Full FIA report on Red Bull F1 cost cap breach and penalty

Red Bull has been given a $7 million fine and a reduction on aerodynamic testing in its agreement on its penalty over its Formula 1 cost cap breach in 2021.

Full FIA report on Red Bull F1 cost cap breach and penalty

Here is the FIA’s report in full:

An Accepted Breach Agreement (“ABA”) dated 26 October 2022 has been entered into by the Cost Cap Administration and Red Bull Racing F1 Team (“RBR”) pursuant to Article 6.28 of the FIA Formula 1 Financial Regulations (“Financial Regulations”). The Financial Regulations are issued by the FIA and form part of the terms and conditions of participation in the FIA Formula One World Championship.

The Cost Cap Administration recognised that RBR has acted cooperatively throughout the review process and has sought to provide additional information and evidence when requested in a timely manner, that this is the first year of the full application of the Financial Regulations which are a very complex set of rules that competitors were required to adapt to and that there is no accusation or evidence that RBR has sought at any time to act in bad faith, dishonestly or in a fraudulent manner, nor has it wilfully concealed any information from the Cost Cap Administration.

The Cost Cap Administration considered it appropriate, in these circumstances, to offer to RBR an ABA to resolve this matter on the terms set out below, given the limited nature of the Procedural Breach in issue and the fact that the Minor Overspend Breach falls at the lower end of the <5% minor overspend range, and RBR’s willingness to accept the breaches and to cooperate with the Cost Cap Administration. That offer was accepted by RBR.

The ABA concerns:

• RBR’s submitted Relevant Costs reported in its 2021 Full Year Reporting Documentation of £114,293,000;
• Subsequent to the findings of the Cost Cap Administration, a Procedural Breach committed by RBR pursuant to Article 8.2(e) of the Financial Regulations due to the submission of inaccurate Full Year Reporting Documentation in respect of the Full Year Reporting Period ending on 31 December 2021 because it inaccurately excluded and/or adjusted costs amounting to a total of £5,607,000 in its 2021 Full Year Reporting Documentation; and
• Consequently, a Minor Overspend Breach committed by RBR under Article 8.10(b) of the Financial Regulations because its Relevant Costs, as adjusted by the FIA, exceeded the 2021 Cost Cap of £118,036,000 by less than 5%, namely by £1,864,000 (i.e., 1.6%).

Summary of ABA terms and sanctions

In accordance with the findings of the Cost Cap Administration, RBR has acknowledged that the Reporting Documentation submitted by it included the following incorrectly excluded and/or adjusted costs:

1. Overstated excluded costs pursuant to Article 3.1(a) of the Financial Regulations (concerning catering services);
2. Costs pursuant to Article 3.1(w) of the Financial Regulations (concerning consideration and associated employer’s social security contributions);
3. Costs pursuant to Article 3.1(h)(i) of the Financial Regulations (in respect of Non-F1 Activities), as those costs had already been offset within Total Costs of the Reporting Group;
4. Costs pursuant to Article 3.1(k) of the Financial Regulations (in respect of bonus and associated employer’s social security contributions);
5. Understatement of Relevant Costs in respect of a gain on disposal of fixed assets by failing to make the necessary upwards adjustment;
6. Costs pursuant to Article 3.1(q) of the Financial Regulations (concerning apprenticeship levies);
7. Costs pursuant to Article 3.1(h)(ii)(i) of the Financial Regulations (concerning consideration and associated employer’s social security contributions);
8. Understatement of Relevant Costs in respect of provisions set forth by Article 4.1(a)(i) of the Financial Regulations (concerning the cost of use of Power Units);
9. Costs pursuant to Article 3.1(h) (i) of the Financial Regulations (concerning consideration and associated employer’s social security contributions);
10. Understatement of Relevant Costs in respect of provisions set forth by Article 4.1(f)(i)(B) of the Financial Regulations (concerning use of inventories);
11. Clerical error in respect of RBR’s calculation of certain costs re-charged to it by Red Bull Power Trains Limited;
12. Certain travel costs pursuant to Article 3.1(r) of the Financial Regulations;
13. Costs of maintenance pursuant to Article 3.1(i) of the Financial Regulations.

And further that consequently its Relevant Costs for the 2021 Reporting Period exceeded the 2021 Cost Cap by £1,864,000 (1.6%). RBR has therefore accepted that it has breached: (i) Article 8.2(e) of the Financial Regulations due to its failure to file accurate Full Year Reporting Documentation in respect of the 2021 Full Year Reporting Period, and (ii) Article 8.10(b) of the Financial Regulations due to its failure to keep its Relevant Costs under the 2021 Cost Cap.

The FIA acknowledges that had RBR applied the correct treatment within its Full Year Reporting Documentation of RBR’s Notional Tax Credit within its 2021 submission of a value of £1,431,348, it would have been considered by the Cost Cap Administration to be in compliance with Article 4.1(b) of the Regulations and therefore RBR’s Relevant Costs for the 2021 Reporting Period would have in fact exceeded the 2021 Cost Cap by £432,652 (0.37%).

