Since the start of the month, two questions have been on the mind of nearly everyone in the Formula One paddock: Did Red Bull Racing breach the $145 million cost cap during the 2021 season? If so, how would the team be penalized by the championship’s governing body?
As prescribed in the F1 Financial Regulations, Red Bull Racing entered negotiations with the Fédération Internationale de l’Automobile and agreed on an appropriate penalty. The Accepted Breach Agreement (ABA) works in a similar manner to plea bargains in the criminal justice system. The ABA exists for procedural and minor overspend cases to avoid the potentially lengthy legal process of the issue being heard by the FIA’s Cost Cap Adjudication Panel.
In the ABA, the FIA stated that Red Bull Racing exceed the 2021 cost cap by $2.2 million, or 1.6 percent of the cost cap’s total value. The governing body also mentioned that Red Bull’s incorrect filing of financial statements made its overspend breach more severe than it should have been. The FIA admitted that if Red Bull had properly applied the tax credit the team would have only exceed the cap by $500,000, or 0.37 percent of the cap’s value.
Red Bull Racing, or any other team, has to make a number of concessions for an ABA to happen. The team must admit to violating the financial regulations, waive its right to challenge the agreement and have the details of the violation made public.
Red Bull Racing’s ABA with the FIA stipulates that the team will pay a $7 million fine. Red Bull Racing will also face a ten percent reduction in its aerodynamic testing allocation.
The FIA already regulates wind tunnel hours and CFD usage in an attempt to encourage parity with the world championship. Aerodynamic testing resources are allocated annually on a sliding scale determined by the previous season’s World Constructors’ Championship standings. The defending champions receive the least time, 70 percent of the base amount of aero testing, while the last place constructor gets 115 percent of the base amount. Red Bull’s penalty means as champions it will only be allowed 63 percent.
While Red Bull Racing has been essentially untouchable on track this season as they ran away from the field, the world champions will effectively have a hand tied around its back by the FIA as it attempts to mount a title defense. Only time will tell if Scuderia Ferrari and Mercedes-AMG will be able to capitalize on the hampered development ability of Red Bull Racing in 2023.