Salary cap, Shmalary Cap

[S griffin]

People have compared it to the Ferrari engine case a few years ago. The problem is this seems to be more out in the open than Ferrari's was. So the FIA need to be seen to do the right thing.

[greentrumpet]

Also, Ferrari didn't win championships. Red Bull profited last year from the FIA breaking their own rules as well as an overspend. Hopefully the FIA are turning over a new leaf.

[Woolley]

The thing with all of this 'technical minor breach only 1%, blah, blah, blah'

If you have a minor technical breach that means your rear wing is 1% over the permitted measurements, you get thrown out of every race in which you ran in that condition. It's legal, or it isn't. Mistake, error or deliberate makes no difference.

If Merc had a 1% allowance on their budget they might have found the error which made their car not work properly, Ferrari might have been able to make their car a little more stable, and perhaps that's why Red Bull's has been dominant. We don't know, but whatever the reason they have an advantage which might be because they ignore the rules.

On the other hand, Aston Martin don't seem to have gained anything from it...!

[V8 Fireworks]

Originally Posted by EastonNeston

1) stripped of ALL drivers and constructors points for 2021, 50% of points for 2022.

Sure, let's take away 2 x Max Verstappen World Driver's Championships, that's going to be happen.

(Or not.)

[Richard C]

Originally Posted by EastonNeston

I would suggest that both of the offending teams are

1) stripped of ALL drivers and constructors points for 2021, 50% of points for 2022.
2) A very significant financial penalty is applied ( higher than the spygate penalty)
3) A 10% reduction in the teams budget cap for 2023 and a similar reduction in wind tunnel and CFD hours.
4) an FIA appointed auditor is based at the offending teams, to monitor their spending through 2023 & 2024, all the costs of which are to be included in the teams spending limits.

I generally agree with the spirit of the post, but as I called out earlier, I don't think these are generally realistic given how the current regulations are written given the size of the infraction.

Few (if any) regulations are perfect as written. I expect when this is all done, there might be some adjustments to the regulations. And it makes sense for them to evolve.

Richard

[Teretonga]

Originally Posted by EastonNeston

Looking at the situation, it's important to look at the situation in general terms, not letting the identity of the offenders influence the decision of the penaties applied.


The following questions have to be considered.
a) did the offending teams benefit from breaking the spending rules?
b) when the overspending benefit the offending teams?
c) Did the benefits gained from breaking the rules affect the championship ?
d) what penalty would remove the benefts gained from offence?
e) what level of penalty will ensure that this is not repeated?


In my opinion, the offening teams did benefit substantially from breaking the rules, not only in the 2021 season, but also in 2022 and into 2023. The overspending did have a very significant influence on the championship and disadvantaged the teams that abided by the regulations. Also the offending team, it's drivers and sponsors have had commercial and financial benefits as a direct result of the rule breaking.

Therefore any punishment should not only restore the situation to where it should have been if the rules had not been broken, but should have an additional punitive element to doscourage any futher breaking of these rules.
We also need to take into consideration the penalties issued for the "spygate" incidents & the "Tyrrell water balast" situation.


I would suggest that both of the offending teams are

1) stripped of ALL drivers and constructors points for 2021, 50% of points for 2022.
2) A very significant financial penalty is applied ( higher than the spygate penalty)
3) A 10% reduction in the teams budget cap for 2023 and a similar reduction in wind tunnel and CFD hours.
4) an FIA appointed auditor is based at the offending teams, to monitor their spending through 2023 & 2024, all the costs of which are to be included in the teams spending limits.


It is only right that the punishment for the offences not only removes from the offending teams the benefits from their deliberate rule breaking, but it ensures no other team will attempt to do the same again.

The spirit of this discipline is completely consistent with the way things were dealt with during the Max Mosley era but I doubt if the present FIA regime has the stomach for it.

Richard suggests its not in the present regulations, but we are not sure what capability the FIA has bestowed on itself in terms of the consequences of breaking the rules. Certainly it should fit the level of the offence the offending team made.

Binotto suggested $500,000 investment could result in a 0.4 of a second per lap advantageadvantage so should be reduce that advantage to 4/100 of a second per $500000 and it extrapolate it out.
$5.7 million would result in a 11.4 multiple of $500000 so 11.4 x 0.04 is 0.456 per lap. On a race distance of 53 laps (Suzuka) that is an advantage of
24.168 seconds.
Can an advantage like that materially affect a championship result?
Absolutely.

So it is a nonsense for the F!A to suggest that a 5% over the limit is of little or no consequence. That much money (5% of $145 million is $72500000.00)
can obviously affect a championship result.
That amount applied to performance enhancing development is not inconsequential.
As others have pointed out we do not apply that 5% reasoning to other contradictions of the rules so why should we here?

