BREAKING: FIA penalizes Red Bull for 2021 F1 cost breach

The FIA has handed Red Bull a $7 million fine and a docked car development time (10% reduction) in its Accepted Breach Agreement as part of the punishment for breaching the F1 budget cap in 2021. This brings to an end an extended period of speculation around the budget cap breach that started during the 2022 F1 Singapore GP.

According to the FIA's announcement, the team overspent by 1.6%. The FIA, however, also admitted that it would be under 0.4% had Red Bull filled a permitted tax credit correctly.

The $7 million fine will not be from the cost cap, and hence, this won't be too big a financial hit for the team. The 10% reduction in the wind tunnel and computation fluid dynamics time over the next 12 months, however, will cause significant damage to the team.

With Red Bull being the constructors' champions this season, it was supposed to only have 70% of the current limit (that stands at 40 runs per week). With a 10% reduction, that number would further come down to 63% for the team.

While announcing the punishment, the FIA Cost Cap Administration stated:

"Red Bull acted cooperatively throughout the review process and has sought to provide additional information and evidence when requested in a timely manner, that this is the first year of the full application of the Financial Regulations and that there is no accusation or evidence that RBR has sought at any time to act in bad faith, dishonestly or in a fraudulent manner, nor has it willfully concealed any information from the Cost Cap Administration."

The FIA's statement further stated:

"Red Bull's accounts were finalized in Pound Sterling and the ABA shows its original submission came in at £114,293,000 ($132.4m at the current exchange rate) — nearly £4,000,000 ($4.6m) under the cap — but that the Cost Cap Administration found it inaccurately excluded and/or adjusted costs amounting to a total of £5,607,000 ($6.5m) in its 2021 Full Year Reporting Documentation."

When the FIA worked out the relevant cost that came under the cap, it was found that the team had exceeded the cost cap by £1,864,000 ($2.2m), or 1.6%, equating to a minor overspend breach. The FIA, however, did acknowledge that Red Bull had incorrectly applied and allowed tax credit worth £1,431,348 ($1.7m), and had it done so properly it would have exceeded the 2021 cost cap by £432,652 ($500,104), or 0.37%.

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Where did Red Bull breach the F1 cost cap?

According to the FIA, there were a total of 13 areas where they found adjustments that needed to be made, including catering costs, sick pay, and the value of unused parts. Specific figures for every single area were prohibited from being released due to data protection laws.

The possible monetary impact probably won't affect the team much, but simultaneously, the impact of the 10% reduction in development will be massive. The team's championship defense will be in a spot of bother next season as rivals Mercedes and Ferrari will be taking advantage of the extra development time that they have at their disposal.