Why Red Bull’s rivals expect their budget cap penalty to have a “very small” effect

2022 Mexican Grand Prix

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The FIA has ruled Red Bull failed to comply with its new budget cap regulations in 2021 and announced its penalty for the team.

Red Bull spent £1.864 million more than it was permitted to, exceeding the £118m ($145m) cap by 1.6%. Ferrari sporting director Laurent Mekies described it as a “significant” overspend.

The FIA and Red Bull settled the matter through an Accepted Breach Agreement. As Red Bull were found to have committed breaches of the rules that were “Minor” (an overspend of less than 5%) and “Procedural”, the FIA had several available punishments to choose from.

Their options were a fine, a public reprimand, deduction of either or both constructors and drivers championship points for the 2021 season, suspension from stages of a competition (except a race), limitations in aerodynamic or other testing or a reduction of the cost cap.

Christian Horner, Red Bull, Autodromo Hermanos Rodriguez, 2022
Report: Red Bull explains how budget cap breach happened and why it accepted penalty
Had Red Bull committed a more serious breach the FIA could have imposed a “Material Sporting Penalty”. In this case a restriction of development would not have been available as an option, but exclusion from the championship would.

The FIA chose to impose a fine of $7m (£6m) and cut Red Bull’s aerodynamic development time by 10% next year. However, their rivals expressed concerns that the impact of those penalties will be softened and the punishment inadequate compared to the advantage they have gained.

The fine handed down to Red Bull is one of the largest issued in the history of the sport, and well above the margin by which they broke the budget cap. The $7m (£6.059m) sanction is slightly more than the total value of the items Red Bull incorrectly excluded or adjusted in its cost cap submission, which was £5.607m.

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Red Bull must pay the fine within 30 days of the FIA’s decision. Significantly, the fine itself does not come out of their budget cap for this year, as all financial penalties under the budget cap are listed as items that can be excluded. So Red Bull is not facing a sudden reduction in the lowered $140m cap it must adhere to in 2022.

Shovlin rubbished Horner’s claim penalty is “draconian”
The second part of Red Bull’s penalty is defined as: “A reduction of 10% of the Coefficient C used to calculate the individual Restricted Wind Tunnel Testing (RWTT) and Restricted Computational Fluid Dynamics (RCFD) limits applicable to each team.” Each team is allowed a restricted amount of development time per season, and Red Bull’s has been reduced by 10% for 2023.

As this year’s champions, Red Bull were already set to have less development time than anyone else. Their 70% allocation will now be reduced to 63%, compared to 80% for the second-placed team.

Speaking to the media at length yesterday, Red Bull team principal Christian Horner described the penalty as “draconian” and indicated they could be disadvantaged by between 0.25 and 0.5 seconds per lap as a result of it. However, towards the end of the conference he indicated that range of figures did not refer to the 10% reduction imposed by the penalty alone and included Red Bull’s reduced development allocation due to their championship success.

The team’s rivals indicated the real impact of this penalty alone on Red Bull will be much less than half a second per lap. “The scale of that penalty isn’t much more than what you would lose if you were just one place higher up in the championship,” said Mercedes’ head of trackside engineering Andrew Shovlin. “So I think describing it as draconian is an exaggeration.”

The upshot of the penalty is Red Bull will have to reduce the number of aerodynamic testing runs using wind tunnel or CFD for 2023. However, Shovlin said this will be less of a problem for them if they are refining a concept they are happy with – which is likely to be the case as Red Bull are undefeated in the last eight races – than if they were considering a drastic change in car concept, as Mercedes may be doing after their win-less 2022 campaign.

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“Reducing the number of runs does limit your freedom when you’re developing your concept, but we’re in reasonably well-explored regulations now,” said Shovlin. “But you definitely have to be more efficient about it.

“If it were half a second, which I’ve heard mentioned, then the team at the back of the grid would have a three-seconds advantage to one at the front and that simply isn’t the case. But it depends on how well you make decisions during the year. I’d’ve thought a tenth, or a bit more than a tenth, maybe two-tenths is realistically what that will cost you.”

Moreover, as Mekies pointed out, Red Bull will save money by conducting less aerodynamic testing, and that saving can be ploughed into other areas which are restricted under the budget cap, further lessening the impact of the penalty.

