How the FIA should punish any breaches of the F1 cost cap

Confidence in the FIA is low. That it took two hours and 31 minutes to penalise Sergio Perez for two safety car procedure infringements in last weekend’s Singapore Grand Prix, doing so with inconsistent wording in its reasoning and ultimately dealing a punishment that appears out of step with past cases of the same offence this year, has done nothing to help. Faith must be restored in the system by the way the governing body reacts to any cases of teams overspending in relation to the 2021 budget cap, the first season it was introduced.

On Wednesday, we will find out if any of the 10 outfits can expect to face a hearing should they not receive a certificate of compliance from the FIA. Of course, the paddock speculation that finally bubbled into the public domain at Marina Bay is that Aston Martin might be a little over the limit and Red Bull even further. Both deny that is the case.

For now, we are dealing with hypotheticals. But if there are breaches, for the budget cap to remain credible and survive, the FIA must ensure that the punishments it gives are spot on. As per Ferrari racing director Laurent Mekies: “It is a very vital test for the cost cap. And if we don't pass that test, it's probably game over, because the implications are huge.”

According to the wording of the 2021 Formula 1 financial regulations, a minor overspend relates to anything under 5% of the circa $145million cost cap. In other words, around $7.25m. Supposedly, this is where Aston Martin might fall foul following its recruitment drive that has involved luring high-profile hires in with handsome renumeration.

Article 9.1 of the rulebook states that this “may” be met with a financial penalty and/or a “minor sporting penalty”. These include:

• Public reprimand
• Deduction of constructors'/drivers’ championship points awarded during the period in which the breach took place
• Suspension from one or more stages of a competition, excluding the race
• Limitations of the ability to conduct aerodynamic or other testing
• Reduction of the cost cap

A material overspend equates to anything more than 5%. This is where the allegations against Red Bull appear to sit. In any such case, the FIA “shall” impose a points deduction. It can then choose to go further with a fine, the same consequences listed above plus suspend the guilty team from a race and total exclusion from the championship.

Suggestions are that Aston Martin has committed a "minor" violation of the cost cap

Photo by: Erik Junius

To assess the merits of each punishment begins with calling out the idea of fining a team for overspending. That would be a nonsense, even though the FIA could realistically address some of its procedural and staffing shortcomings with greater investment. Given that not all teams (read Haas and Alfa Romeo) are operating at the budget cap, to make those who have the deep enough pockets to overspend in the first place then spend their way out of jail ultimately allows the rich to get richer.

Should Aston Martin have strayed over the limit because of signing up top talent with the aim of climbing the constructors’ table and earning more prize money, a fine would not be in any way an incentive to comply with future cost caps unless the price tag so big as to offset the difference to a billionaire team owner. It seems illogical.

A public reprimand, effectively a slap on the wrists, would be similarly meaningless and leave the rest of the paddock seething and make the cost cap that much harder to take seriously and enforce going forward. Similarly, suspension from a free practice session or two, even a qualifying session, just won’t cut it. Hence why it is so important that the right precedent is set for these spending limits to retain their sanctity going forward.

"It is a very vital test for the cost cap. And if we don't pass that test, it's probably game over, because the implications are huge" Laurent Mekies, Ferrari

What of a points’ deduction? The tabloids ran with this idea in Singapore to spuriously claim Max Verstappen would lose his 2021 title and that Lewis Hamilton would be belatedly handed his eighth world crown. Those headlines no doubt generated some good clicks and revenue for the websites, but for a team's overspend to ever be taken out on the driver seems implausible. Any F1 driver has enough on their plate without managing the team’s accounts. They are not to blame for any indiscretion that may have taken place, even if they benefit from it. And again, there is previous here. McLaren was booted out of the 2007 standings for the ‘spygate’ scandal and fined $100m. Drivers Hamilton and Fernando Alonso kept their full points tally (109 apiece) for the season.

