Budget Cap Enforcement | FerrariChat

Budget Cap Enforcement

Discussion in 'F1' started by Temerian, Sep 30, 2022.

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  1. Temerian

    Temerian Formula Junior
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    With the news breaking that Red Bull substantially breached the budget cap in 2021 what is the FIA prepared to do about it? Ferrari have been complaining that Red Bull and others are also close to or exceeding the cap for this year as well. What is the mechanism for enforcing the budget rules and what does this mean for Ferrari? Gentlemen, your thoughts.
     
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  2. william

    william Two Time F1 World Champ
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    #2 william, Sep 30, 2022
    Last edited: Sep 30, 2022
    They should scrap the damned budget cap, IMO. F1 will always need a lot of money: it's the pinnacle.

    You can't have champagne taste with lemonade money !
     
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  3. SS454

    SS454 Formula 3

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    I find it hilarious that Toto Wolff is pointing fingers and making claims like a 5% over-budget is worth several tenths in track time. Yet his team has built 2 entirely different cars for pre-season testing, brought updates almost every race, and has even talked about scrapping the no sidepod design for a more traditional design.

    I like the idea of a budget cap as it was never fair for teams that were spending well under $200m a year to compete against teams spending over $400m, but man do they need a better way to police it.
     
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  4. Mosin

    Mosin Formula Junior

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    This, but while in place, it must be enforced. The more i read about it, the more details emerge that teams will not be happy should they get away with it lightly.

    Its quite a serious matter, it could ( i say could as its just a rumour ) have affected last years championship, and this years, and have a lasting affect into next year also, That must require a punishment worthy of making sure other teams do not decide the punihsment is worth the crime. other wise, its a pointless regulation that will be constantly broken because the benefit of breaking it far out weights the punishment.

    The regulation ive seen posted about ( Not sure if it is right, so a word of caution, they are likely wrong. off planet f1 ) are



    "8.13 In the event the Cost Cap Adjudication Panel determines that an F1 Team has committed a Material Overspend Breach, the Cost Cap Adjudication Panel shall impose a Constructors' Championship points deduction in accordance with Article 9.1(c)(i) and additionally may impose a Financial Penalty and/or any other Material Sporting Penalties.



    But..



    Aggravating or mitigating factors 8.14 In determining the sanctions appropriate for a particular case, the Cost Cap Adjudication Panel shall take into account any aggravating or mitigating factors.



    8.15 Examples of aggravating factors include:

    (a) any element of bad faith, dishonesty, wilful concealment or fraud;

    (b) multiple breaches of these Financial Regulations in the Reporting Period in question;

    (c) breaches of these Financial Regulations in respect of a previous Reporting Period;

    (d) quantum of breach of the Cost Cap; and (e) failure to co-operate with the Cost Cap Administration and/or Independent Audit Firm appointed by the Cost Cap Administration



    It could get worse...."
     
  5. Jeff Kennedy

    Jeff Kennedy F1 Veteran
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    I do not see the budget cap going away as a regulation. It is most surprising to me that here we are 10/11 months after the end of last season and only now is the FIA realizing there was a serious breach. That make me believe that there needs to be more done on pre-season budget estimates and in-season reporting.

    As for punishment for these, only currently alleged, infractions, then do not change the race results or last year's championship winner. Instead take back from Red Bull the Constructors Championship money difference from 1st to 2nd, do the same for this year, and reduce the 2023 budget cap for Red Bull at an amount equal to the overage plus a penalty percentage. One could toss in no more updates for the remainder of this year but that would only be symbolic since it will not change this year's championship.

    IF it is true that Red Bull have also exceeded the budget in this year too then impose another financial drop in the Constructors Championship to 3rd place money with another corresponding decrease in their 2023 budget cap.

    The Drivers Championship is for glory but only the Constructors Championship pays money.

    Want to make all the other teams support the financial penalty - distribute as extra prize money the amounts that would have gone to Red Bull. Decision would be to divide the money by the sliding scale of the Constructors payout or equally divide by 19.
     
  6. jpalmito

    jpalmito F1 Veteran

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    Agree
    And the tofu is the new chateaubriand filet for the gourmets!:D
     
  7. william

    william Two Time F1 World Champ
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    Nothing is fair in love and war either. Bringing parity in a top sport is ridiculous, IMO. We aren't at club level here.

    It's a bit like asking athletes to account for the time and money they spent in training before they get in the starting blocks.

    Beside, some teams started from almost nothing in the past and climbed the ladder to become tittle winners.

    Success can be achieved through good management, patience, hard work, and sound decisions, like in any business.
     
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  8. furoni

    furoni F1 World Champ

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    This is a mess, and Ferrari doesn't deserve to win it, no one does, but, if Red Bull breached the rules, they should be disqualified, pure and simple. You cannot win because yo're able to develop all you want while other respect the limit, it's simply not fair.
    I think the budget cap is stupid, but if it's part of the rules, either you folow it or you don't, if you don't you should be disqualifyed, it's as simple as that. (of course this was exacly what mercedes did for years and yers, but in those days it was legal!)
     
