Red Bull cost cap drama continues: Confrontation beckons for accused team and Formula 1 rivals at US GP

With tension rising and accusations flying after Red Bull were found guilty of breaching Formula 1's cost cap last week, Sky Sports News' Craig Slater delves into the drama that is set to ignite off the track at this weekend's United States GP, with fresh insight in a must-read report...

Formula 1's cost cap was confirmed at a news conference in Austin, Texas in November 2019. This Saturday, another Austin news conference will underline how its now F1's most divisive issue.

Red Bull's Christian Horner, whose team breached the cap, will face the media alongside Zak Brown, whose leaked letter to the FIA claimed exceeding the cap constitutes "cheating".

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Brown's letter, seen by Sky Sports and initially reported by the BBC, does not mention Red Bull by name. However, he explicitly references last week's FIA announcement which confirmed Red Bull's "minor" overspend and "procedural" cost cap breach as well as Aston Martin's procedural breach. Williams were fined earlier this year for their own procedural breach.

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Brown contends: "The overspend breach, and possibly the procedural breaches, constitute cheating by offering a significant advantage across technical, sporting and financial regulations.

"The FIA has run an extremely thorough, collaborative and open process. We have even been given a one-year dress rehearsal [in 2020], with ample opportunity to seek any clarification if details were unclear. So, there is no reason for any team to now say they are surprised."

That last remark appeared to reference Red Bull's "surprised and disappointed" reaction to have exceeded cost cap. Red Bull offered no comment when asked to respond to Brown's letter.

Sky Sports understands, unsurprisingly, they vigorously reject any notion they cheated and that the overspending in part relates to unused parts, cafeteria expenses and other unexpected costs relating to redundancies.

Could FIA punishment make or break the cost cap?

Brown's letter was sent to the six compliant teams and F1 President Stefano Domanicali. However, its principle addressee was FIA President Mohammed Ben Sulayem, at the precise moment he has to oversee a verdict on Red Bull's breach.

Several senior motorsport figures have told Sky Sports that how Ben Sulayem deals with this is "by far" the biggest test of his presidency. Might his decisions make or break the cost cap? Brown thinks so, and makes specific recommendations.

"The bottom line," Brown says. "Is any team who has overspent has gained an unfair advantage both in the current and following year's car development.

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"We don't feel a financial penalty alone would be a suitable penalty for an overspend breach or a serious procedural breach. There clearly needs to be a sporting penalty in these instances, as determined by the FIA.

"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 [a] 25-50 per cent upgrade to [an] annual car-development budget and hence would have a significant positive and long-lasting benefit.

"In addition, we believe there should be minor overspend sporting penalties of a 20 per cent 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."

Whether Ben Sulayem agrees, or what F1's leadership and the other teams make of Brown's recommendations, will emerge over the coming days.

One senior figure from another compliant team told Sky Sports: "We tend to agree that teams can gain a significant advantage by not adhering to the cap. The punishment must be such that the advantage gained is removed and then some in order to disincentivize future breaches."

Another team boss, also from a compliant team, took a different view, stating: "The FIA should be left the freedom to do its own investigation and come up with the appropriate penalty, it should not be a case of teams pushing for this or that outcome."

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But they added that "it is obvious to us that a penalty will need to go well beyond a fine, or else teams will just game the system and consider the fine as cost of business. But it is for the FIA to find their solution, aware of the fact that failure to do so will mean the end of the budget cap."

Does the classification of "material" and "minor" breaches need review? Brown thinks the five per cent (or $7.25m) overspend threshold for a minor breach is too high and suggests it should be half that. He also wants a second minor breach to trigger a material breach, to avoid teams exploiting the rules via cumulative small overspends.

How far Red Bull are over limit, why, and what now?

How minor is Red Bull's breach? All that has been confirmed officially is that it is below the five per cent threshold. Sky Sports has learned that it is towards the lower end of that scale at around the one per cent mark. That's to say less than half the threshold Brown suggested should become the reduced "minor" breach limit.

Red Bull's submission is understood to have been below the limit by several million dollars. What took them over is yet to be disclosed. Has the absence of that information considerably fuelled the ongoing controversy? Sky Sports understands the issue could be heading towards a resolution in a matter of days, rather weeks.

Horner's team now have two options. The first is to partake in an accepted breach agreement. This could be sorted out in a matter of days. It would entail Red Bull admitting their submission was in error - which they have so far disputed - and accept a penalty. The FIA advised that minor overspend breaches would result in "Financial Penalties and/or Minor Sporting Penalties".

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Significantly, accepting the breach agreement would draw a line under the matter. There are no means by which teams can formally protest another team's penalty if they deem it insufficient.

That last aspect could be significant. F1 rules are to a considerable extent policed by the vigilance of rival competitors.

Teams seek FIA clarifications of designs and practices and resultant technical directives shut down loopholes or potential rules breaches. The recent cost cap queries, the questioning of update spending by Mercedes, Ferrari's concerns and now Brown's intervention have felt akin to the public highlighting of controversial bodywork or engineering - to provoke FIA intervention. However, in terms of 2021's financial activities, it may have all come too late.

The cost cap has its own complaints procedures within the sporting regulations and the complaints window for 2021 shut in April. Formal complaints can only be raised between January 1-April 30 of the year after the relevant submission. Significantly, no formal complaints procedure was activated by any F1 Teams within that period.

Red Bull's other option would be to argue they kept within the $145m limit before the FIA's cost-cap adjudication panel. This is a group of six to 12 independent judges who would hear further submissions from Red Bull before making a ruling. Potentially Red Bull could even appeal their ruling or ultimately take their case to court. It would further draw out a process which has already taken attention from Max Verstappen's dominant victory in the drivers' championship and the team's imminent constructors triumph.

What will the FIA ultimately decide? It must be said that nowhere has the FIA accused any team, Red Bull included, of deliberate wrongdoing. Instead recent FIA communications emphasised how "all competitors" had worked "positively and collaboratively" with administrators. In announcing Red Bull's "minor" overspend the FIA also explained that only a confirmed "material" overspend would result in mandatory constructors championship points deductions. Has the governing body already set a rough framework for what it intends to do?

A cost cap announced in Texas faces its acid test in Texas three years on. Given teams made their submissions in the spring this whole process has been drawn out rather than quick on the draw.

Yet the precedents set here will have lasting implications. This weekend could see wild words in the wild west. Can Mohammed Ben Sulayem prove an effective sheriff? Surely a harder task will be to keep everyone happy.