On that basis, RBR has accepted the imposition of the following sanctions:

a) RBR must pay a Financial Penalty of USD 7,000,000 to the FIA within 30 days of the date of execution of the ABA (Article 9.5 of the Financial Regulations);
b) RBR receives a Minor Sporting Penalty in the form of a limitation of RBR’s ability to conduct aerodynamic Testing during a period of 12 months from the date of execution of the ABA through the application of a reduction of 10% of the Coefficient C used to calculate the individual Restricted Wind Tunnel Testing (RWTT) and Restricted Computational Fluid Dynamics (RCFD) limits applicable to each Team as set out in Article 6 of Appendix 7 to the FIA Formula 1 Sporting Regulations. For example, if the Coefficient C, based on RBR’s championship position is 70%, the effective new value of C will be: CNEW=70% x (1-0.10) = 63.0%; and
c) RBR bears the costs incurred by the Cost Cap Administration in connection with the preparation of the ABA.

The decision of the Cost Cap Administration to enter into the ABA constitutes its final decision resolving this matter and is not subject to appeal. Non-compliance by RBR with any terms of the ABA will result in a further Procedural Breach under Articles 6.30 and 8.2(f) of the Financial Regulations and automatic referral to the Cost Cap Adjudication Panel.

shares
comments
FIA hands Red Bull $7m fine, aero testing reduction for cost cap breach
Previous article

FIA hands Red Bull $7m fine, aero testing reduction for cost cap breach

Next article

Can Mexico’s home hero provide its latest F1 magic moment?

Can Mexico’s home hero provide its latest F1 magic moment?
Who were the fastest drivers in F1 2022? Plus

Who were the fastest drivers in F1 2022?

Who was the fastest driver in 2022? Everyone has an opinion, but what does the stopwatch say? Obviously, differing car performance has an effect on ultimate laptime – but it’s the relative speed of each car/driver package that’s fascinating and enlightening says ALEX KALINAUCKAS

Why F1's nearly man is refreshed and ready for his return Plus

Why F1's nearly man is refreshed and ready for his return

He has more starts without a podium than anyone else in Formula 1 world championship history, but Nico Hulkenberg is back for one more shot with Haas. After spending three years on the sidelines, the revitalised German is aiming to prove to his new team what the F1 grid has been missing

Formula 1
Jan 29, 2023
The potential-laden F1 car that Ferrari neglected Plus

The potential-laden F1 car that Ferrari neglected

The late Mauro Forghieri played a key role in Ferrari’s mid-1960s turnaround, says STUART CODLING, and his pretty, intricate 1512 was among the most evocative cars of the 1.5-litre era. But a victim of priorities as Formula 1 was deemed less lucrative than success in sportscars, its true potential was never seen in period

Formula 1
Jan 28, 2023
Why Vasseur relishes 'feeling the pressure' as Ferrari's F1 boss Plus

Why Vasseur relishes 'feeling the pressure' as Ferrari's F1 boss

OPINION: Fred Vasseur has spent only a few weeks as team principal for the Ferrari Formula 1 team, but is already intent on taking the Scuderia back to the very top. And despite it being arguably the most demanding job in motorsport, the Frenchman is relishing the challenge

Formula 1
Jan 27, 2023
The crucial tech changes F1 teams must adapt to in 2023 Plus

The crucial tech changes F1 teams must adapt to in 2023

Changes to the regulations for season two of Formula 1's ground-effects era aim to smooth out last year’s troubles and shut down loopholes. But what areas have been targeted, and what impact will this have?

Formula 1
Jan 26, 2023
Are these the 50 quickest drivers in F1 history? Plus

Are these the 50 quickest drivers in F1 history?

Who are the quickest drivers in Formula 1 history? LUKE SMITH asked a jury of experienced and international panel of experts and F1 insiders. Some of them have worked closely with F1’s fastest-ever drivers – so who better to vote on our all-time top 50? We’re talking all-out speed here rather than size of trophy cabinet, so the results may surprise you…

Formula 1
Jan 25, 2023
One easy way the FIA could instantly improve F1 Plus

One easy way the FIA could instantly improve F1

OPINION: During what is traditionally a very quiet time of year in the Formula 1 news cycle, FIA president Mohammed Ben Sulayem has been generating headlines. He’s been commenting on massive topics in a championship that loves them, but also addressing necessary smaller changes too. Here we suggest a further refinement that would be a big boon to fans

Formula 1
Jan 24, 2023
How can McLaren keep hold of Norris? Plus

How can McLaren keep hold of Norris?

Lando Norris is no longer the young cheeky-chappy at McLaren; he’s now the established ace. And F1's big guns will come calling if the team can’t give him a competitive car. Here's what the team needs to do to retain its prize asset

Formula 1
Jan 24, 2023