But hurting the guilty team in the championship is much more worthy of consideration, and as per the precise wording of the financial regulations is what the FIA “shall” do. This would be in relation to 2021 only and not decide the current battle. But one issue here is that, partly owing to the infancy and complexity of the cost cap, it is already 10 months into the following year when compliance certificates will be awarded. Any follow up hearing and punishment will drag on further still. By which time, the severity of eliminating a team or docking their points from a season that might be two years old is suddenly diminished. By comparison, ‘spygate’ was in relation to the 2006 and 2007 seasons and heard in court and fines settled before the end of September ’07.

The FIA set a firm precedent with McLaren in 2007's spygate scandal - will it do the same with cost cap transgressions?

Photo by: Glenn Dunbar / Motorsport Images

And then it would be wise to consider what is best for the championship and the governing body. While the FIA should be working to establish a precedent by which any future cases of overspending must be judged, there are of course special circumstances in relation to 2021. For all the vitriol in the paddock and online, the sacking of Michael Masi and the NDAs signed following the deeply controversial Abu Dhabi title decider, it must be asked whether it is truly worth revisiting this sorry chapter for F1 by allowing debate to run wild should a team from the title fight have its final score changed.

While there is a weakness in this argument, having cited FIA inconsistency but now going against the precise “shall” wording of the rules, maybe now is the time for utilitarianism to rule - what offers the greatest good for the greatest number? Regardless of whether it is total elimination from second in the standings or a deduction, perhaps it is best to let that remain a closed book if F1 and its fanbase are to ever move on meaningfully.

And given the partisanship that rightfully exists in a team sport with fanatical supporters, benching a team for a race in the event of a “material overspend” would be wrong, too. It would diminish the spectacle and skew the results. For fans attending or pay-per-view TV customers, they would correctly feel short-changed. In any case where F1 or the FIA might have acted differently to prevent the avoidable scenario of a team missing out on a grand prix and hurting the show as a result, comparisons would be made to Indianapolis in 2005. Besides, in this lucrative chapter for F1 with sponsors, rights holders and commercial partners to charm and keep on side, the FIA would be ill-advised to create a scenario where those with deep, deep pockets are denied the full package.

That leaves the FIA with two plausible punishments. The correct two, in this writer’s opinion. A limit on aero testing and a reduction on future cost caps. These are forward-looking and prevent revisiting Abu Dhabi in any lasting way.

Given any breaches concern 2021, it makes the subject altogether more difficult. Until we have a full breakdown of accounts, any rival to a team guilty of exceeding the cost cap can claim that this helped said party better prepare for the seismic rule change at the start of this season too. In other words, one year of overspending can have benefits lasting multiple seasons.

Red Bull boss Christian Horner has taken aim at rival squads asserting his team has overspent

Photo by: Erik Junius

Mercedes boss Toto Wolff reckons any breaches might have an impact into 2023. But since nothing can be unlearned, could that not be extended until the end of the 2025 campaign? For if funds were directed to optimising for the switch to ground-effect, that knowledge either remains relevant for the duration of the rules cycle or at least allows the team to be that bit further ahead in their understanding. Surely, to balance the scales, the team would then need to be restrained to ensure the others can play catch up. Capping the windtunnel time allotted under the sliding scale of the new Aerodynamic Testing Regulations or tightening future purse strings would allow this. Of course, if a team has knowingly broken the cost cap in the first instance, it might be prepared to surpass a reduced cost cap too. At which point, for a repeat offence, exclusion from the championship standings would be entirely appropriate.

Public perception of the FIA is poor, its relationship with F1 is fractured. But the cost cap and its preservation is critical and can help restore these links. Therefore the governing body has to act in a timely and effective manner while creating a meaningful deterrent for any future breaches. Limiting aero testing and dialling back the cost cap for any guilty parties is the best way to get close to doing this.

If Red Bull and Aston Martin are - as reports suggest - guilty, the FIA must underpin its rules with a firm deterrent

Photo by: Lionel Ng / Motorsport Images