RACING

The risk big F1 teams face with updated cost cap

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It would be understandable if fans were left puzzled by the ongoing saga of team leaders squabbling over a few million here and there.

After all, the sport is supposed to be a battle between drivers on the track and between the smart people who design and run their cars. It was never meant to be a contest between accountants.

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However, we must not lose sight of the bigger picture. F1 is in a healthy situation at the moment, largely because there is a cap on costs, and therefore there is a cap on total spend which is holding back the bigger players.

If he hadn’t been introduced, more than one team could have been lost in the past two years. Instead, investors strove to get involved in the sport.

“The argument is that F1 is now too cheap,” says Alfa Romeo’s Fred Vasseur. “For me, this one is completely wrong, because I think F1 is in good shape because we have the cost cap.

“If you kill the cost cap, I’m not sure we’ll stay in good shape. F1 was always up and down. Ok, we’re going up, but at some point we’ll have another phase.

“At the end of the day, I think in F1 we ​​were pretty close to deep shit two or three years ago. We were really close to losing three teams.

Frederic Vasseur, Team Principal, Alfa Romeo Racing, during the Team Principals’ press conference

Photo by: Mark Sutton / Motorsport Images

It must therefore be admitted that the financial regulations of F1 now have as much weight as their sporting and technical equivalents, and that in the event of an infringement, they must lead to some form of sanction.

The big difference is the time difference. Assuming nothing untoward happens on the track or in parc fermé, then the results of the Abu Dhabi GP, and therefore of the 2022 world championship, should be final on the evening of November 20 – at least on the sporting and technical.

However, the final financial figures for this season will only be calculated until 2023. In theory, a breach could result in a retrospective sanction which would impact this year’s World Championship and possibly trigger a messy legal battle if the team concerned does not accept the judgment.

There is precedent in F1 history for a significant post-season change in the outcome of the season.

Following his infamous clash with Jacques Villeneuve at the 1997 European GP in Jerez, Michael Schumacher lost his second place in the world championship, a punishment that meant far less than if he had lost the actual title.

However, a late change of winner is not unheard of in other sports. This has happened at high profile events such as the Olympics and the Tour de France when a drug cheat was revealed after the fact. So why not in F1 too if a team “cheats” on its expenses?

If the F1 Commission had not accepted the increase in the initial cost cap, it was inevitable that several teams would have exceeded the limit and then had to deal with the consequences.

The 3.1% increase is a small number, but it has given teams some breathing room as they struggle to limit spending. Whether or not they can all stay under the new limit remains to be seen, but at least they now have some wiggle room.

The base cost cap for 2022 was $140.0 million, plus an additional $1.2 million for the 22nd race, for a total of $141.2 million. That’s the figure several teams have admitted to the FIA ​​they wouldn’t be able to make, thanks in large part to inflation driving up utility bills and other costs, and a global rise in costs. transport.

Max Verstappen, Red Bull Racing RB18 leads at the start

Max Verstappen, Red Bull Racing RB18 leads at the start

Photo by: Alessio Morgese

The key was how far they would get past that goal. The FIA ​​financial regulations indicate a threshold of 5% – an overrun of less than an amount is considered a “minor overrun”. Missing the target by more than 5% is considered a “material overshoot”.

The significance is that the list of potential sanctions for the latter, as decided by the Cost Cap Adjudication Panel of the FIA, is much stricter and extends to the exclusion of the team concerned from the world championship. .

The inflation increase of 3.1% represents approximately $4.3 million, creating a revised target total of $145.5 million. Above that, the new 5% threshold for a material breach sits at around $152.7 million.

In Austria, any discussion of the F1 Commission’s results involved the word ‘compromise’, and it was clear that the big spending teams wanted more, and the small teams wanted less.

“Obviously the different positions have been quite far from no adjustment to bigger adjustments,” said Andreas Seidl, whose McLaren team expected to break the initial ceiling, but not as much as some. rivals.

“In the end, we somehow met in the middle. And that’s why it’s called a compromise.

Andreas Seidl, Team Principal, McLaren

Andreas Seidl, Team Principal, McLaren

Photo by: Sam Bloxham / Motorsport Images

“We were also happy with that, because on our side too we were voting for a raise, because we were facing similar problems at Mercedes, Red Bull, Ferrari and other teams. And we are very happy now that we find a solution, especially for ’22.

“Because I think at the end of the day, it’s in the best interest of the sport, we have a solution defined for this year, and don’t find ourselves in several teams going over the cap in just the second year of its implementation. in place, due to very specific circumstances, and so what is in place now makes perfect sense.”

The three biggest spenders welcomed the 3.1% increase, although they all clearly wanted more.

“It was positive because we made a decision,” Ferrari’s Mattia Binotto said. “Because at the last F1 Commission we discussed a lot without any decision.

“I think in terms of timing, we were really on the edge. Some teams had already exceeded the budget cap this year, and finding a compromise was important.

“Of course as a great team you are always looking for more, but I think this compromise is good enough to give us a brief and a new objective, a new challenge. Yes, it will be tight, but positive that we arrive at a decision.”

“Of course it helps,” said Red Bull’s Christian Horner. “I think in the interest of finding a compromise, it was too much for a few teams, and it wasn’t enough for the top teams.

“So it was about finding common ground. And it’s not just about this year, it’s about next year and the years to come as well. So I think that was the responsible thing to do.”

Of the bosses of the big three teams, Toto Wolff was perhaps the least enthusiastic.

Christian Horner, Team Principal, Red Bull Racing

Christian Horner, Team Principal, Red Bull Racing

Photo by: Mark Sutton / Motorsport Images

“Too little for big teams, I guess,” said the Austrian. “Because energy prices, inflation and freight are skyrocketing.

“But too much for the smaller teams. So no one is really happy, and I guess that’s a good result.

“I think the reason we reached the compromise is that we’ve been saying to the smaller teams, we’re not going to come back, and saying we need some sort of negotiation with the committee. cost cap arbitration.

“I think the three of us are well above that, and that means savings will be needed for Mercedes. So yes, the result is helpful. Does it solve our problems? No…”

It was a fairly candid admission from Wolff that Mercedes will struggle to meet the new limit.

One would assume that any team that uses the 3.1% inflation bonus and still exceeds the revised overall total is asking for trouble, even if they only stray into “minor expense” territory.

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Previously, there was a kind of security in the number. It was said that up to seven teams would breach the original limit, and the clear implication was that any serious penalties spread over that many teams and applied in mid-2023 would be far-fetched and mock the sport.

Would CCSI really be willing to do that?

However, if only one or two teams exceed the new limit, and the others play along and prove that it is possible to stay below, the authorities might not be very sympathetic. This is the risk the big players now face.

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