The one thing that can't be sacrificed amid Red Bull’s F1 overspend controversy

At the 2019 United States Grand Prix, F1’s owner Liberty Media and the FIA held a grand reveal for the new era rules that was originally going to be unleashed for 2021. While the centrepiece of the media event that day was the showing off of a windtunnel model of a new ground effect car, the press conference made clear there would be a more holistic approach to grand prix racing that would bring together a host of aspects to make the racing better.

Part of that came from delivering a car that could help drivers follow their rivals more closely, but of equal importance was the move towards the cost cap era that would level up the playing field between the front and the back of the grid. No longer would grand prix racing be about the big spenders simply writing cheques to buy their way to the top. Now, the smartest brains who could use the same resources better would have their own chance of success.

It was also about long term survival too, because a spending arms race always had the danger of teams deciding that one day the expense that came with being in F1 no longer matched the reward for being a part of the show. Get three or four teams deciding the same and a mass walk out would leave the world championship on its knees.

While F1 had escaped such a collapse, there were times – especially amid cycles of financial crisis – where things had got dangerously close to the edge. F1’s chiefs knew they needed to future-proof themselves from dangers that lurked around the corner – like the COVID pandemic.

As its managing director of motorsport Ross Brawn said at the Austin event of the plan for cost restrictions: "They are essential for the well-being of F1. Budgets have been escalating. F1 is almost a victim of its own success in that the rewards of success are so valuable that the justification for investment keeps coming."

And in words that have re-emerged on social media this week, in the wake of the FIA’s findings that Red Bull breached the 2021 cost cap limit, ensuring everyone stuck to the newly imposed limits was essential if the new system was going to work. For the one thing that would be worse than having no limit would be some teams not respecting the rules and spending more cash, while others were forced to sit back and watch.

When the cost cap was announced, Brawn declared that punishments for violations would be severe - but how this will work out in reality is as yet unclear

Photo by: Patrick Vinet / Motorsport Images

As Brawn said: "Whereas before we had the resource restriction, which was a gentlemen's agreement between teams – well there's not many gentlemen in the paddock I'm afraid, and that was a failure.

"But this has teeth. If you fraudulently breach the financial regulations, you will be losing your championship. So it has serious consequences if teams breach these regulations."

The focus on the cost cap right now is obviously on what Red Bull did. And there are two critical themes here. Why did its calculation put it several million dollars below the cost cap limit but the FIA deemed it to be over And, in finding the team guilty of breaching the cost cap, what will the governing body do as a sanction? Does the Milton Keynes-based squad get the book thrown at it with the harshest of sanctions that its rivals want meted out, or will the FIA go soft as the rules are in their infancy?

If the FIA goes too lenient over something that Red Bull may argue was accidental or not much money, then the floodgates are open for other teams to ignore the rules going forward

A lot is hanging on how things play out over the next few weeks, especially in terms of how Red Bull’s rivals treat the cost cap going forward once they know what sanctions have been dished out. With scope for there to be a simple calculation of the performance benefit Red Bull got from any overspend (0.1 seconds per $1 million), teams will weigh up what is on offer from busting the limit against what the ultimate penalty is.

For example, a $2 million dollar overspend for 0.2 seconds of laptime that could help produce wins and the hundreds of millions of pounds of commercial benefits from winning a championship could be a bargain if the title stands and a small fine is handed out in return.

That is the tightrope that the FIA needs to balance on right now. If it goes too lenient over something that Red Bull may argue was accidental or not much money, then the floodgates are open for other teams to ignore the rules going forward.

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The precedent will be set for teams to adjust their cost cap to be within minor breach territory rather than below the limit entirely, and that is then suddenly a $7.5 million difference between those willing to take the risks against those that choose to follow the letter of the law.

How will Red Bull’s rivals treat the cost cap going forward once they know what sanctions have been dished out?

Photo by: Carl Bingham / Motorsport Images

Such an effective collapse of the cost cap would be a bitter blow not just to the top teams but to squads further back. F1’s era of having a spending limit has given team owners the assurances that were not present in the past of F1 not being a bottomless money pit. Manufacturers, company owners and individual entrepreneurs now know roughly what the spending requirements are, and also that F1 can be a decent profit centre rather than a pure loss leader.

As Alfa Romeo team principal Fred Vasseur said recently: “From my point of view, and perhaps also because we are a small team, I think that the Financial Regulation was the biggest move of the F1 over the last 20 years. And we don't have to jeopardise something like this for lack of decision. If it’s the end of the cost-cap, for me it's not the end of the F1 but almost. We have to take action.”

There has been so much pain undertaken up and down the grid, and hundreds of people have had to be made redundant, to make the cost cap work. But that short term hurt has been for the greater good in leaving F1 in the strongest financial state it has been in for decades.

Sure the cost cap is not perfect - and teams are gaming the system as much as possible to shift direct costs outside of their F1 operations – but if everyone is operating to the same understanding of what they are up to, then that is still good enough. To risk throwing the cost cap away now would be a huge mistake, as the ramifications would be immense.

For the top teams, the constraints of efficient spending that have tempered their updates would be unleashed if they suddenly decided that busting the limit in a small way was the right thing to do. The arms race would escalate. At the smaller teams, the spending gulfs between them and the bigger outfits would widen: wrecking Liberty’s vision of every team on the grid having a shot at winning on their best of days.

If the costs continue to increase and suddenly teams become money pits, then F1 returns to the realm of a sport where having 10 secure competitors on the grid is not a given. Whatever the FIA’s eventual findings and outcome of the Red Bull situation, it goes far beyond just some minor overspend in 2021.

The very solid ground that F1 finds itself on risks being destabilised if it’s not dealt with properly. Throwing away all the good that has come from the cost cap is something that it simply cannot afford to let happen.

There is a considerable risk that ditching the cost cap would have dire implications for F1's smaller teams

Photo by: Alfa Romeo