Max Verstappen’s Formula 1 team Red Bull Racing will be punished for spending more money than allowed in 2021, but the Dutchman will retain the world title he won that year. Motorsports federation FIA and Red Bull announced Friday that they have reached an agreement in which Red Bull admits to have exceeded the budget cap of $145 million. With the agreement, the two parties avoid a protracted arbitration case. They also set an important precedent for the sport, which has been the subject of uproar over cost overruns in recent weeks.
As part of the deal, Red Bull not only acknowledges the violation; it also accepts the penalty imposed on it by the FIA. The Austro-British team must pay a fine of seven million dollars. In addition, in the coming year, ten percent less often use the wind tunnel and computer simulations to test new parts. The move could give other teams the opportunity to close the gap more quickly with Red Bull, who won the Drivers’ and Constructors’ Championships this season without much effort.
Red Bull admitted on Friday that it was $1.8 million above its budget cap last year. That was a few weeks after the first rumors of the overrun started circulating. The team denied. Shortly after Verstappen became champion for the second time in Japan at the beginning of October, the FIA confirmed that a violation had indeed been found when checking Red Bull’s annual accounts.
With that discovery, Red Bull and Formula 1 ended up in uncharted territory. 2021 was the first year of the budget cap, intended to create a fairer playing field. And to put an end to the long-standing situation in which Red Bull, Mercedes and Ferrari had become untouchable for the rest thanks to their budgets of 300-400 million dollars on the track. Now it turned out that one of those big teams had not adhered to the rules right away.
Heavy sanctions
Red Bull’s competitors argued for severe sanctions. The regulations allow the FIA to impose a range of penalties on violators of: the financial rules, ranging from a warning to a fine and the deduction of points. The latter could even jeopardize Verstappen’s title. According to rival teams and drivers, if Red Bull got away with just a fine, the FIA would be sending a very wrong signal. Teams would then be able to accept the fine, while they no longer care about the budget limit.
That also liked Lewis Hamilton, who narrowly lost the 2021 title fight to Verstappen in the controversial final race in Abu Dhabi. “If they are too lax with these rules, all teams will simply ignore the budget cap from now on. […] Then we might as well not have a cost ceiling.”
Red Bull itself maintained that it had not benefited from the higher expenditure. These allegedly arose from a lack of clarity about which costs were covered by the budget rules and which were not. So overtook journalists that Red Bull had not included more than 1 million dollars in catering costs, while it should have been. There was similar confusion over redundancy pay for a departed technician and leftover spare parts. Red Bull said it had not benefited from the violation at the bottom of the line on the track.
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That argument is questionable: The overspending may well have been spent on non-race-related things like free lunches for team staff (such as The Telegraph wrote) – if Red Bull had stayed within the budget cap, such spending would have come at the expense of spending on other things, perhaps including car development. “If we had been able to spend £300,000 extra on a new car floor, or a modified wing, it would of course have affected the outcome of the championship,” he said. said Hamilton. “You’re just faster the next race if you put better parts on your car.”
Arbitration Committee
With the agreement between Red Bull and the FIA, the championship team’s competitors get their way. After all, in addition to the wallet, Red Bull will also feel the consequences of the violation in the sporting field, due to the limitation on the wind tunnel and simulation time. The fact that the team nevertheless accepts the penalty, which is not subject to appeal, probably has to do with the alternative. The case would then have ended up in a special arbitration committee, where sanctions such as decreasing points or reducing Red Bull’s budget cap in future seasons would have been tabled. With the so-called Accepted Breach Agreement that the team has negotiated with the FIA in recent weeks, it was clear in advance that those penalties were not an option.
In other words, Red Bull has therefore opted for a strategic withdrawal that causes the least damage to the team in the longer term. The FIA, in turn, shows that teams cannot just ignore the budget rules.
Verstappen agrees that the budget saga is probably grist to the mill of his critics, who believe that the title in last year’s much-discussed season finale should have gone to Hamilton. “Those people are already angry,” he said on Thursday against journalists in Mexico City, where Formula 1 is racing this weekend. “I can put it off. But those people probably can’t, that’s their problem.”