Salary cap, Shmalary Cap

[Tourer]

Originally Posted by Akrapovic

Apparently Red Bull can just say they spent too much on cakes.

Not the case - RB may yet cop a significant flogging - all that remains to be seen. Does appear though that there are different interpretations at play that need to be adjudicated.

Originally Posted by Richard Casto

I think of everything posted in this thread in the past few days this is the most important. And I expect the FIA knows it.

Agree - the FIA will need to get this absolutely right - no doubt there'll be people unhappy with whatever the outcome is but as long as the FIA can justify decisions and be both reasonable if needed and firm if needed, then the organisation should come out of it looking like a good governing body. Remains to be seen of course & personally I think that leaks in advance are not a good sign that governance is in order.

[Teretonga]

Originally Posted by Tourer

Don't disagree but IF one of the big teams breached the cost cap, event a large financial penalty could be seen by them as worth risking, if the overspend provides a genuine advantage - remembering that the big teams had significantly higher revenue than the cost cap at the time of introduction and still appear to have similar commercial (sponsorship) arrangements in place.

We'll find out with time if AM and RB are going to contest the current findings, and if they do, both may end up not having breached. If they are still in breach after due process, then there are some difficult decisions for the FIA to make, particularly IF any breach appears to be a question of interpretation. Seems to me that there's a lot more to run on this and the process (at least in the early years of the cost cap) is unlikely to be straightforward.

Reports that Zac B. has written to the FIA suggesting significant penalties indicate this is not going to go away.
If things aren't resolved, then the FIA position becomes very precarious as regulator.
Z Brown said that 2020 was a pre-run through the technicalities so everyone knew what to expect and that there shouldn't be any surprises, which is in contrast to Christian Horner's surprise...

[Tourer]

Originally Posted by Teretonga

Reports that Zac B. has written to the FIA suggesting significant penalties indicate this is not going to go away.
If things aren't resolved, then the FIA position becomes very precarious as regulator.
Z Brown said that 2020 was a pre-run through the technicalities so everyone knew what to expect and that there shouldn't be any surprises, which is in contrast to Christian Horner's surprise...

Agree that the FIA needs to get this resolved clearly one way or the other - either RB is in breach or the other teams will have a new interpretation of the cost cap rules that allows them to spend a little more.

If RB does end up in breach, then sanctions will need to be meaningful - otherwise temptation will be too much for others.

[billy bleach]

Originally Posted by Tourer

Agree that the FIA needs to get this resolved clearly one way or the other - either RB is in breach or the other teams will have a new interpretation of the cost cap rules that allows them to spend a little more.

If RB does end up in breach, then sanctions will need to be meaningful - otherwise temptation will be too much for others.

The issue is that Redbull have more expensive and better Lawyers than FIA......

[Akrapovic]

Originally Posted by billy bleach

The issue is that Redbull have more expensive and better Lawyers than FIA......

I hope they're found guilty and the lawyers expenses become part of the monitored salary cap, thus making the transgression worse. It'll be a nice warning to anyone trying to be creative*

* by creative I mean cheating.

[PhilipR]

What I find interesting is that it seems they have done a dress rehearsal in 2020 so most issues could be clarified and questioned.

I still think RB found what they believed to be a loophole and did not disclose it so not to give same opportunity to their rivals. And now they will need to provide arguments for it. Mind you if they were so sure about it - what is to say they have not done the same for this year as well? - imagine having same thing coming up in October 2023 as well - we might need to have a special Financial Certificate Award day

[S griffin]

Usually if a car doesn't confirm to the regulations due to something going wrong with the car, or a team error they will be DQed and no more. However if they are found to have done something deliberately against the rules, there is a chance the FIA will take it further

[chillibowl]

Originally Posted by Akrapovic

I hope they're found guilty and the lawyers expenses become part of the monitored salary cap, thus making the transgression worse. It'll be a nice warning to anyone trying to be creative*

* by creative I mean cheating.

nice one!

as fans we are, within reason, allowed to think and say what we want so fair play.

personally i hope they are exonerated of being deliberately creative as i would hope for every team on the grid who find themselves operating near the margins...as i hope for every team in every sport i watch.

no doubt that makes me naïve but i honestly dont think i would be able to watch if i believed cheating within this sport was as rife as some here always claim it to be.

Originally Posted by Tourer

Agree - the FIA will need to get this absolutely right - no doubt there'll be people unhappy with whatever the outcome is but as long as the FIA can justify decisions and be both reasonable if needed and firm if needed, then the organisation should come out of it looking like a good governing body. Remains to be seen of course & personally I think that leaks in advance are not a good sign that governance is in order.

also agreed. so far the process does leave much to be desired but as they complete the process the possibility, for me at least, of a reasonable and equitable decision is still on the table.

