Red Bull has become the first team to be implicated for an overspend in the new Formula 1 cost cap rules, after committing a 'minor' breach of the $145 million limit during the 2021 season.
The breach equates to just a maximum of five per-cent of that budget overspent, however there is dispute in the Red Bull camp with the FIA as they believe the 'relevant costs' are covered in the spend cap.
Prior to it being known teams were already calling on the governing body to impose significant penalties on teams that breach the cost cap in any way, due to the performance yields it could bring.
McLaren CEO Zak Brown sent a letter this week, seen by RacingNews365, to FIA President Mohammed Ben Sulayem in which he specified the types of penalties that should be levied towards Red Bull to uphold the reputation of F1 for fans, shareholders and sponsors.
Brown: Learnings from first year of cost cap should leave "No room for loopholes"
In the letter, Brown states that any "key learnings" after the first full year of running the cost cap should be shared by the FIA to the teams with "no room for loopholes" to exploit.
"It is paramount that the Cost Cap continues to be governed in a highly transparent manner, both in terms of the details of any violations and related penalties," wrote the McLaren CEO.
"It will also be important to understand if, after the first full year of running and investigating the scheme, there needs to be further clarity on certain matters or any key learnings.
"Again, any insights or learnings should be shared across ALL teams – there can be no room for loopholes."
What should be the punishment?
Mercedes Team Principal Toto Wolff has already called any breach of the cost cap a "heavyweight offence," while Ferrari Sporting Director Laurent Mekies expects "decisive action" to be made.
In his letter, Brown points fingers towards the various infractions that have been made by teams so far, and believes 'procedural breaches' which were committed by Aston Martin and Williams also "constitute [as] cheating."
He explains: "One team was guilty of a minor overspend breach plus a procedural breach, and two further teams also in procedural breach.
"The overspend breach, and possibly the procedural breaches, constitute cheating by offering a significant advantage across technical, sporting, and financial regulations."
He goes on to say: "A financial penalty alone is not enough for these violations. A sporting penalty must clearly be imposed by the FIA."
Brown outlines that teams should expect their budget cap to be reduced for the following season by double the amount that was overspent.
"We suggest that the overspend should be penalised by way of a reduction to the team’s cost cap in the year following the ruling and the penalty should be equal to the overspend plus a further fine.
"I.e. an overspend of $2M in 2021, which is identified in 2022, would result in a $4M deduction in 2023 ($2M to offset the overspend plus $2M fine). For context $2M is 25 - 50% upgrade to annual car development budget and hence would have a significant positive and long- lasting benefit."
In addition to the financial hit, there should also be a reduction in wind tunnel use as a sporting penalty according to Brown.
"There should be minor overspend sporting penalties of a 20% reduction in CFD and wind tunnel time. These should be enforced in the following year, to mitigate against the unfair advantage the team has and will continue to benefit from."
To avoid teams from benefitting from their overspend in subsequent years, Brown suggests that any "minor breach" committed in successive years should be treated as a "major breach" and that a change should be made to reduce the overspend amount from 5% to 2.5%.
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What will be the outcome for Red Bull?
If Red Bull enters an Accepted Breach Agreement with the FIA like Williams did earlier this year, these penalties mentioned by Brown could be applied to the team.
This would be the more likely option for Red Bull to protect themselves from the governing body imposing large penalties, such as getting points in the Drivers' or Constructors' Championship removed.
Sources with knowledge of the discussions believe Red Bull has gone over the cost cap by $1.75 million. A penalty of double that amount would mean Red Bull would have $3.5 million less to spend in the 2023 season which, as noted by Brown, would be the budget for car updates for a medium-sized team.
A reduction in wind tunnel time from 15% to 25% could be a possibility for Red Bull, but that is just one of a number of penalties that need to be considered by the Cost Cap Adjudication Panel of judges.