Full FIA verdict on Red Bull F1 over spending limit

default agreement accepted (ABAfor its English acronym) dated October 26, 2022 Accepted by Cost management dashboard s Red Bull Racing (RBR) in accordance with Article 6.28 of the FIA ​​Financial Regulations for Formula 1.

Maximum Cost Management acknowledges that Red Bull has acted collaboratively throughout the process and has attempted to provide additional information and evidence upon request. Bearing in mind that this is the first year of financial regulations in place, that it is a very complex set of rules that teams have to adapt to and that there is no evidence that Red Bull has sought to act in bad faith and dishonestly. or fraudulently.

The Cost Limits Department has deemed it appropriate, in the circumstances, to offer Red Bull a ABA To resolve everything that has occurred as described below, considering that the expense violation is better than the 5% set by the regulations, the willingness of the team to accept the violation and cooperate with the cost limits management.

Summary of the ABA (Accepted Hypothetical Agreement) between Red Bull and the FIA:

• The relevant costs presented by Red Bull and reported in their documents for the entire 2021 season are £114,293,000 (€132,969,255).
• Following an investigation by the Cost Cap Department, a violation was found by Red Bull under Section 8.2(e) of the Financial Regulations due to the incorrect filing of an annual report in connection with the annual reporting period ending the past December 31, 2021, since excluded and/or amended It incorrectly costs a total of 5,607,000 pounds (about 6.5 million euros).
• A misdemeanor offense has been confirmed by Red Bull under Section 8.10(b) of the Financial Regulations on Related Costs. In sum, the spending of the Austrian team in 2021 amounted to 118,036,000 pounds, that is, it was exceeded by less than 5%, with a total of 1,864,000 pounds (2.1 million euros), 1.6% more than allowed.

Summary of ABA terms and penalties:

Based on the results of the cost cap management, RBR acknowledged that the reporting documents it provided included the following costs that were incorrectly excluded and/or adjusted:

1. Overestimated excluded costs in accordance with Financial Regulation 3.1(a) (in respect of catering services);
2. costs in accordance with Section 3.1(d) of the Financial Regulations (in respect of the employer’s consideration and social security contributions);
3. Costs in accordance with Financial Regulation 3.1(h) (1) (in respect of activities other than F1), where such costs have already been offset within the total reporting group costs;
4. Costs pursuant to Financial Regulation 3.1(k) (in relation to remuneration and contributions to the
   Associated Employer Social Security);
5. Minimizing related costs in relation to the gains on disposal of fixed assets by not making the necessary upward adjustment;
6. Costs in accordance with Financial Regulation 3.1(q) (regarding apprenticeship fees);
7. costs in accordance with Section 3.1(h)(2)(1) of the Financial Regulations (in connection with employer contributions to social security);
8. minimization of related costs in connection with the provisions set out in Article 4.1(a) (1) of the Financial Regulations (in relation to the cost of using power units);
9. costs in accordance with Financial Regulation 3.1(h) (1) (in connection with the employer’s consideration and social security contributions);
10. minimization of related costs in connection with the provisions set out in Article 4.1(f) (1) (b) of the Financial Regulations (regarding the use of inventories);
11. Administrative error relating to RBR’s calculation of certain costs charged by Red Bull Power Trains Limited;
12. Certain travel expenses in accordance with Financial Regulation 3.1(r);
13. Maintenance costs in accordance with Article 3.1(1) of the Financial Regulations.

Thus, its related costs for the 2021 reporting period exceeded the cost ceiling for 2021 by £1,864,000 (1.6%). Therefore, RBR has agreed that it has breached: (i) Financial Regulation 8.2(e) for its failure to provide full annual report documentation in relation to the 2021 Annual Report period, and (ii) Financial Regulation 8.10(b) )) Because it did not keep related costs below the 2021 cost limit.

The FIA ​​acknowledges that had the RBR applied the correct treatment within the full year reporting documents of the RBR’s default tax credits in its 2021 submission of £1,431,348, the cost cap management would have deemed it to have satisfied Article 4.1 (b) )) from the regulations, so the relevant RBR costs for the 2021 reporting period actually exceeded the cost cap for 2021 by £432,652 (0.37%).

On this basis, RBR has agreed to impose the following penalties:

• RBR must pay a fine of $7,000,000 to the FIA ​​within 30 days of the date the ABA is implemented (Section 9.5 of the Financial Regulations);
• RBR receives a slight mathematical penalty in the form of restricting the RBR’s ability to perform aerodynamic tests for a period of 12 months from the date of implementation of the ABA by applying a 10% reduction to the parameter C used to calculate the individual Restricted Wind Tunnel Test (RWTT) and the applied Restricted Computational Fluid Dynamics (RCFD) to each team as provided for in Article 6 of Annex 7 of the FIA ​​Formula 1 Sports Regulations. For example, if the parameter C, based on the position of the RBR championship is 70%, the new effective value of C would be: CNEW = 70% x (1-0.10) = 63.0%;
• The costs incurred by the cost department in connection with the preparation of the ABA are borne by the RBR.

The Cost Cap Department’s decision to enter ABA constitutes its final decision to resolve the matter and is not subject to appeal. Failure by RBR to comply with any of the ABA’s terms will result in a new procedural breach under Sections 6.30 and 8.2(f) of the Financial Regulations and automatic referral to the arbitration panel at the maximum cost.