[E.B]

Originally Posted by Akrapovic

I hope they're found guilty and the lawyers expenses become part of the monitored salary cap, thus making the transgression worse. It'll be a nice warning to anyone trying to be creative*

* by creative I mean cheating.

Unfortunately all legal fees/costs are specifically excluded from the budget cap.

[Tourer]

Originally Posted by billy bleach

The issue is that Redbull have more expensive and better Lawyers than FIA......

Could well be but then I reckon the same could be said for many of the teams (not just the big teams). That's been part and parcel of "the game" for some time - despite that though, some teams have fallen foul of the rules and better lawyers haven't gotten them off the hook - plenty to play out on this one I reckon.

Originally Posted by Akrapovic

I hope they're found guilty and the lawyers expenses become part of the monitored salary cap, thus making the transgression worse. It'll be a nice warning to anyone trying to be creative*

* by creative I mean cheating.

Legal fees are outside the cap I believe. Being creative is absolutely not cheating - being creative has been part of the fabric of the sport (by that I mean motor sport generally, not just F1) almost from the start. Being creative is one of the really cool things about the sport and has provided some of the best stories and legends of them all.

Originally Posted by PhilipR

What I find interesting is that it seems they have done a dress rehearsal in 2020 so most issues could be clarified and questioned.

I still think RB found what they believed to be a loophole and did not disclose it so not to give same opportunity to their rivals. And now they will need to provide arguments for it. Mind you if they were so sure about it - what is to say they have not done the same for this year as well? - imagine having same thing coming up in October 2023 as well - we might need to have a special Financial Certificate Award day

My thinking runs along the same lines - although RB have yet to convince the system that the loophole they're using is acceptable. At the current pace of checking & process for adjudication and appealing (that we know of publicly) it would well drag out beyond this year's season - big gamble on RB's part to keep doing the same thing this year but the team may consider it a risk worth taking.

[wnut]

Did Adrian Newey’s salary cause Red Bull to breach F1 cost cap?

https://www.crash.net/f1/news/101475...newey-s-salary

If this is the cause of the breach, it is just playing games with accounting definitions.

The bigger question is where this "breach" was leaked to Wolff from within the FIA.

[Adam43]

The biggest thing about this is that the cap was breached and the biggest question is what will be done about it.

The rest is a smaller matter.

[E.B]

So to me it seems that Red Bull have shot themselves in the foot by allowing Newey to work on a (full time) consultancy basis. No doubt to help him taxwise.

In doing so they have included Newey as being one of the top 3 earners so (on that basis) have rightfully not included his earnings in the budget cap.

However the FIA have said that Newey although full time employed at Red Bull (or more likely RBT) he is not employed BY them as he is an external consultant. Thus on that basis his earnings should be part of the budget cap as he is not strictly an employee of the Red Bull Group. His compansy is used as a consultancy.

So in effect Newey's costs should be included as an external but related cost... but by the same token the next highest earner would move up to become the third highest RB/RBT earner and be deducted.

Thats how I see it but very happy to be corrected.

[PhilipR]

I also imagine Newey has quite a high salary maybe in the millions - so if his consultancy was not considered as part of the cap by the team - and FIA says it should be as they used an external company - how is the breach just minor? I mean I do not know F1 salaries but imagine someone like Newey might be in the 5-10 million range if not more?

Again these are all speculations and probably we will find out more - on summer bank holiday next year

[crmalcolm]

Originally Posted by PhilipR

I also imagine Newey has quite a high salary maybe in the millions - so if his consultancy was not considered as part of the cap by the team - and FIA says it should be as they used an external company - how is the breach just minor? I mean I do not know F1 salaries but imagine someone like Newey might be in the 5-10 million range if not more?

Anything up to $7.25m is still 'minor'. And it is also the delta between what Newey was receiving and the next highest earner that will be the 'overspend' if this is the cause.

For example:
Assume that Newey was receiving the same as his previous (full-time) F1 salary of $10.25m.
The next highest earner in the Red Bull team might be on $4m and was previously included in the budget.
The total spend was exactly on the cap of $145m.

$145m - $4m = $141m.
$141m + $10.25m = $151.25m.
The overspend is now $6.25m and considered 'minor'.

[E.B]

Originally Posted by crmalcolm

Anything up to $7.25m is still 'minor'. And it is also the delta between what Newey was receiving and the next highest earner that will be the 'overspend' if this is the cause.

For example:
Assume that Newey was receiving the same as his previous (full-time) F1 salary of $10.25m.
The next highest earner in the Red Bull team might be on $4m and was previously included in the budget.
The total spend was exactly on the cap of $145m.

$145m - $4m = $141m.
$141m + $10.25m = $151.25m.
The overspend is now $6.25m and considered 'minor'.

