An unusual delay in the FIA issuing Formula 1 teams with their cost cap compliance certificates has fuelled mounting speculation over potential rule breaches being probed.
Ever since the F1 cost cap came into force for the 2021 season, the confirmation of the FIA’s reviews of teams' submissions that are submitted by a March 31 deadline has normally been completed shortly after the summer break.
When all 10 teams have been found to comply with the regulations, the FIA has issued its compliance certificates around the same time. In 2023, it came on September 5, while last year it was on September 11.
The only time things got delayed beyond early September was in 2022, when both Red Bull and Aston Martin were found to have broken the cost cap rules.
As a result of the extra time needed for the FIA to conduct extra analysis of those teams’ submissions, the announcement confirming the all-clear for eight teams for 2021, plus the two breaches, was made on October 10, the following year.
With it now a fortnight beyond that date, and up to seven weeks beyond when the FIA has traditionally announced an all-clear, there has been mounting speculation within the paddock that the delay is because the FIA is involved in some extended investigations.
While sources have suggested that potential breaches by more than one team are being probed, it is not uncommon for the FIA to look at submissions in detail and need to take whatever time is needed to check that everything is in order.
So it is possible that while some back and forth discussions over interpretations of the budgets and rules compliance are ongoing, everything could still, in the end, be found to be in order.
However, the scale of the delay in issuing the compliance certificates suggests that things are far from clear-cut, as the delay has become long enough to fuel talk in the paddock about possible FIA action.
The FIA itself said on Thursday that the review of the 2024 submissions was not complete yet but that it expected to report its findings soon. It also made it clear it would not be offering any insight on individual teams.
An FIA spokesperson said: “The FIA’s Cost Cap Administration is in the process of finalising the review of the 2024 submissions from teams and power unit manufacturers, the result of which is expected to be communicated shortly.
“The FIA does not comment on individual submissions made by specific teams and/or powerunit manufacturers and, as per established practice, the results of the review will be made public once assessment of all submissions are completed and finalised.”
The cost cap last year was set at a base figure of $135 million, but due to inflation and an adjustment because of the size of the calendar, it came in at roughly $165 million.
There is also a powerunit cost cap that runs to $95 million.
What happens if there is a breach?
Once teams have submitted documentation of their spending for the previous 12 months by the March 31 deadline, it is then examined by the FIA’s Cost Cap Administration.
The FIA then concludes that everything is in line with the regulations, or if there are uncertainties, then it can open an investigation.
If everything is in order, then the FIA will issue what is known as a compliance certificate to prove that the team was under the spending limit.
If the FIA deems that there has been a breach, then there are two options on the table.
One is to enter what is known as talks for an Accepted Breach Agreement (ABA) for a procedural or minor spending breach.
The other is for there to be a Cost Cap Adjudication Panel for more serious rule-breaking.
Article 6.11 of F1’s Financial Regulations states: “There shall be no right of appeal against any decision by the Cost Cap Administration to issue a compliance certificate to an F1 team.”
The ABA works by the Cost Cap Administration proposing sanctions it thinks are suitable for the scale of the break, which includes “aggravating and mitigating factors” – and these can be accepted by the team or rejected.
To accept an ABA, a team must acknowledge that it has breached the financial regulations; accept, observe and satisfy the sanction(s) and/or enhanced monitoring procedures levied; agree to bear the costs detailed in the ABA, and waive its right to challenge the ABA.
If a team rejects accepting an ABA, or its offence is more serious, then the matter is policed over by the Cost Cap Adjudication Panel, which is made up of between six and 12 judges elected by the FIA General Assembly.
Its hearing takes place behind closed doors, and no facts or other information from it can be disclosed either before, during or after the proceedings – beyond the final decision that is made.
Its ruling can be challenged at the FIA’s International Court of Appeal.
What punishments can be handed out?
The scale of punishments for a cost cap breach depend exactly on what the offence is.
If it is a procedural breach – such as a late submission, or failing to respond to requests for information – then a team will be given a financial penalty only.
If it is for late and then non-submission of cost cap documents entirely, then a team can have constructors’ championship points deducted.
If there is a minor overspend breach, which counts as less than 5% over the cost cap limit, then a team may impose a financial penalty and/or minor sporting penalties.
The FIA classifies minor sporting penalties as a public reprimand, deduction of constructors’ or drivers’ championship points, suspension from races, limitation on aero or other testing or a reduction of future cost cap.
If there is a material breach, which is busting the cost cap by more than 5%, then a team will be docked constructors’ championship points, plus it may also get a financial penalty and a material sporting penalty.
The FIA rulebooks list the same punishment options as for a minor breach, but it does include the possibility of exclusion from the world championship.
What is the precedent?
Back in 2022, Red Bull and Aston Martin were punished for different breaches of the cost cap rules from the previous season.
Red Bull was fined $7 million and faced a 10% reduction in windtunnel testing for a minor overspend of less than 5%.
The FIA found the squad had exceeded the circa £145 million cost cap by just more than $2.3 million. Had the team correctly applied a notional tax credit, its breach would only have been $536,500.
Aston Martin was fined $450,000 for a procedural breach having been found to have incorrectly excluded and/or adjusted costs pertaining to the building of its new headquarters and other spending, such as signing bonuses, used inventories, and costs of catering.
In that first year, Williams also voluntarily disclosed a procedural breach in submitting its annual reports beyond the March 31 deadline, and was fined $25,000.
