The hard numbers behind Red Bull's cost cap penalty

Christian Horner, naturally, wasn’t happy with the extent to which his Red Bull squad was punished late last year for breaching the 2021 cost cap – the first year of Formula 1’s precious new financial restrictions put to the test immediately. Red Bull’s rivals, equally naturally, weren’t happy either, feeling the punishment hadn’t gone far enough. The FIA, having handed out the penalty once Red Bull had entered into an Accepted Breach Agreement (ABA) for what constituted a ‘minor’ overspend breach, acknowledged the contrasting positions.

In these circumstances a good compromise means all parties end up equally unhappy, which is what the FIA achieved. But the situation is more complicated, chiefly because F1’s nature means any advantage Red Bull gained by going £1.8m over the 2021 cost cap limit of $145m could very well still be felt in the coming campaign – and even seasons to come. Alternatively, the penalty it’s now serving could actually harm Red Bull over an even longer period.

The full penalty issued last October is this: a 10% reduction of Red Bull’s aerodynamic testing allowance for 12 months and a $7million fine. Crucially, the fine is separate to the cost cap – so Red Bull will still be able to spend the full $142.4m allowed for 2022 and $135m for 2023. And by accepting an ABA, Red Bull removed the risk of an even harsher punishment being handed down had the case gone to the FIA’s Cost Cap Adjudication Panel and potentially higher.

This is significant because, as per the FIA’s judgement, had Red Bull “applied the correct treatment within its Full Year Reporting Documentation of [its] Notional Tax Credit” then in fact it would have overspent by just £432,652. Red Bull also took issue with other parts of the FIA’s findings – famously its 2021 catering spend, but also the rule change regarding how car parts can be carried over for heritage use after the team’s accounts submission was made and calculations surrounding sick pay. But Horner says Red Bull entered into the ABA because “we felt it’s in everybody’s interests to say, ‘we close the book.’”

Verstappen’s titles in question?

By accepting the ABA, Red Bull made certain it would avoid the potential points deduction or cost-cap-figure reduction options a Cost Cap Adjudication Panel might have considered at the next legal level. For the avoidance of doubt, there was next to no chance of Max Verstappen being stripped of his 2021 title even if Red Bull had gone to the next stage, since such penalties are applied to current and future campaigns rather than being meted out retrospectively.

The penalties issued to Red Bull will have no retrospective impact on seasons gone by, meaning Verstappen's world titles weren't in doubt

Photo by: Zak Mauger / Motorsport Images

Such clarifications are important because some of the more deranged quarters of F1’s online fandom immediately began agitating for the 2021 title to be readdressed in Lewis Hamilton’s favour. There was also plenty of social media clamour over the ABA process itself – that Red Bull was supposedly ‘picking its punishment’ – despite this being clearly enshrined as an option in the rules. For the FIA, it’s an important one since it means the quick conclusion Horner points out can be reached, but these come with the understanding that the genuinely ‘draconian’ penalty options are removed.

So, Verstappen’s two F1 titles are, legally speaking, untouched by this scandal. The first will forever be tainted by the Abu Dhabi saga (not his fault), while the second included this whole sorry cost cap mess. But what comes next for Verstappen and his team?

PLUS: How much will Red Bull's aero testing penalty really hurt?

The $7million fine is but a scratch for Red Bull, bar the damage to its reputation in accepting it was guilty of a regulations breach. But the sporting handicap Horner fears has handed a clear gain to main rivals Ferrari and Mercedes is much more problematic. It will be a central theme for the upcoming campaign, plus, potentially, additional seasons too.

In terms of a real-world impact of the penalty, Red Bull should have been allowed to run its wind tunnel 224 times in each ATP but will now get just 202. For comparison, as the 2022 runner up, Ferrari can conduct 240 runs

Red Bull has lost 10% of its aerodynamic testing allowance for most of 2023. The restriction on how much and how fast it can run its wind tunnel systems and use its Computational Fluid Dynamics (CFD) software will expire on 26 October. But Red Bull won’t just be able to go back to the full whack of its systems come the end of the 2023 season and the critical early development phase for its 2024 challenger. This is thanks to F1’s first attempt at a minor form of performance balancing being added to the Aerodynamic Testing Restrictions.

The penalty spot

F1 has eschewed such unsophisticated (although nevertheless effective) drags on car performance such as adding success ballast or ‘Balance of Performance’ technical adjustments, as deployed in the World Endurance Championship. Instead, it got very F1 by adding a sliding scale of aero restriction allowances to the existing rules back in 2021.

Then, it set fifth place as the middle point where the team that finished fifth in the 2020 constructors’ championship (Alpine) would be allowed to stay at the established limit on wind tunnel and CFD usage, for all of which the teams must submit covering data to the FIA for auditing within six Aerodynamic Testing Periods [ATPs] of nine, eight, eight, ten, eight and nine weeks – spread through the year with the longest incorporating the summer break. In 2021, the scale split the reduced or increased allowance by 2.5% for a place. This meant Mercedes started off with a 90% allowance of its permitted use in 2020, while Williams could go to 112.5%.

Red Bull's new car would already have been hit by restrictions under the sliding scale that governs wind tunnel and CFD usage

Photo by: Glenn Dunbar / Motorsport Images

For 2022, this system was beefed up – with the gaps between the teams increasing to 5% and the constructors’ winner going down to 70% of the typical allowances and the last-placed competitor allowed up to 115%, with seventh place (Aston Martin for the start of 2023) at the existing 100% mark. So, for the coming season as the 2022 constructors’ champion, Red Bull should have been at that 70% mark for its wind tunnel operations and CFD usage. But, with the cost cap penalty, that all comes down to 63%.

