Budget cap breach ‘speculation’ say Red Bull, but Ferrari and Mercedes call it ‘open secret’

Ferrari and Mercedes both say it is an “open secret” that two teams broke Formula 1’s budget cap last year.

Aston Martin are “in discussion with the FIA and awaiting certification”.

Ferrari racing director Laurent Mekies said: “It’s now no secret that two teams broke the 2021 budget cap regulations, one by a significant amount, the other less so.”

Mercedes team principal Toto Wolff added: “There’s a team in minor breach, which is more procedural, and another team that is fundamentally massively over and that is still being looked at. That’s an open secret in the paddock.”

Mekies said the matter was “very serious” and that Ferrari expected governing body the FIA to “manage the situation in exemplary fashion”.

The FIA told the teams this week that it would issue certificates of compliance with the 2021 financial regulations – or not – on 5 October.

Red Bull team boss Christian Horner told BBC Sport it was “purely speculation” that his team had exceeded the limit. He added to Sky that he was “not aware” of any breaches.

Wolff added to BBC Sport: “The cost cap is probably the most important evolution of regulations to keep a level playing field to allow teams that haven’t got the full budget to catch up, and to put a ceiling on the spending of the top teams.

“It is of huge importance for a demonstration that these regulations are policed and I have no reason to believe otherwise.

“The FIA, particularly Mohammed [Ben Sulayem, the president], has shown a pretty robust stance on enforcing all kinds of regulations. So if we are talking now about something big, he will show the same integrity and leadership that he has done before.”

Mekies said Ferrari expected “complete transparency and maximum penalties” from the FIA to “ensure we are all racing within the same rules, because their impact on car performance is huge”.

A number of teams questioned when approached by BBC Sport why the process of ensuring compliance with the budget cap had taken so long.

The accusations, if proved to be true, risk exacerbating problems F1 has had with the credibility of the 2021 season, and extending them into this year.

The claims relate to 2021, when Red Bull’s Max Verstappen clinched his maiden title from Mercedes’ Lewis Hamilton after a controversial end to the season in which FIA race director Michael Masi failed to implement the rules correctly during a late safety-car period.

The budget teams spend during a season also includes their development for the following year’s car, so any breach would have had an impact on a team’s performance in 2022.

The budget cap was introduced as part of a swingeing set of regulation changes aimed at closing up the field and making the racing in F1 more competitive.

This year, Red Bull have dominated the season, helped by a series of errors and failures by Ferrari, and Verstappen is poised to clinch his second world title with several races to spare.

McLaren team principal Andreas Seidl said: “I don’t want to comment on specifics because I don’t have any information, but it is clear that in terms of the financial regulations, similar to the technical and sporting regulations, good governance and policing is in place because the integrity of the sport is the most important thing.

“We have a lot of faith in the new president of the FIA and his team, seeing the rigour with which they investigated the budget cap on our side.

“We trust them to make the right judgement.

“It is also important to have proper penalties in place so the cap works as intended.”

An FIA spokesperson said: “The FIA is currently finalising the assessment of the 2021 financial data submitted by all F1 teams. Alleged breaches of the financial regulations, if any, will be dealt with according to the formal process set out in the regulations.”

What are the potential penalties?

The cost-cap regulations define an overspend of less than 5% as “minor” and more than that as “material”.

Sanctions for a minor breach can include a deduction of points for the championship in which the breach took place, a suspension from a limited number of events, limitations on research and development and a reduction of the cost cap for the team in question.

For a material breach, the possibility of banning a team or driver from an entire championship is included.

Teams regard it as an open secret that there has been both a major and a minor breach. At least one team has been given that information direct from the FIA.

And there is concern that the FIA will try to reduce the offence to a minor one to limit the damage to the championship.

Red Bull and the FIA are known to have been in conversation on the matter of compliance with the budget cap for some time.

One senior figure said that breaking the cost cap was analogous to doping as the financial increase involved is directly related to performance.

However, there is no expectation within F1 that the results of last year’s championship will be changed. But there is serious concern among teams that the championship could be distorted by breaches of the budget cap.

Even a minor breach could give a team a significant advantage.

A 5% overspend in 2021 would amount to an overspend of $7.25m.

This is in the upper reaches of a leading team’s annual spend on in-season development, so even a minor breach could amount to the equivalent of effectively an entire season’s development.

Another way of viewing the figure is that an extra $10m would allow a team to employ a further 100 people, based on a typical top team’s average salary figure.

The budget cap reduced to $140m in 2022 (£125.4m) and is coming down to $135m (£120.8m) in 2023. The exchange rate is fixed at $1.2961 to the pound – so the cap is not affected by the recent reduction in the value of sterling.