Fuel additives. 'Oh it's less than 5% so it's of no consequence. NOT.
Underweight. Oh, its only 3% UNDERWEIGHT. Let it go.... NO.
Capacity. 'It's only 64cc over capacity. It will be OK.' NO.

So, the FIA has to sort out a way of regulating this task if it is to be seen to be an effectual administrator of its own regulations.
If it does not than F1 as we have known it is over.
Certainly, for as long as the FIA is the regulator.

My earlier post (195) suggested a consequence that dealt with the participants offence in the future. That was to allow the FIA and fan groups to let results as recorded by the offender's drivers to stand simply because many have suggested that it is unlikely that the FIA would withdraw Maxs 2021 WDC.

By applying penalties that would affect the team's future development the result would be allowed to stand. But that concept ignores the fact that the driver and team benefitted competitively from the infraction of the cost cap.
In any other situation there would be (and should be) a consequence.

Others would question 'Why not?'
If he was over capacity or the team had broken any other competitive or performance rule he would be disqualified.

How the FIA actually handles this will determine the validity of its future as regulator.

[EastonNeston]

By applying a punishment that only affects future events, it allows the offenders to benefit, both in sporting terms and comercially. Therefore theonly logial solution is that any penalty imposed has to remove the sporting benefits obtained by the offending, but also ensure there is no comercial gain from the offences.


NB I have looked at this in a generalised way, the rukes have to be applied equally and fairly, regardless of the identity of the offenders.

[Teretonga]

Originally Posted by EastonNeston

By applying a punishment that only affects future events, it allows the offenders to benefit, both in sporting terms and comercially. Therefore theonly logial solution is that any penalty imposed has to remove the sporting benefits obtained by the offending, but also ensure there is no comercial gain from the offences.


NB I have looked at this in a generalised way, the rukes have to be applied equally and fairly, regardless of the identity of the offenders.

Ideally you would like to remove the commercial benefits. Yes, I would desire that, but:
You might remove some of the direct benefit, but you could not absolutely remove all of the indirect commercial benefits, nor could you remove all of feeling of some supporters that the removal of benefits was in some way unfair....
Our world is always compromised in some way, which is why in many instances, ideals are often forgotten.

[EastonNeston]

A very significant financial penalty could remove, some, of the financial and comercial benefits from the offences, although it is, almost, impossible to remove all the gains. The effort should be made to remove the benefits gained from the rule breaking.

[Tourer]

Originally Posted by EastonNeston

A very significant financial penalty could remove, some, of the financial and comercial benefits from the offences, although it is, almost, impossible to remove all the gains. The effort should be made to remove the benefits gained from the rule breaking.

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.

[Mike Harte]

Bear in mind that Aston Martin's breach was procedural not financial; only Red Bull have been deemed to have overspent, whilst Williams have already been fined for their breach by being late in presenting their budget accounts to the FIA.

[Tourer]

Originally Posted by Mike Harte

Bear in mind that Aston Martin's breach was procedural not financial; only Red Bull have been deemed to have overspent, whilst Williams have already been fined for their breach by being late in presenting their budget accounts to the FIA.

Agree - although in both AM & RB cases, the teams MAY choose to contest the decision and MAY end up not in breach. Williams accepted the decision and copped their fine - AM & RB could do the same as well.

All remains to be seen.

[Richard C]

Originally Posted by Teretonga

Richard suggests its not in the present regulations, but we are not sure what capability the FIA has bestowed on itself in terms of the consequences of breaking the rules. Certainly it should fit the level of the offence the offending team made.

First, let me say nice overall post.

My earlier comments were mostly targeting some suggested penalties that I think are clearly outside of the penalties listed for minor breaches. I do fully agree with you that any penalty should fit the offence. Of course most fans (and no doubt various team principals) will have wide ranges of what they think will be correct.

I am going to drop in some quotes (and paraphrases) from the financial regulations...

First, it seems RBR has committed a "Minor Overspend Breach".

8.11 In the event the Cost Cap Adjudication Panel determines that an F1 team has committed a Minor Overspend Breach, the Cost Cap Adjudication Panel may impose a Financial Penalty and/or any Minor Sporting Penalties.

So money and/or a minor sporting penalty.