Considering the scale of the breach, Ferrari believe Red Bull’s penalty is insufficient. “We certainly think it’s low,” said Mekies. “We don’t see it on the same scale as to be able to compensate the overspending that was done. Especially combined with the fact that the penalty is not combined with any budget cap reductions for them.”

“So we say altogether what will remain of the real impact of the penalty will probably be very small,” he concluded.

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2022 Mexican Grand Prix

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Author information

Keith Collantine
Lifelong motor sport fan Keith set up RaceFans in 2005 - when it was originally called F1 Fanatic. Having previously worked as a motoring...
Claire Cottingham
Claire has worked in motorsport for much of her career, covering a broad mix of championships including Formula One, Formula E, the BTCC, British...

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21 comments on “Why Red Bull’s rivals expect their budget cap penalty to have a “very small” effect”

  1. I’ll give it a 6/10. Let’s see what the 9th article on this subject brings to the table later on. We can do a full ranking once we get to the 10th one later this weekend.

    1. If you don’t like them so much stop reading them.

  2. Love them or hate them, I think the logic laid out by MB and Ferrari is solid. If RBR’s current aero philosophy is evolution rather than revolution then I am not convinced that a 10% reduction in aero resource will really hurt them given their current superiority. It may create slightly tighter racing not to the extent that they will be overtaken.

    It does seem like that their budget cap should have been reduced by the cost that they would have incurred for the extra 3 wind tunnel sessions and associated CFD, otherwise as Ferrari point out this money will be deployed elsewhere in performance terms (eg weight reduction).

  3. BLS (@brightlampshade)
    29th October 2022, 18:54

    I imagine most of the other teams feel a little short changed by this penalty. Fully expected them to milk it in the hope of getting some other perks in future.

    Red Bull have gotten away with this, they’ll be delighted I’m sure. Come March it’ll be largely forgotten.

    1. It will never be forgotten by anyone outside of RedBull and their fans.

      It’s akin to Lance Armstrong being allowed to keep his Tour titles and being told to spend 10% less on his next bike but he wangles a deal with the bike manufacturer to buy the exact same bike but without a 2023 go-faster stripe that, coincidentally, no honestly, would add 10% to the price.

      1. BLS (@brightlampshade)
        29th October 2022, 19:26

        Liberty and the FIA will soon start closing ranks on the accredited press and broadcasters. It’s not right but it’s what F1 is, unfortunately.

  4. None of the teams outside of the guilty party is happy with the FIA’s punishment and that says all that needs to be said on the matter.

    Disgusting officiating of the rules has harmed the sport.

  5. “they could be disadvantaged by between 0.25 and 0.5 seconds per lap as a result of it”.

    My seat of the pants human biased memory says their pace vs the rest of the grid in most races this season was at least that if not more. So even if this were the case, which I find unlikely since they will just spend the money saved on other performance improvements, then it would still leave them with a gained advantage for a third season.

  6. It’s in F1 DNA that all the teams able to exceed the budget cap will try to without getting caught. I don’t for a minute trust the noises coming from any of them.

    It’s just that RB got caught and now Ferrari and Merc are looking to gain an advantage from that. So, meh.

    1. That is obviously the case and it is about 0.37%. Which is still factually an overspend but let’s not get ahead of ourselves that this delivers such advantages. There is an amount of targeted search here.

  7. I feel the wind tunnel is to confirm or deny the assumptions made in the computer models. So RB will look to spin up more models with the less time they have in the actual wind tunnel. Adrian Newey is going to come into hand again here.

    I’m a biased RB supporter and understand that accounting is man made and not a science so things can be interpreted differently. This coming from a position that I am Certified Practising Accountant. So I’m in the camp that the penalty is over blown.

    1. its not only windtunnel time but also

      will be a 10% reduction in the time given for car development and aerodynamic testing, and the Restricted Computational Fluid Dynamics (CFD) limits for the 2023 season.

      so all in all a hefty penalty for only a minor breach. Something all teams agreed on beforehand.
      So wide spread hypocrisy is as always part of F1.

      1. Yeah I feel their is a long process before it gets to the CFD stage. This pre stage is what I’m alluding to where they will spin up more models.

        1. I feel the regs limit simulation time. Which is the finally stage. But there is a long process before that to determine what concept makes it and does not make it into the simulation time.

