McLaren Racing CEO Zak Brown has written a letter to FIA President Mohammed Ben Sulayem regarding potential punishments for the teams which were not compliant with the 2021 Formula 1 Financial Regulations.

Seven of the sport’s 10 teams were fully compliant, with Williams and Aston Martin having made Procedural breaches. More alarmingly was that Red Bull was found to have made a ‘Minor overspend’.

With no punishment yet handed out, Brown has lobbied for harsh and meaningful action to be taken against all three teams.

Brown’s letter to Mohammed Ben Sulayem, October 12, 2022:

FAO: Mohammed Ben Sulayem

CC: Stefano Domenicali

12th October 2022

Dear Mohammed,

Following on from my previous letter, and now that we have more information, I would like to focus more narrowly on the matter at hand.

Firstly, we have the utmost respect and trust in the way the FIA has led the Cost Cap process. We applaud the approach which has been very collaborative and transparent and very much appreciate the work done by Federico and his team. We understand this is a challenging process for both FIA and the teams, but its importance to maintaining F1’s reputation to fans, sponsors and other investors is critical, making the strength of its governance and policing imperative.

Now we understand the spending situation of various teams, we must communicate subsequent action and penalties at pace to maintain the integrity of F1 and the rules it abides by. It is paramount that the Cost Cap continues to be governed in a highly transparent manner, both in terms of the details of any violations and related penalties. It will also be important to understand if, after the first full year of running and investigating the scheme, there needs to be further clarity on certain matters or any key learnings. Again, any insights or learnings should be shared across ALL teams – there can be no room for loopholes.

As the investigation demonstrated, of the ten teams reviewed, seven were found in total compliance with the Cost Cap rules. One team was guilty of a minor overspend breach plus a procedural breach, and two further teams also in procedural breach. 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 1-year dress rehearsal 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.

The bottom line is any team who has overspent has gained an unfair advantage both in the current and following-year’s car development.

We don’t feel a financial penalty alone would be a suitable penalty for a 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 25 – 50% upgrade to annual car development budget and hence would have a significant positive and longlasting benefit.

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

To avoid teams accumulating and benefitting from the multiplier effect of several minor overspend breaches, we suggest that a second minor overspend breach automatically moves the team to a major breach.

Finally, given the financials involved, a 5% threshold for a minor overspend breach seem far too large of a variance, we suggest a lower threshold 2.5% is more appropriate.

In closing, I would like to refer to Martin Brundle’s recent quote “…the cost cap system is brilliant, in terms of, it’s been a corner stone of why Formula 1 is in a better place today than it has, in my view, ever been….”. I am in total agreement with Martin, in fact the Cost Cap introduction has been one of the main reasons we have attracted new shareholders and investors to F1 in recent years as they see it as a way to drive financial and sporting fair play. It is therefore critical that we be very firm on implementing the rules of the Cost Cap for the integrity and the future of F1.

Sincerely,

Zak Brown
CEO