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FIA

FIA issue important directive to stop teams exploiting cost cap

The governing body has issued a Technical Directive to close a loophole in Formula 1's cost cap regulations.

Start Spain 2023
Article
To news overview © Red Bull Content Pool

The FIA has issued an important Technical Directive to close a loophole in the cost cap regulations regarding the use of staff and special project divisions.

It has been common practice for F1 teams to employ senior technical staff to work in separate divisions on technical projects, which enables them to apply their knowledge from racing to other business areas.

Top teams including Mercedes and Red Bull have 'Applied' areas of their business which includes working on multiple projects including road cars, yachts in the America's Cup, e-scooters and other areas where technology from Formula 1 can be trickled down.

But amid suspicions that teams were gaining an unfair advantage from gaming the system to employ people in these areas to improve their F1 knowledge outside of the cost cap, the FIA has stepped in by issuing a Technical Directive, according to Gazetta.

TD45 warns teams that Intellectual Property gained from projects running outside of their F1 operations must fall under the cost cap, and cannot come from free sources within the same company. Knowledge gained from F1 operations can still be passed down to these Applied companies.

Teams already warned of 'loophole' in the system

Alpine Team Principal Otmar Szafnauer has previously warned of loopholes being exploited by top teams nullifying the effect of having a cost cap in place.

“It seems like more and more teams are looking at their well remunerated employees that way for cost cap reasons,” he told media, including RacingNews365.com.

"There comes a time where all these ancillary businesses that are now cropping up – which without a budget cap wouldn't be there – we've got to look at that and make sure that the loopholes aren't big enough where we effectively don't have a [cost] cap.

"I think the cap itself has helped F1 as a whole and driven valuations of the teams higher. The cap we have now is still 10 times more than any other racing formula spends on going motor racing."

He also questioned how Intellectual Property will be accounted for in separate business divisions, given that teams could easily game the system if they marginally account for F1.

"If you have a great F1 idea because you're working on something else, how do you account for the stuff that you thought of when you're working on something else? And that's just an idea," he explained.

"But if you take that even further, it could be other things; developing tools for a boat, but that tool applies to F1 and you've spent loads of investment on developing the tool – then you marginally account for F1."

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