Salary cap, Shmalary Cap

[davec]

Interestingly if you read the full summary there was another "error" which could have reduced effective overspend to 0.37%..

[chillibowl]

Originally Posted by Greem

$7 million fine
10% reduction in wind tunnel and CFD time

https://twitter.com/ChrisMedlandF1/s...95323457110016

reasonable and in addition to the reduction in wind tunnel time (or CFD time?) they have as reigning champs could make for a more interesting 2023 season.

more importantly they believe that RB did not act in bad faith or a fraudulent manner which, for the integrity of the budget cap, was the more important concern to me.

on to next years violations then!

[Adam43]

Cool. That’s that sorted then.

[Mike Harte]

Originally Posted by Adam43

Cool. That’s that sorted then.

Yup, they only understated the costs of about 11 to 14 different cost centres to the tune of nearly £6 million. The only reason that they only went over the budget cap by £1.8 million is because the total spend shown in their audit was about 6 million below the cap figure - if they had gone up to the cap maximum, they would have had a major, not minor, breach of the cap.

[morninggents]

But don't forget the 'tax credit' that they ignored. Why did they ignore that?

[EastonNeston]

The fact remains that Red Bull, and it's drivers, have benfitted from their breaching of the rules.

The overspending gave the team, and drivers, and advantage in 2021, 2023 and will still give a benefit in 2023 and beyond.

Red Bull have got off very lightly from their deliberate rule breaking.

[gert]

Originally Posted by EastonNeston

The fact remains that Red Bull, and it's drivers, have benfitted from their breaching of the rules.

The overspending gave the team, and drivers, and advantage in 2021, 2023 and will still give a benefit in 2023 and beyond.

Red Bull have got off very lightly from their deliberate rule breaking.

Yes, VERY

[Richard C]

Originally Posted by EastonNeston

The fact remains that Red Bull, and it's drivers, have benfitted from their breaching of the rules.

The overspending gave the team, and drivers, and advantage in 2021, 2023 and will still give a benefit in 2023 and beyond.

I agree that money should equal a benefit. I am surprised that they didn't reduce the cap for next year. I tend to think the cash penalty should have been less and then they should have also received a cap penalty.

But!!

I also didn't really expect the CFD and tunnel time penalty. That seems pretty stiff and WILL have an impact. They can spend money on aero ideas (which remains the driver of this tech spec), but they can't test it in CFD and they can't validate it in the tunnel to the level as everyone else next year.

Originally Posted by EastonNeston

Red Bull have got off very lightly from their deliberate rule breaking.

The "deliberate" part is frankly something we just don't know if it is true or not. It's an opinion. But no doubt various fans will feel you are absolutely correct (or not).

In the end this will continue to be a bit of a s*** show with respect to opinions and comments from fans, team personnel, etc. And who knows who is right or who is wrong!

Richard

[seanyb505]

Would have been interesting if the penalty was to come out of next years budget cap. Sure pay it immediately, but next year starts with 138m instead of 145m.

[peebee2]

Isn’t next year 135m anyway?

[crmalcolm]

Originally Posted by peebee2

Isn’t next year 135m anyway?

If you want to be really specific about it, then 2022's budget cap is $151.21m and 2023's is (currently) $159.24m

Why? - The initial value is based on a 21-race season, and in July this year the FIA applied a 3.1% interest that is compounded into 2023.

Although - I think it is clear what seanyb505 was meaning. Regardless of what the actual budget cap is, Red Bull should have theirs reduced by the overspend of 2021. It makes for an interesting way to apply the penalty.

[Teretonga]

Originally Posted by crmalcolm

If you want to be really specific about it, then 2022's budget cap is $151.21m and 2023's is (currently) $159.24m

Why? - The initial value is based on a 21-race season, and in July this year the FIA applied a 3.1% interest that is compounded into 2023.

Although - I think it is clear what seanyb505 was meaning. Regardless of what the actual budget cap is, Red Bull should have theirs reduced by the overspend of 2021. It makes for an interesting way to apply the penalty.

If I went back to my earlier post I suggested the failing team(s) simply have the amount of overspend applied to a similar reduction in their allowable budget for the following year.

Any fine should not be kept by the FIA but split evenly amongst their fellow teams that kept within their allowable budget figure.
No team manager wants to help his fellow team by giving them cash to feed into their allowance for the year, however small.
Its isn't an imposition on the team because they will already have budgeted in to meet the salary cap but having their cap reduced for that year AND the money going to the opposition would add to the incentive not to overspend.