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  9. furoni

    furoni F1 World Champ

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    For once i agree, Ferrari started from nothing, they built a test track, they bought Mugello and updated it to test, while others spent their money on motorhomes and simulators, and in the end, they prohibited everyone to test. This wasn't fair, if Ferrari had that advantage, it's because they invested on it.
     
  10. DeSoto

    DeSoto F1 Veteran

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    Teams cheat with the cars, it was obvious they were going to cheat with the budget too. For now I hope they apply appropiate penalties because rules are rules, but at some point they´ll have to apply such a heavy penalty that would kick someone out of the business and they´ll have to axe the whole budget limit issue.
     
  11. william

    william Two Time F1 World Champ
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    Yeah, what would happen if Red Bull and Aston Martin got caught, then fined heavily, or their results cancelled, and they both say. "That's enough of this, we aren't playing silly games anymore!" and then decide to start their own series? That would be 3 teams off the grid.
    What would be the FIA's response to that?
    There is always the risk when the participants don't like the management, they set their own. The FIA has been living with that threat for years. The USAC-CART-Champcar-IRL events can serve as a precedent.
    The center of gravity has changed in F1. It is now run by an US company (Liberty), but regulated by an European organisation (FIA). The conflict between expansion and restriction will become more apparent with the enforcement of the budget cap.
     
  12. Jeff Kennedy

    Jeff Kennedy F1 Veteran
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    With unlimited budgets are we ready to accept a grid of only 6 or 8 cars? 3 or 4 teams with each team's participation dependent upon the corporation's next board meeting.

    Remember when Porsche/Penske killed the original Can Am?
     
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  13. Mosin

    Mosin Formula Junior

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    And what happens if the other 7 teams decide the FIA cant apply fair and appropriate penalties and decide enough is enough also? eg Merc, want a new floor since testing, but cant because of finacial cap, still raging over lasts seasons failure to apply the rules and regulations? Or Ferrari and its new floor but got cancled due to mid season regulation change, to find out they could have just spent over the budget and got said new floor ingoring the finacial regs? Or Williams could be a head of AM and so on and so on, More teams to upset by not enforcing the rules than enforcing them, If upset teams are unhappy a sport is applying its rules and regulations they broke, it would do more harm to that companys image to leave, than to take the punishment given to them
     
  14. william

    william Two Time F1 World Champ
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    Don't agree with the Porsche Penske bit, but that's another subject.

    At the moment, the rules are preventing several interested parties to join F1, so there shouldn't be any shortage of teams.

    In general terms in business, deregulation brings growth, and there is no reason this wouldn't apply in F1.
     
  15. Temerian

    Temerian Formula Junior
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    I think the issue for me is will the teams abide by the rules they all agreed to. It seems unfair that the cap can be exceeded without real penalties. Maybe the entire hybrid scheme should be scrapped and the rules simplified to make development less costly. Limit the weight of the cars, their size and the fuel allowance and let each team figure out the best way to make fast cars within the budget cap.
     
  16. DF1

    DF1 Two Time F1 World Champ

    Wolff???

    https://www.autosport.com/f1/news/alfa-romeo-no-room-for-flexibility-on-budget-cap-breaches/10376874/

    Capito: Cost cap breach more serious than cheating on track
    Williams team principal Jost Capito says that a Formula 1 cost cap breach should be deemed a more serious offence than cheating on track.

    Other team bosses have agreed that any such breaches should trigger appropriate punishments from the FIA.

    Red Bull and Aston Martin are both understood to have overspent last season, with the former believed to be a potentially more serious case of a “material breach”.

    The penalty for such a spend – in excess of 5% of the 2021 cap limit – could extend to exclusion of the team concerned from last year’s world championship.

    Capito stressed that a breach in 2021 would also have fed into development for this season’s cars.

    “I think there's no way around not staying in the cost cap,” the German told Autosport.

    “And if somebody doesn't stay in the cost cap, it has to have serious implications. Because not having stayed in the cost cap last year is most likely development for this year's car.
     
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  17. william

    william Two Time F1 World Champ
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    #17 william, Sep 30, 2022
    Last edited: Sep 30, 2022
    Your comment is welcome in this discussion, of course, but makes me wonder how F1 managed to survived all these years BEFORE the budget cap!
    All it has done is introducing another layer of regulations on top of what was existing.
    The sport was healthy before, and not a basket case at all. Who benefits from it?

