, Mercedes F1 W14, Fernando Alonso, Aston Martin AMR23, George Russell, Mercedes F1 W14, Esteban Ocon, Alpine A523, the rest of the field at the start

Max Verstappen, Red Bull Racing RB19, Lewis Hamilton, Mercedes F1 W14, Fernando Alonso, Aston Martin AMR23, George Russell, Mercedes F1 W14, Esteban Ocon, Alpine A523, the rest of the field at the start

Photo by: Andy Hone / Motorsport Images

F1 knowledge can still be freely passed out to the technical divisions, so can continue be utilised in outside business interests.

There has been no formal statement from the FIA about the matter, and when approached by Autosport several teams with such technical divisions insist that they have fully complied with the rules and welcome the clarification.

However, one leading F1 source with good knowledge of the situation, said that TD45 had already had triggered changes.

“It’s had an impact,” said the insider. “Some have been forced to act because they realised what they were doing is no longer allowed.

“But the difficult part is they will have been doing it since January 1 (when the TD declared a cut off point), so they will have had a spend up until this point that they now need to address and somehow claw back.”

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Suspicions over teams exploiting the use of F1 staff deployed to outside operations has been prevalent since the start of the cost cap.

Alpine team principal Otmar Szafnauer said earlier this year that bigger squads had found ways around employing staff so that they did not count for the cost cap.

“I think what some of the other teams are now doing, the bigger teams, is they're looking to exploit or have a better understanding of where there's some loopholes or some organisational changes you can make to actually stuff more people under that budget cap,” he said. “And we're not there yet.

“They're looking at: ‘I got rid of 100 people, but now I want to hire them back’. They can find spots for them, where they either don't count as a whole person or they do some marketing stuff or whatever it is, or they work on a boat for some of the time.”

The arrival of TD45 comes against the backdrop of what several sources have said is a much more thorough effort by the FIA to investigate team spending this year as part of its cost cap analysis.

It is understood that the governing body has been visiting team factories in recent weeks for forensic analysis of their finances, with one suggesting that the latest questionnaire from the governing body regarding compliance now totals more than 100 questions – far higher than 12 months ago.

Last year, Red Bull was fined $7 million and given a reduction in windtunnel development time for overspending during 2021.

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