The discussion that takes place between the FIA and Red Bull over the coming days is critical to the future of Formula 1.

Red Bull was found to have made a ‘minor breach’ of the Formula 1 Financial Regulations over the course of the 2021 season.

It first came to light over the Singapore Grand Prix as speculation, before being confirmed when seven of the 10 teams received Certificates of Compliance in the days after the Japanese Grand Prix.

Williams and Aston Martin made procedural breaches, with Red Bull the only one to have exceeded the $145 million cost cap the rules have put in place.

This is a step into the unknown for the sport and has potentially significant ramifications.

Given that, there are calls from some within the paddock to take a hard stance on the situation.

Zak Brown suggested any breach of the Financial Regulations is akin to breaching the Technical Regulations; it’s cheating, and he said as much in a letter that has been widely circulated since being sent to FIA President Mohammed Ben Sulayem earlier this month.

That’s a point Christian Horner has taken offence at, arguing that in these new regulations the overspending is a result of interpretation.

It’s understood Red Bull overspent by $1.8 million after the FIA completed its audit, having made a submission $4 million under the cap.

Speedcafe.com has previously detailed where the bulk of that difference came from – personnel, catering, reclassification of parts, and tax refunds.

None of those directly relate to car performance, though the argument is that it freed money the team did spend on development.

The other side of the coin is to take a more conciliatory approach to the breach, noting it is the first time the sport has ever been in this position and there are lessons to be learned on all sides.

What the FIA chooses to do is critical because, either way, it sets a precedent.

Currently, the governing body and Red Bull are discussing an Accepted Breach Agreement – effectively an admission of guilt, with an agreed outcome.

Should the FIA propose a penalty that the team perceives as being too harsh, it runs the risk of the process becoming even more drawn out than it already is.

However, too lenient and it undermines the very reason the Financial Regulations exist.

Getting that balance right is critical, as the sport needs to be seen to be taking the situation seriously, but not doing so in a way that risks it prolonging an embarrassing situation.

It’s a tightrope with dire consequences should it make a misstep as the value of teams is now largely underpinned by the financial structures in place.

Remove those and the prospect of a business with known outgoings, and the potential to turn a profit, evaporates in an instant.

None of the 10 Formula 1 teams are currently at risk of disappearing but reverting to a sport without limits would immediately put two if not more teams in danger.

So what is the FIA to do? Does it throw the book at Red Bull and establish precedent, or let it off lightly on the understanding that this is a learning experience for everyone, and the goalposts have moved after the final whistle?

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