THE BUDGET CAP ISSUE

On October 11, 2022, an FIA statement significantly stirred emotions regarding the Budget Cap issue in Formula 1. The matter, which had already been known in previous weeks, took a sudden turn following Max Verstappen’s championship win, achieved with his first-place finish at the Japanese Grand Prix in Suzuka. Verstappen’s team, Oracle Red Bull Racing, alongside Aston Martin, was found guilty by the Fédération Internationale de l’Automobile (FIA) of violating financial regulations. However, there is a distinction between the two cases: while Aston Martin’s infraction was merely procedural (failing to include a budgetary item that should have been accounted for), resulting in a simple fine, Red Bull breached the cost cap, albeit to a lesser extent. 

The term “minor breach,” as stated in the FIA’s official communication, caused some confusion among Italian media, but the FIA’s interpretation refers to a violation below 5% of the $145 million Budget Cap, equating to $7.25 million. In the days leading up to the verdict, Red Bull worked with the FIA to argue that certain items should not be included in the Budget Cap, though the FIA disagreed. This effort allowed them to avoid falling into the category of a “material breach,” which would have resulted in more severe consequences. However, the situation remains significant. 

The aspect raising the most doubts is the fact that this regulatory infraction pertains to the 2020-2021 season. This season was notably won by Red Bull driver Max Verstappen in the final race against Lewis Hamilton. Initially, economic reports suggested that Red Bull made illegal modifications to the rear wing to generate greater downforce. However, more recent reports indicate the team exceeded the Budget Cap due to personnel vacation costs and post-race catering expenses. Nonetheless, these claims, which Red Bull has not denied, should not be automatically accepted as true, given that penalties also depend on which budget items were involved. Consequently, it could be in Red Bull’s interest to promote such narratives. 

A post on Red Bull’s social media channels does not indicate any intention from the team to admit guilt or back down, suggesting that this matter could persist for some time. Meanwhile, the FIA has reserved the right to decide in the coming days. Potential penalties, which can be combined, include: 

– Public reprimand; 

– Fine; 

– Exclusion from sessions, except the race; 

– Limitations on wind tunnel usage for future developments; 

– Budget Cap reductions for future seasons. 

These are the most probable sanctions, though there is concern that this dangerous historical precedent might lead other teams to exceed the Budget Cap deliberately to win a championship, accepting minor penalties in the following season—or, as in this case, two years later. For this reason, two additional sanctions could be more appropriate: 

– Deduction of points in the 2020-2021 Constructors’ Championship (won by Mercedes); 

– Deduction of points in the Drivers’ Championship, leading to the 2020-2021 title being awarded to Lewis Hamilton. 

Further developments are sure to follow, as the 2020-2021 World Championship is once again under scrutiny. For the FIA, this will be a historic decision, which could take more time to finalize. Regardless of the outcome, one thing is certain: from this moment on, Formula 1 will never be the same. 

By Spampinato Antonio