  8. Budget cap is as good as dead, now that we have a precedent of the kind of penalties teams risk by breaching it, they will do it any time is cost-effective for them.

    Only with really extreme penalties there was a chance to prevent more cases like this in the future. FIA really needs someone like Jean-Marie Balestre in charge of penalties.

    1. Yeah, tons of teams are going to be willing to lose 10% of their wind tunnel time, 10% of their CFD time and $7m to spend an extra 1.4%. Makes a TON of sense. 🤦‍♂️ I say this as someone who is neither a Max or RBR fan. It seems like nothing beyond a total DQ would have satisfied those w/an axe to grind.

      1. Luckily it is a very small group. Give it a year and the topic is long forgotten

      2. Nick T., when criticising some of the initial proposals for the budget cap, Horner commented about the potential for overspending to be seen as a strategic option for a team to employ if they felt that they were in a tight championship battle and used it as an argument against the introduction of a budget cap. Horner’s own argument in the past was yes, some teams might well take the attitude in the end that the benefits that might be gained from overspending could be worth more than the resulting penalty that they get.

        For teams further down in the WCC, ending up a place or two higher in the WCC might well be worth a comparable amount in increased revenue, so it might not really hurt all that much. Meanwhile, particularly for the larger teams, increased success and prestige might well draw in more commercial revenue from sponsors than they might lose in any fines – there are ways in which the financial rewards that the team might gain outweigh the resulting fine.

        With regards to aerodynamic development, as noted by Mekies, when you look at how the penalty is applied in practice, the net effect is not that much more than the amount that a team would otherwise have lost from finishing a place higher in the WCC, and the effect of the penalty is spread out over a period of time.

        In the case of Red Bull, what that means is that their current allocation of wind tunnel runs has been reduced from 224 to 202, with the CFD runs reduced from 1400 to 1260 hours, whilst the reduction for finishing one place higher in the WCC is 100 hours of CFD runs and 16 wind tunnel runs per year.

        With teams allocated six fixed periods during which they can undertaken wind tunnel testing, each of which lasts for 8 weeks, the difference it makes to Red Bull on average is about 0.46 of a wind tunnel run per week (i.e. their allocation goes down from an average of 4.67 runs to 4.21 wind tunnel runs per week during each 8 week testing period). It is a similar story with the CFD – in practice, the reduction would be from about 29.2 CFD items per week to 26.3 items per week, which means the difference is in the order of 2.9 fewer CFD runs per week.

        Whilst the 10% figure sounds dramatic as a headline figure, when you account for the way that it impacts on the team once you factor in the FIA’s restrictions on when the teams can run those simulations and how frequently, the effect of distributing that penalty over the year means that it doesn’t radically change things from week to week.

        The effect of the penalty is really more of a slow accumulation, rather than radically shifting performance – we’ve already kind of seen that given that we’ve had comparable, if not larger, shifts in the allocation of wind tunnel and CFD runs this season when the allocations were revisited in June. The effect is more gradual, slowing down development in the longer term – Red Bull’s not really going to feel the impact when they launch their car early next year, it’s only really going to start having some impact in the latter half of 2023.

        In that case, a team might well look at an element of risk/reward when considering the potential impacts. A slowly accumulating penalty over the longer term might well, in some circumstances, be considered an acceptable trade off if you were able to use those increased funds to generate a decent short term boost, particularly if the benefits related to parts which can then be carried over into future years.

        We will have to see whether teams do end up overspending more frequently in the future, but I would say that, contrary to what you think, it is entirely possible that some teams might yet think that the penalty for overspending is worth the potential cost.

  9. FIA is on knife edge. Hornet

  10. FIA is on knife edge. Horner knows his job very well and has outsmarted the FIA more than once. Last year’s championship was handed to his driver as a consequence of severe human error. And now it is proven than the team crossed the lines for its 2021 campaign, gaining an advantage for 2022 as well. Those are FACTS. We are tired and sick of what F1 has become, failing to clean up this mess in our hearts and minds. Having become a soap opera, we watched one of the most boring championships of the last few years with silly calendar additions like Miami (and Las Vegas next year). Instead of breakthrough changes we have one team benefiting from the fall of another, while an Italian one just can’t stop shooting its legs. This is all a proper circus.

  11. Just as small as the breach of 0.37% would be fitting

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