9.1 (b) A "Minor Sporting Penalty", meaning one or more of the following:
(i) public reprimand;
(ii) deduction of Constructors' Championship points awarded for the
Championship that took place within the Reporting Period of the breach;
(iii) deduction of Drivers' Championship points awarded for the Championship
that took place within the Reporting Period of the breach;
(iv) suspension from one or more stages of a Competition or Competitions,
excluding for the avoidance of doubt the race itself;
(v) limitations on ability to conduct aerodynamic or other Testing; and/or
(vi) reduction of the Cost Cap

There is more details in the overall "punishment" part of the regulations, but they have a wide range of options, but it is not infinite.

9.2 In addition to any of the sanctions listed in Article 9.1, the Cost Cap Adjudication Panel has the power to impose enhanced monitoring in respect of an F1 Team.

They can also impose additional future monitoring.

These are just a few select items.

My best guess is the punishment will be:

1. Public reprimand (meaning I don't think all of the below will be handled internally like the Ferrari engine situation)
2. Financial penalty that will be some amount larger than the overspend.
3. No changes to WDC points
4. No exclusion from future events.
5. Reduction in WCC points. If they go deep enough this might drop RBR down a notch and have financial penalties baked in.
6. They will reduce the cost cap by at least the amount of the overspend for next year. Probably some factor above it like 2x penalty.
7. I don't think they will reduce things like aero, CFD or testing time. They will do it via cost cap reduction.
8. They will impose additional monitoring on RBR. I assume this is financial monitoring and probably will be something like a quarterly or half year report vs. one report at the end of the year.

Originally Posted by Teretonga

So it is a nonsense for the F!A to suggest that a 5% over the limit is of little or no consequence. That much money (5% of $145 million is $72500000.00)
can obviously affect a championship result.

No doubt an accidental typo on your end, but 5% is $7.25 million not $72.5 million. But your point remains.

As I have called out earlier, I think they should shrink the 5% value down either in one step to something like 1% or maybe slightly less. Or ramp it down over a few years. 5% is too big.

Originally Posted by Teretonga

My earlier post (195) suggested a consequence that dealt with the participants offence in the future. That was to allow the FIA and fan groups to let results as recorded by the offender's drivers to stand simply because many have suggested that it is unlikely that the FIA would withdraw Maxs 2021 WDC.

Agree. They are going to punish the team and not the driver this time around. Especially given it still fits into their "minor" category and (maybe good for RBR) probably a small one at that.

Originally Posted by Teretonga

How the FIA actually handles this will determine the validity of its future as regulator.

Very much agree. My suggestion above, while not everyone may agree, if done with the correct values, could really hurt RBR in 2023, but not knock them out. It would set the right tone.

Also the longer this goes, the better the regulators should get at seeing areas being explored and providing the feedback to the teams that "no, that is not ok".

Lastly, I fully expected more than one team to spend between 1-5% over as "on paper" the penalty is not that harsh. If multiple teams had done so, I actually think the penalty per team might have been less than I propose above, but if RBR is the only one to overspend, I think they might end up being made an example of.

Richard

[crmalcolm]

It is not just Ferrari and MB who are calling out RB over this.

McLaren F1 boss Zak Brown has written a letter to governing body the FIA in which he says Red Bull breaking the budget cap "constitutes cheating".

"Brown praises the FIA's work on the cost cap, and says policing it is "critical" to the sport's future.

He suggests any team guilty of an overspend should be hit with a fine equal to double the amount by which they have breached the cap, and for a reduction in their permitted research and development next year."

[Mike Harte]

Zak Brown has sent a letter to the FIA, copied in to all the other teams, giving his views how the penalty for overspends should be dealt with. ( https://www.bbc.co.uk/sport/formula1/63256734 )

He suggests that any team overspending should face a reduction in the year's spending after the accounts have been audited equal to the overspend, plus a fine also equal to the overspend.

In addition, he suggests that the team should also have to maintain a reduction in research and development for that year.

[chillibowl]

absolutely agree with his proportional penalty recommendations and for sure also agree that the FIA regulators deserve much credit for policing this cap.

but that said, i still have an issue with him saying it 'constitutes cheating'.

a soft cap was chosen for a reason in that it was highly anticipated teams would, from time to time, break the cap level so they built this outcome into the system. if it turns out to be an annual thing for a specific team then by all means add in the extra pejoratives as well as a graduated punishment but we are not there yet imo.

a lot of analogies being made to how this is the same as breaching technical rules. technical rules dictate exact measurements which would, if one is to carry the analogy over, would be like a hard budget cap with zero tolerance for anyone exceeding the limits.

perhaps F1 will get there in time, with adequate punishments of infractions a culture of budget adherence may be created so a hard cap can be implemented...i hope.

until then though, it is my opinion that using the 'cheating' label does more harm and may lead to the cap system being destabilized (or undermined as some push for higher and higher limits) before we really have an understanding of how this thing will work over a set of seasons.

