As a result of going over the $145 million Formula 1 cost cap in 2021, Red Bull have been ordered to pay a $7 million fine and forfeit 10% of its wind tunnel and CFD simulation allowances over the next 12 months.
In its ruling, the FIA has emphasised the complexity of the new financial rules introduced in 2021 and that it is the first time in F1 history that a budget cap applied
However, Red Bull was found to have fully co-operated with the governing body by providing all the requested information and provided further clarifications as quickly as possible.
They also did not intentionally break the rules, nor did they act fraudulently or withhold any information during the six-month auditing process.
Thus the team were offered an Accepted Breach Agreement (ABA) during the course of the United States Grand Prix, then finalised on 26th October.
Why no further punishment?
The narrative received enormous attention in the F1 world given the controversial end to the 2021 Drivers' Championship, with some team principals even suggesting that Red Bull had ‘cheated’.
Why then wasn't Red Bull punished more stringently, given rhetoric that exceeding the cost cap could influence on-track performance during the current and subsequent seasons?
Had Red Bull not chosen not to enter into the Accepted Breach Agreement offered by the FIA the team may well have faced harsher penalties including loss of points, a disqualification or a ban.
As was the case with Williams, the ABA enables a team to accept wrongdoing provided the breach is of a ‘minor’ nature – up to $5m overspend as per the Financial Regulations. By doing so a team leaves itself open to only financial and/or sporting penalties but no points deductions or disqualification.
Given the nature of the breaches, the FIA felt it appropriate to offer a settlement to Red Bull: "Because Red Bull's procedural violation is minimal, they only committed a minor violation of less than 5%, Red Bull was willing to admit it and because the team was willing to cooperate with the Cost Cap Administration, we made them a settlement offer," the FIA’s bulletin reads.
Initially Red Bull was £3.8 million under the budget cap when submitting their financial figures in March, but when the figures were re-processed it turned out they had not account for £5.6 million in various areas, putting them £1.8 million (1.6%) over the budget cap.
This was due to various factors including catering, sick pay, spare parts and issues with the United Kingdom's tax authorities, HMRC, as exclusively revealed by RacingNews365.com.
The FIA mentions that had the tax refund of £1.4 million from HMRC been properly processed and stated in its financial report, the governing body would have accepted it. In this scenario Red Bull would have only been £400,000 above the budget cap.
While a $7 million fine might seem insignificant for a company that signed numerous major sponsorship deals prior to the 2022 season, it is the reduction in wind tunnel time and CFD simulation allowance that will hurt them most given they already will have reduced time for winning the Constructors' Championship this year.
The FIA report states that “The decision of the Cost Cap Administration to enter into the ABA constitutes its final decision resolving this matter and is not subject to appeal. Non-compliance by RBR with any terms of the ABA will result in a further Procedural Breach under Articles 6.30 and 8.2(f) of the Financial Regulations and automatic referral to the Cost Cap Adjudication Panel."
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