After Red Bull driver Max Verstappen secured his second consecutive drivers championship on Sunday, the questions surrounding the legitimacy of his controversial first title were enhanced on Monday, earlier this week.
On October 10th, Formula 1’s eagerly awaited annual cost cap results were published, with nine of the ten teams awarded a 2021 cost cap compliance certificate.
Red Bull was the only team not garnering this certificate from the FIA (Formula 1’s governing body) and abiding within the $145 million cost cap in 2021. The FIA’s 2021 cost cap report stated that Red Bull committed “minor” breaches (exceeded the cap by less than $7.25 million) to the cost cap, alongside a procedural breach.
With the events of Abu Dhabi 2021 already haunting the authenticity of Verstappen’s first title, could this new revelation force the FIA to strip Max Verstappen of his 2021 drivers championship? What does the cost cap also mean for Formula 1 and sports going forward?
Find out more with me, Agastya Bajaj, on Main Stand.
What is the F1 cost cap?
The cost cap is a financial policy implemented by Formula 1’s governing body, the FIA, to limit the amount teams can spend in a single campaign.
The cost cap was first enforced in 2021 to enhance competitiveness and create a level playing field. Before the cost cap’s introduction, the discrepancy in purchasing power would make it insurmountable for lower echelon teams like Haas to bridge the gap in performance to the top teams such as Mercedes.
These budget restrictions ensure teams spend under a certain threshold, eradicating the insurmountable discrepancy to tighten the field, especially after the Silver Arrows hoisted up eight constructors titles in a row. In 2021, that specific threshold was $145 million, with teams submitting their final spending results the following March to the FIA for investigation and confirmation.
The cost cap predominately monitors car development expenditure. This includes parts on the car, features required to run the car, team personnel, car transport expenditure, and spares, for example.
The only car developmental part excluded from the cost cap is the engines. This is a byproduct of the vast array of different methods teams garner their engines from, with some manufacturing their own while others purchase their engines from third parties.
The cost cap also doesn’t entail driver, team principal, travel, marketing, licensing, and non-F1 involvement fees, allowing the FIA to hone in on car development expenditure.
Cost cap implications
If the FIA’s findings reveal a team has breached the cost cap (in this case, Red Bull), the governing body would distinguish the severity of that breach based on two metrics, a minor and major breach. A minor breach entails a team breaching the $145 million cost cap by less than 5%, around $7.25 million in financial terms. A major breach entails breaching this cost cap by above this 5% margin. With the rules being incredibly ambiguous based on the severity of the breach, punishment ranges from monetary fines to sporting penalties.
In this instance, with Red Bull supposedly committing a minor financial breach, the penalties could entail:
- Public reprimand
- Limitations to conduct future testing
- Reduction of the cost cap in the following season
- Deduction of constructors championship points
- Deduction of drivers championship points
- Suspension from one or more stages of a competition
The merited outrage
Key figures from Red Bull’s direct rivals, Mercedes and Ferrari, have been quite vocal about how breaching the cost cap, regardless of major or minor breaches, alters the outcome of the championship. In an interview with Sky F1, Mercedes boss and team principal Toto Wolff suggested the wording of minor breach “is probably not correct.”
Wolff told Simon Lazeby, Martin Brundle and Paul Di Resta, “If you’re spending $5 million more, and you’re still in the minor breach, it still has a big impact on the championship. To give you an idea, we obviously monitor closely which parts are being brought to the track from the top teams every single race, for the 2021 and 2022 season.”
“We can see that there are two top teams [Mercedes and Ferrari] that are just about the same and there is another [Red Bull] that spends more. We know exactly that we’re spending $3.5 million a year in parts we bring to the car. So then you can see the difference it makes to spend another $500,000. It would make a difference.”
Wolff described this as a cascade of events with spending over the budget affecting the results of the championship, labeling cost cap offenses as “heavyweight.”
“That’s massively heavyweight. We are using used parts, we are not running what we would want to run and we are not developing what we could be developing. We have made more than forty people redundant, so they are dearly missed in our organizations. It was a huge mammoth project to make the cap. I don't know how many tens of millions we had to restructure processes in order to be below the cap, and if someone has been not doing that or pushing the boundaries, every million [in excess spent] is a massive disadvantage [for teams complying with regulations].”