After the other teams have already been placed at a disadvantage because the offending team overspent and thus violated the purpose of the rule (the purpose of the rule is the narrow the advantages of well-heeled teams) and having the opportunity to make a performance gain

Note (whether they spent it wisely or not is irrelevant. They broke the rule and thus possibly gained an advantage. You don't quantify being overcapacity or underweight and then match the penalty to the gain. You break the rule you pay the penalty)

Any spend over the amount should result in a penalty and the whole penalty process be simple and transparent. I accept that some details may be commercially sensitive, but the actual amount and corresponding reduction is a simple process and plain for everyone to see and understand.

No. I do not buy into this 'quietly discuss and agree on a penalty' approach. It lacks the open integrity of purpose that a governing body should have.

If we are not going to go back and take 25 points of each of the team's cars and 50 points off their constructor's points (and therefore a reduction in their payments via the liberty administered fund for finishing positions in the WDC/WCC, something that would be much more complex) then what I am suggesting above is far more open and actually much lighter than any hefty points loss would ultimately be.

Yes. It would require a team to accept it would have a couple of tight years and make things difficult for a time, but they have already gained an advantage over their opposition over a year and some resulting advantage for a year beyond that, so a tight year to conform may bring them some loss but if you are not going to penalize them for what they may already have gained you do a disservice to the other teams.

Zac Brown was right. You break the rule on a competitive issue you are cheating, whether it is through negligence or being deliberate, it is still a cheat, because negligence is failing your responsibility to ensure you comply.

If the purpose of the rule is to produce greater equity between the competing teams, then NOT penalizing them in an open and consistent manner is creating a greater sense of injustice toward the teams who have complied.

If there is no corresponding loss of place in the order of teams in the offending year then the whole cap may simply be a nonsense eventually because the advantages in winning, both in Liberty prize money and commercial gain may simply our weigh any fine.

In that case there will be no reason why any major team would even try to conform. Not conforming but just paying a fine for failing to comply would be making the FIA richer but treating all the other teams with complete disrespect.

[S griffin]

Lucky not to get a bigger penalty. We'll see how much the lighter wallet and lack of aero testing affects them next year

[nobster]

Originally Posted by S griffin

Lucky not to get a bigger penalty. We'll see how much the lighter wallet and lack of aero testing affects them next year

we'll see we'll see....

[peebee2]

Originally Posted by S griffin

Lucky not to get a bigger penalty. We'll see how much the lighter wallet and lack of aero testing affects them next year

The lighter wallet doesn’t affect them at all, and I suspect the AT may be less aero-developed for ‘23…

[crmalcolm]

Originally Posted by peebee2

The lighter wallet doesn’t affect them at all, and I suspect the AT may be less aero-developed for ‘23…

Am I missing something here?

This post reads like it is suggesting that the reduction in aero testing imposed on RBR will impact Scuderia AlphaTauri? And by implication, the aero testing time for Scuderia AlphaTauri will be used by RBR instead?

[Skam85]

Anything to make RB look more villainous

[Mike Harte]

Don't attempt to question the insights from the person who lives within the confines of the F1 paddock!

[crmalcolm]

Originally Posted by crmalcolm

If you want to be really specific about it, then 2022's budget cap is $151.21m and 2023's is (currently) $159.24m

For accuracy - the calculated figures I quoted are slightly incorrect.
The budget cap for future seasons is:

2022 - $146,706,800.00
2023 - $149,621,610.60

The races over/under 21 are subject to a different calculation that I had neglected. Apologies for the oversight.


On a separate note - I am reading that many are suggesting the aero penalty will not be as restrictive as it may seem at first glance. This is because it actually 'frees up' budget to be spent elsewhere on performance gains.

[Tourer]

So now we know - Red Bull DID get it wrong and ARE copping a penalty - no pushing the boundaries or finding a loophole that other teams didn't. The infraction wasn't especially large as it turned out (particularly if the tax credit is factored in, as it should be) and the penalties applied are pretty strong in comparison, which they need to be as a deterrent.

Of course, RBR are saying that the penalties are draconian and other teams are saying that the penalties are too light - what they all are thinking or saying behind closed doors could be completely different.

There are thoughts that I have on all this, now that we have the whole story:

• Odd that RBR did not take part in the "dress rehearsal" cap assessments done the previous year - clearly confident that they had it sorted but clearly incorrect in that assumption.
• RBR's finance department needs to have a good long look at itself - how on earth could they miss the tax credit for example?
• To my mind there is still the question of information leaking out of the FIA prior to announcements being made - & that is something that the FIA should be tightening up and fixing - not good enough from a governing body.
• Allegations of "cheating" don't stack up once the FIA Statement is read - not malicious or wilful - more that the requirements weren't fully understood by RBR (another reason for the RBR finance department to have a good hard look at itself).
• Now that this is put to bed, it'll be one less item of intrigue for social media to salivate over (for now).

