Red Bull, Mercedes and Ferrari fear penalties after exceeding budget cap

(Motorsport) Formula 1 teams Red Bull, Mercedes and Ferrari could be at risk of incurring penalties after exceeding the budget cap for this season. Every F1 team on the grid has a budget cap of $140m (£119m) for the 2022 season to ensure a more competitive season and a level playing field, however, with the rise in inflation and freight costs, the budget has come under considerable strain with the three biggest teams of the sport insisting that the cap be increased due to the circumstances.

In an interview, Red Bull Team Principal Christian Horner said “At the time we all agreed to those reductions, nobody could have predicted what was going on in the world and how that is driving inflation in every household globally. We're seeing it in Formula 1, we're seeing it with logistics, we're seeing it with energy costs. That to me is something the FIA needs to take into account. They have the ability through force majeure to apply an inflationary effect because we don't have enough levers to get down to the cap. I think that's the same for probably seven of the teams in Formula 1. "We've still got six months left this year, inflation still looks like it's rising rather than diminishing, and hopefully the FIA will act shortly." 

Ferrari team boss Mattia Binotto agreed with Horner and said “I think that there will be no way for us to stay below. So, I'm pretty sure that at some stage we will go over. In the regulations, there is a threshold, which is 5 percent. If you do not exceed the 5 per cent, on the top of what's the budget cap threshold, it will be considered a minor breach. And what's a minor breach in case of force majeure? What will the stewards and the FIA decide on that, in terms of penalties? No idea – but I don't think there is any way for us – and for many teams – simply to stay within, and even laying-off people, I don't think that's a good and right choice." 

Mercedes’ Toto Wolff also echoed Ferrari and Red Bull’s sentiments by saying “The cost cap was introduced for specific purposes, to allow the small teams to spend the same amount as the big ones. There shouldn't be bargaining every year to lift the cost cap up. But I think we're facing an exceptional situation in that we have real inflation that is north of 7 per cent at the moment. Our energy prices in Brackley have tripled, our freight costs have tripled. 

“I think that is something that needs to be considered because we want to avoid any circumstance, reorganization and restructuring the big teams again in a way that would be really damaging for us as a team and as an industry. This is a force majeure situation, having a raging war in the Ukraine and the consequences that it had on energy prices is not something anybody could have foreseen. There needs to be some sort of compromise for the teams that are against an inflationary adjustment and the teams that are for it."

However, not all teams on the grid are unanimous in agreement with Alpine and Alfa Romeo against the adjustment of the budget cap. Alfa Romeo's Fred Vasseur said “We are in this situation and sooner or later we will have to stop the development of the car because we will be at the limit of our budget. And I think everybody can do the same. It's absolutely not a case of force majeure, because inflation is not a case of force majeure.” Alpine’s Otmar Szafnauer said “Most teams do their budgets in November, December timeframe, for the following year and we are no different and at that time, inflation was already at 7+ per cent. RPI in England was 7.1, 7.2 per cent. We took that into consideration when we did our budgets and laid out all the development work that we were going to do. And we're still within it. Where there's a will there's a way and we set a budget cap and we should stick to it." 

Also read: Formula 1: Red Bull extend Sergio Perez’s contract until 2024


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