Horner had originally claimed (c.3rd Oct) the figure signed off by their auditors was less than the $145 mill cap:

When asked if he was nervous about the FIA ruling Horner was bullish. “No. We’re absolutely confident in our submission,” he said. “Our audit was signed off by our auditors. We believe we are comfortably within the cap.”

https://www.theguardian.com/sport/20...dget-cap-rules

On that basis the 'overspend' would therefore potentially be less than the $6.25.mill

[crmalcolm]

Originally Posted by E.B

Horner had originally claimed (3rd Oct) the figure signed off by their auditors was less than the $145 mill cap:

It was just an example of how a ~$10m salary for Newey could still be a minor breach.

If they were comfortably below the cap and had Newey's salary was in their assumed exclusions, then it is even easier to see how the breach is minor.

The example figures could be amended to:
Assume that Newey was receiving the same as his previous (full-time) F1 salary of $10.25m.
The next highest earner in the Red Bull team might be on $4m and was previously included in the budget.
The total spend was comfortably below the cap of $145m and was close to $140m.

$140m - $4m = $136m.
$136m + $10.25m = $146.25m.
The overspend is now $1.25m and considered 'minor'.


As I said - it is just an example of how such a high salary could still result in a minor overspend - which was the question asked by PhilipR. I am not suggesting that these are the actual figures.

[E.B]

Originally Posted by crmalcolm

It was just an example of how a ~$10m salary for Newey could still be a minor breach.

If they were comfortably below the cap and had Newey's salary was in their assumed exclusions, then it is even easier to see how the breach is minor.

The example figures could be amended to:
Assume that Newey was receiving the same as his previous (full-time) F1 salary of $10.25m.
The next highest earner in the Red Bull team might be on $4m and was previously included in the budget.
The total spend was comfortably below the cap of $145m and was close to $140m.

$140m - $4m = $136m.
$136m + $10.25m = $146.25m.
The overspend is now $1.25m and considered 'minor'.


As I said - it is just an example of how such a high salary could still result in a minor overspend - which was the question asked by PhilipR. I am not suggesting that these are the actual figures.

I wasnt 'fighting' your figures in any way... we seem to be on the same track in our thinking. I understand we are all commenting on a situation where specific / factual numbers are a little light on and our perception is therefore clouded by rumour from what we read ... I was just trying to add a bit more info (rumour?) for consideration.

[crmalcolm]

Originally Posted by E.B

I understand we are all commenting on a situation where specific / factual numbers are a little light on and our perception is therefore clouded by rumour from what we read ... I was just trying to add a bit more info (rumour?) for consideration.

Agreed - we are all trying to fill in the blanks at the moment.

[S griffin]

It's interesting if they weren't using Newey as full time staff.

[Beau2]

Newey also had his accident last year, wonder if that brought about a sudden contract change as for a while no-one seemed to be sure how active he still would be?

I also wonder if the sickness issue is around Newey too for the same reasoning.

[S griffin]

Originally Posted by Beau2

Newey also had his accident last year, wonder if that brought about a sudden contract change as for a while no-one seemed to be sure how active he still would be?

I also wonder if the sickness issue is around Newey too for the same reasoning.

That's a good point. Maybe you've just given Red Bull a good defence!

[AnnoyedMoose]

Interesting that the main car related breach seems to be over the transfer of old parts to the heritage team. Something that the FIA issued a clarification to three months after the teams submitted their documents.

I do find the opinions of some on social media that the overspends on catering and staff sick pay gave RB a competitive advantage. Their reasoning is that they would have pulled money from the car to pay the other bills. Big assumption. It's a bit like assuming someone would not pay their mortgage to go on holiday.

The other thing I find odd is all the bleating from other teams that a minor breach is still a massive performance advantage. I don't recall them complaining when the FIA originally brought out the definition of minor breaches at the start of the cost cap.

[S griffin]

Seems the FIA are ready to make a deal with Red Bull over the breach:

https://www.motorsport.com/f1/news/r...ment/10387108/

This is very similar to how the dodgy Ferrari engine situation was sorted a few years ago. Not going to please other teams this

[Mike Harte]

Originally Posted by AnnoyedMoose

I do find the opinions of some on social media that the overspends on catering and staff sick pay gave RB a competitive advantage. Their reasoning is that they would have pulled money from the car to pay the other bills. Big assumption. It's a bit like assuming someone would not pay their mortgage to go on holiday.

The other thing I find odd is all the bleating from other teams that a minor breach is still a massive performance advantage. I don't recall them complaining when the FIA originally brought out the definition of minor breaches at the start of the cost cap.

Isn't it obvious that if they spent more of their overall budget on anything, regardless of whether it catering and/or sick pay (C & SP), then it stands to reason that it meant that they spent more on their car. Using imaginary figures, if their budget was $145 million and out of that they allocated $5 million to C & SP leaving $140 mill for the car, but they actually spent $10 mill on C & SP, it means that they should have reduced spending on the car to $135 million.

And the second point was that one of the team principles used their calculations to explain how much a certain amount of money could or would result in a certain amount of a speed increase or lap time reduction.