[Mike Harte]

Originally Posted by Tourer

So now we know - Red Bull DID get it wrong and ARE copping a penalty - no pushing the boundaries or finding a loophole that other teams didn't. The infraction wasn't especially large as it turned out (particularly if the tax credit is factored in, as it should be) and the penalties applied are pretty strong in comparison, which they need to be as a deterrent.

Of course, RBR are saying that the penalties are draconian and other teams are saying that the penalties are too light - what they all are thinking or saying behind closed doors could be completely different.

There are thoughts that I have on all this, now that we have the whole story:

• Odd that RBR did not take part in the "dress rehearsal" cap assessments done the previous year - clearly confident that they had it sorted but clearly incorrect in that assumption.
• RBR's finance department needs to have a good long look at itself - how on earth could they miss the tax credit for example?
• To my mind there is still the question of information leaking out of the FIA prior to announcements being made - & that is something that the FIA should be tightening up and fixing - not good enough from a governing body.
• Allegations of "cheating" don't stack up once the FIA Statement is read - not malicious or wilful - more that the requirements weren't fully understood by RBR (another reason for the RBR finance department to have a good hard look at itself).
• Now that this is put to bed, it'll be one less item of intrigue for social media to salivate over (for now).

It wasn't just a "small" amount that they overspent on as the FIA's report makes clear; it only appears that way because the audited accounts that they provided showed that they had underspent by about £6 million because they under-reported on a number of cost centres as my quote from last week shows:

Originally Posted by Mike Harte

Yup, they only understated the costs of about 11 to 14 different cost centres to the tune of nearly £6 million. The only reason that they only went over the budget cap by £1.8 million is because the total spend shown in their audit was about 6 million below the cap figure - if they had gone up to the cap maximum, they would have had a major, not minor, breach of the cap.

[Richard C]

Originally Posted by Mike Harte

It wasn't just a "small" amount that they overspent on as the FIA's report makes clear; it only appears that way because the audited accounts that they provided showed that they had underspent by about £6 million because they under-reported on a number of cost centres as my quote from last week shows:

Actually isn't a more accurate statement that the overspend was small, but their error in accounting was large.

Richard

[Teretonga]

Originally Posted by Mike Harte

It wasn't just a "small" amount that they overspent on as the FIA's report makes clear; it only appears that way because the audited accounts that they provided showed that they had underspent by about £6 million because they under-reported on a number of cost centres as my quote from last week shows:

So that is being true we know that they did overspend by a significant amount and that effectively means the probability of a performance advantage, simply because their business is creating a performance advantage, and the purpose of the cap is limiting expenditure to create a performance advantage.

So, 2022, the year following their overspend, they have been able to build an even more significant performance advantage. We know money expended appropriately develops knowledge, so it is it isn't unreasonable to assume that 2022 is an advantage that has been partially underwritten by the overspend in 2021.

Comments that they were fortunate to get off lightly are not wrong, and if that is the standard being set, how many are likely to push the boundaries in 2023/24??Its too late to say they will be treated more harshly or differently if the standard set is so low.
It would have been more appropriate to be clearly and openly harsher to make it clear that the standard set for cap violation was much higher.

[Mike Harte]

Originally Posted by Richard Casto

Actually isn't a more accurate statement that the overspend was small, but their error in accounting was large.

Richard

That is putting it too politely, I feel. To my mind they overspent by a large amount because their own accounts were hopelessly incorrect, but which they wanted the FIA and the world to believe was an accurate reflection of how much they actually spent. Nothing can escape from the fact that they spent £6 million more than they claimed, whether that was in error or deliberate. However, I am not claiming the latter, but they must surely have gained an advantage from the overspend.

[Teretonga]

Originally Posted by Mike Harte

That is putting it too politely, I feel. To my mind they overspent by a large amount because their own accounts were hopelessly incorrect, but which they wanted the FIA and the world to believe was an accurate reflection of how much they actually spent. Nothing can escape from the fact that they spent £6 million more than they claimed, whether that was in error or deliberate. However, I am not claiming the latter, but they must surely have gained an advantage from the overspend.

Totally agree Mike. That is why I feel the penalty is not adequate, because it does not reflect the extent of the possible advantage gained. The 7 million might be good for the FIA but it does not provide enough redress for the teams that remained within the cap.