Mercedes driver and record holder for most Formula 1 victories echoed these remarks, asking the FIA for transparency with the cost cap. Prior to the cost cap findings officially being published, when the seven-time champion was asked by Sky if he was concerned with the breach, Lewis responded by saying:
“For sure, because it will put into question our values, the integrity of the sport. I remember last year as a driver, you’re always asking for updates, updates and updates whether it's fuel or whatever it is”
“I remember in Silverstone we got our last update. I remember that was almost 0.3 seconds, and I’m pretty certain it cost less than $1 million. But I remember after that needing more updates but seeing trucks [Red Bull trucks] of updates continuing to arrive on the other car and thinking, it's going to be hard to beat them in the championship if they keep bringing updates.”.
“It’s so integral to the development race. If we’d had another half a million to spend, we would have been in a different position as some of the following in the races. If we had just brought another floor, which we could’ve easily done. But that’s not the name of the game. I think it would be bad for the sport if action wasn’t taken if there is a breach, but I don’t know if there is so I will wait."
This sentiment was echoed across the paddock, with Ferrari team principal Mattia Binotto also piling increased pressure on the FIA in an interview with Sky Italia.
“For us, $4 million is what we spend on new parts during a season. $4 million is enough to pay the salary of 70 technical people, who can come up with ideas and solutions good enough for maybe half a second per lap.”
“So even if it’s officially a minor violation, it's not nothing. If we talk about half a second advantage, that advantage is also carried over to the following season.” Binotto echoed Toto and Lewis’ concerns, but also raised a valuable point on how a minor breach also affects the outcome of the championship for proceeding seasons too.
Furthermore, AMuS Paddock sources suggest “It’s not Mercedes and Ferrari demanding a severe punishment, other teams are doing it too. They also had to reduce staff or take pay cuts. Red Bull would call for unrivaled salaries, and with extra benefits like discounted leased cars. That also counts in the budget.”.
Could Verstappen lose his championship?
Yes, he could. Is it likely? No, far from it for Silver Arrow fans, unfortunately.
Under the regulations, as aforementioned, there is a possibility that Verstappen’s title gets stripped with a points deduction depending on when the overspending was committed. Considering how close the title was between Lewis and Max, with a mere seven points between the drivers, a points deduction would theoretically hand the Brit his eighth championship.
Suppose Mercedes aggressively push their concerns to the FIA, public sentiment against Red Bull becomes insurmountable, and with the knowledge of how rules were manipulated in Abu Dhabi, there is a chance Red Bull will lose their title in court. A slim and unlikely one, considering the ambiguity and lack of transparency surrounding the cost cap regulations and punishments.
That said, Verstappen’s 2021 championship validity could further wane several people. Those in the paddock provide solid points on how even a minuscule breach is championship-defining in the FIA’s terms.
There is no denying how Max Verstappen has been incredible and a worthy champion over the past two seasons. It also isn’t outrageous for fans to be under the impression that the manner of winning those titles is unfair to competitors, particularly Mercedes.
The bigger picture
With the cost cap being a predominant feature in American sports, such as the NBA and NFL, if the cost cap is successful in Formula 1, it could give other global sports the impetus to utilize it.
Especially in football, with state-owned ownership and rich billionaires taking over certain clubs, a cost cap with stern penalties and punishments could be the way to go to maintain competitiveness and avoid controversy in the transfer market with the sport’s FFP.
However, honing it back to Formula 1, the next few weeks are imperative for the sport and the legitimacy of Verstappen’s titles, alongside the cost cap. Should Red Bull avoid any major penalties, the cost cap could be considered negligible and ineffective.
With the information currently available on Red Bull’s breach, if penalties ensue, this could set the precedent for the cost cap to be commonly used, get closer to sporting fairness and be a step in the right direction to achieve a competitive playing field.
Sources
https://www.formula1.com/en/latest/article.what-is-the-2021-f1-cost-cap-and-how-will-it-be-enforced.4l0LPbfFgBhDxjccMseCHO.html
https://au.sports.yahoo.com/formula-one-2022-lewis-hamiltons-warning-over-potential-cost-cap-breach-fia-232251834.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAJJ1HfkFl3LkHSDDPlwqzEAPBCcFn_tVjU99vUtTF7-N-fhMhRbIn4tjq68cmoKY07mKwTTsWEoMMueOvprw9C8TqXZlT-Ih0EI2NitiblDPvZWRruTA0LBZhqX5akaAFROOzpMV2-2P5C_G3vWlAeaj4O3ILbPuj6a8M4E36xw3
https://thesportsrush.com/f1-news-5-million-not-a-minor-breach-mercedes-boss-toto-wolff-says-red-bulls-budget-cap-breach-not-a-small/
https://racingnews365.com/even-a-minor-cost-cap-violation-from-red-bull-would-enrage-ferrari