In terms of a real-world impact of the penalty, Red Bull should have been allowed to run its wind tunnel 224 times in each ATP but will now get just 202. For comparison, as the 2022 runner up, Ferrari can conduct 240 runs. This is a gain for the Scuderia of nearly 20% in real-world application (so, not just its ATR allowance percentage minus Red Bull’s). Mercedes is set to gain 54 wind tunnel runs per ATP compared with Red Bull.

When it comes to CFD usage, Red Bull is down 140 test items compared with what it should have been able to model in each 2023 ATP (1400), while Ferrari can conduct 1500 simulations and Mercedes 1600. At 359 wind tunnel runs and 2,300 CFD items which can be simulated, Williams can test nearly double what Red Bull can in the first half of 2023.

That’s the first of several important caveats with these figures. As it did in 2021 and 2022, the sliding scale will change for each team at the halfway stage of the calendar year – the start of 2023’s third ATP – based on their constructors’ championship position at that stage. But Red Bull will continue to lose 10% of whatever allowance it has earned by this point until 26 October.

It should also be noted that the penalty concurrently covers how long Red Bull can run with its wind tunnel speed going higher than 15m/s, plus the duration of how long its tunnel is running at a lower speed – 5m/s – with any further drop not counting towards the allowance. Red Bull also faces the same 10% cut when it comes to the formula by which the FIA allows teams’ CFD systems to spend time assessing the results of the simulation running.

Deep impact, or gone in 60 seconds?

The first-ever penalty for breaching F1’s cost cap will definitely have a sporting impact. The question, inevitably, is by how much.

“If you look at the other teams, they will say we have been light [on Red Bull],” FIA president Mohammed Ben Sulayem said last year. “And the penalty? Some of them want them to be hanged and they want to see blood. And the [guilty] teams themselves see it as huge on them. So, where do you [fairly] draw that?”

Horner believes the changes will cost Red Bull between 0.25s and 0.5s per lap, but that figure is disputed

Photo by: Red Bull Content Pool

Red Bull saw things thusly: “It is an enormous amount,” said Horner. “That represents anywhere between quarter and half a second worth of lap time.” Horner also lamented his team’s “relic of the Cold War” wind tunnel – refurbished early this century but still the oldest in F1 – which means the effect of the ATR squeeze would be magnified since it takes longer to get up to the highest permitted speeds compared with newer systems. This suggestion must be balanced against the general aero might of Red Bull’s 
cars since it hit the front of the grid in 2009…

Ferrari railed against what is viewed as imbalance between what it suggested Red Bull had been able to gain by spending “€2 million [extra]”, according to racing director Laurent Mekies, who added: “We at Ferrari think that this amount is worth around a couple of tenths [per lap] and so it’s easy to understand that these figures can have a real impact on the outcome of the races, and maybe even a championship.”

At Mercedes, team boss Toto Wolff admitted Red Bull’s penalty was considered “too little” but chose to focus on praising the FIA showing “strong governance”. His director of trackside engineering, Andrew Shovlin, suggested the 
pace impact Horner fears for Red Bull’s 2023 
car would be more like “a tenth” or “maybe 
two-tenths at the upper end”.

The squeeze will be felt when it comes to the upgrade programme for Red Bull’s new challenger and the initial stages of design for its 2024 car too

The FIA had to act. It’s no exaggeration to say the cost cap has been pivotal in F1’s current boom, giving teams financial stability which has made their values rocket. Without a penalty in this instance, the principle would have been badly undermined, potentially fatally weakened: the outcome of the FIA’s interpretations in assessing Red Bull’s accounts was noted by every team. Should a similar breach over the 2022 cost cap be revealed this year, although a precedent has been established, it should be expected a harsher penalty would be applied given the cost cap’s newness was a factor in the FIA’s judgement.

Falling down

Outside Red Bull, there is a sense the penalty is little more than a slap on the wrists. In all likelihood it’s more than that but, at the same time, its impact won’t be sending Red Bull tumbling down the grid.

The aero testing restrictions will have been felt in the design process for its 2023 car, which must incorporate the higher floors and diffuser changes designed to eliminate porpoising – not that this was much of an issue for Adrian Newey’s design team. But the squeeze will be felt when it comes to the upgrade programme for Red Bull’s new challenger and the initial stages of design for its 2024 car too.

It will be difficult to determine how much impact the penalty has on Red Bull if its rivals improve

Photo by: Andy Hone / Motorsport Images

The real problem is it’s going to be very hard to definitively see just how much Red Bull is harmed by its cost cap penalty. While Red Bull is indeed being held back, its rivals can make their own gains. Mercedes team insiders feel there was a 0.3-0.4s performance loss sealed into the concept of its flawed W13 which it hopes it has unlocked this off-season. Ferrari gains just by fully addressing the reliability and strategy issues that beset its 2022 campaign, let alone improving its car package.

Then there’s the impact of the design tools and systems all teams have spent years implementing – Red Bull isn’t going to lose such capability, it will just have to be even more efficient in its operations until late October. And, finally, while it will argue the immaturity of the latest ground-effect rules means it could be making bigger gains were it not for its aero testing handicap, Red Bull will go into 2023 drawing on running what was proved to be by far the best car on the biggest spread of track types in 2022.

That should cement its place as the pre-season favourite heading into the 2023 campaign now so near. But, should things indeed be closer than the walkover Red Bull managed in 2022, Red Bull will loudly point to the ATR hit. And if 2023 proves to be 2022’s second chapter, its rivals will say the FIA was too lenient in its first cost cap penalty. That’s just how the ‘Piranha club’ works...

Should Adrian Newey's technical group keep Red Bull at the front, many will argue that the penalty levied against the team wasn't harsh enough

Photo by: Erik Junius