[Mike Harte]

However, chilli, if the FIA's assertion is found to be correct, then it means that by gaining a financial advantage over their competitors by overspending, then it surely follows (seeing as how their cars have been superior for the last two seasons) that they would have appeared to have gained an unfair advantage i.e cheated. Even if we assume that it was unintentional.

[chillibowl]

imo, as long as the system allows for overspending (which it does otherwise there would be a hard cap/maximum spending limit) and if said team is prepared to accept the penalties associated with that overspending then they are abiding by the rules of the soft cap system even if they overspend, intentionally or unintentionally.

so how can it be 'cheating' if they are operating under the current rules of the system?

if said team intentionally (or even unintentionally) misled or lied to the
regulators and/or fail to accept the penalties handed down then im with you...that would then be 'cheating'.

for me though, we are not yet at the point in this process where that label should be applied particularly by one team principle against another (even if it is being done without naming names).

[Akrapovic]

You know. When cars are found to be illegal by tiny ammounts, and/or illegal due to damage, the cars are often disqualified anyway (See Lewis rear wing: Interlagos). So I do find it somewhat odd that this isn't treated the same way.

[P38 in workshop]

Originally Posted by Akrapovic

You know. When cars are found to be illegal by tiny ammounts, and/or illegal due to damage, the cars are often disqualified anyway (See Lewis rear wing: Interlagos). So I do find it somewhat odd that this isn't treated the same way.

I do remember the Ferrari bargeboard saga,when even Ross Brawn admitted on the day that they didn't conform.It all fizzled out before a penalty was applied,so not all infringements lead to harsh penalties.


A simple solution might be to allow all the other teams to overspend by the same amount for next year to even things out.

[chillibowl]

Originally Posted by Akrapovic

So I do find it somewhat odd that this isn't treated the same way.

thats a good question..why didnt they just implement a hard cap to begin with?

the biggest issues at the onset of the cap was the fear that teams would cheat and/or that the regulators would not be able to work it out.

for the most part and in hindsight, both were unwarranted concerns?

clearly its possible for teams (including some former big spending teams) to stay under the soft cap limit (even in the face of increased competition and inflationary markets to boot), and also clearly it is possible that the FIA is capable of monitoring this stuff (although it would be better if they could conclude their reviews quicker).

[Akrapovic]

Originally Posted by P38 in workshop

I do remember the Ferrari bargeboard saga,when even Ross Brawn admitted on the day that they didn't conform.It all fizzled out before a penalty was applied,so not all infringements lead to harsh penalties.


A simple solution might be to allow all the other teams to overspend by the same amount for next year to even things out.

I don't think it fizzelled out. Ferrari had all of their points removed and filed an appeal and had to fight to be re-instated. That race is what caused a rules re-write to bring in the 5mm tolerance.

Ferrari had to fight to keep their points. Apparently Red Bull can just say they spent too much on cakes.

[Richard C]

Originally Posted by Akrapovic

You know. When cars are found to be illegal by tiny ammounts, and/or illegal due to damage, the cars are often disqualified anyway (See Lewis rear wing: Interlagos). So I do find it somewhat odd that this isn't treated the same way.

Probably the same reason all cars are not disqualified by having bodywork that has some flex and is "moveable aero". Or that off track chaos in the first corner of the first lap are generally ignored. The current technical and sporting regulations have example of "unwritten rules" where the rules are just sometimes ignored. I think the financial regulations took a different path (probably due to negotiations and not explicit intent) and that was to create a buffer zone between the elusive "right and wrong", "black and white", "legal and illegal" and "cheat and not a cheat" (pick whatever binary statement works)

Richard

[Richard C]

Originally Posted by chillibowl

thats a good question..why didnt they just implement a hard cap to begin with?

the biggest issues at the onset of the cap was the fear that teams would cheat and/or that the regulators would not be able to work it out.

for the most part and in hindsight, both were unwarranted concerns?

clearly its possible for teams (including some former big spending teams) to stay under the soft cap limit (even in the face of increased competition and inflationary markets to boot), and also clearly it is possible that the FIA is capable of monitoring this stuff (although it would be better if they could conclude their reviews quicker).

I think the answers to all of your questions is that the financial regulations are the output of a negotiated set of rules. So they have wiggle room and different levels of "guilt and punishment" baked in.

I suspect if the FIA was able to, they would have had more hard lines. But that probably would have resulted in one or more of the big teams walking away. I would have been all for that. But that is not what happened.

Richard

[Richard C]

Originally Posted by Teretonga

How the FIA actually handles this will determine the validity of its future as regulator.

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.

Richard