    Just like in other economic sectors, when the bills become too heavy, you relocate where the costs are less.
    Should most teams subcontract their labour intensive work to companies in Asia or Africa?
    It wouldn't take long for a team to produce carbon-fibre parts in Bangla Desh at 1/5 of the price in Europe.
    Some of the design work can be outsourced in India or the Far East, and wind tunnels built there too..
    In fact some teams could relocate completely in low-tax countries to meet the budget cap target: welcome to Dubai !
    That would seriously shake up the present structure, and see most jobs existing around F1 emigrating to low-cost locations.
    The Sauber-Audi alliance is seriously at risk since it will operate in 2 of the countries with high wages, high overheads, etc... ,
    Is that what FIA wants? Will that serve F1? I doubt it.
     
  18. Giallo 550

    Giallo 550 Formula 3

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    The whole situation is an absolute mess and another embarrassment for the FIA.

    They could deduct a percentage of points won by both RB drivers that matches the percentage by which they exceeded the cap, but that wouldn’t account for points not won by Ferrari.

    If there are no consequences, it’ll be just another example of unsporting FIA favoritism.
     
  19. SS454

    SS454 Formula 3

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    It's a sport. In sports there is supposed to be a level playing field in terms of rules and regulations. It's like allowing PED's in the olympics or any other athletic sport, and the athletes that can't afford to juice up, then too bad for them.

    Success SHOULD be achieved from all the characteristics you listed, but that is just not the truth, especially in motorsports. If it was physically possible, a team could have some of the brightest minds working 24 hrs a day, but it doesn't mean squat if you can't afford to build the parts. Money is massive, in any business. What most people don't realize, is how much politics (and of course corruption) happens in business, and of course motorsports.
     
  20. william

    william Two Time F1 World Champ
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    That's my take on it. The FIA introduced this budget cap when it wasn't needed.

    They thought it would be very "egalitarian" to put everybody on the same footing, when it's a complete absurdity.

    Now this story is proven true will open another can of worms and affect F1. Roll on FIA !!!
     
  21. SS454

    SS454 Formula 3

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    After FP2, they interviewed Toto and he went on about how difficult it is to stay within the budget, and complained of the advantages of going over, and was suggestive in his words that he thinks Red Bull has cheated. I am saying that based on what we have seen from Mercedes in just their development program, that it's very hard to believe Mercedes has not gone over budget as well.
     
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  22. SS454

    SS454 Formula 3

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    Williams went from a dominating, championship team to being forced to sell.
    BMW had a big impact in F1 between 2001 and 2007, but left.
    How many small teams have been forced to sell or get out of business in the last 10 years?
    Teams rebranding because of money issues? Benetton > Renault > Lotus (which previous Lotus became Caterham), back to Renault, and now Alpine.

    Point is, teams do not survive in F1 unless they are Ferrari or McLaren. Red Bull purchased Jaguar which used to be Stewart, and of course Mercedes purchased Brawn, which used to be Honda, and that list goes on.

    Now with the budget cap, these smaller teams have a better chance of surviving, and immediately big companies like Porsche and Audi are looking to come in.
     
  23. kandi

    kandi Formula 3

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    The budget cap restriction is a fundamental rule (a clearly stated rule) which defines the possibilities of development of the car. Is the 2021 & 2022 Championship title open again?

    Toto Wolff:
    He says that if Red Bull overspent last year, it could carry benefits through this year and into 2023.

    "The crucial part is that if you've been over in 2021, then you've been over in '22," he said. "That means you have an advantage in '23.

    "If it's true that they've [Red Bull] homologated the lightweight chassis this year, they may use it next year. So it's a really a cascade of events that can be influential in all of the three championships."
     
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  24. william

    william Two Time F1 World Champ
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    Business means competition: some sink and other survive. It's as simple as that.
    When a team don't perform, it stops attracting sponsors, and has to sell or go bankrupt.
    That's the rules of business, you develop or you get swallowed.
    The budget cap keeps in business teams that don't deserve it, and prevents others to join in.
     
  25. jgonzalesm6

    jgonzalesm6 Two Time F1 World Champ
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    In light of the budget cap breaking, here are the rules and what can happen if found to be in breach. If found to be below 5% of the budget cap, its classed as a Minor Overspend Breach and the punishment can be either a Financial Penalty or a Minor Sporting Penalty.

    A Minor Sporting Penalty can be:

    - Public reprimand
    - Deduction of WCC points
    - Deduction of WDC points
    - Suspension from one or more races
    - Limits on aerodynamic testing
    - Reduction of the Cost Cap


    If its over 5%, then its classed as a Material Overspend Breach, the punishment is WCC Points Deduction and additionally

    - Deduction of WDC points
    - Suspension from one or more races
    - Limits on aerodynamic testing
    - Reduction of the Cost Cap
    - Exclusion from Championship




    In addition to any sanctions, the Cost Cap Adjudication Panel has the power to impose enhanced monitoring in respect of an F1 Team. At its sole discretion, the Cost Cap Adjudication Panel may suspend the application of any imposed sanction in whole or in part.


    Any points deductions are taken from the season the breach relates to, so in this case, the 2021 season
     
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