(L to R): Max Verstappen, Red Bull; Charles Leclerc, Ferrari; Miami International Autodrome, 2022

Solve budget cap row or risk championship being decided in appeal court – Horner

2022 Monaco Grand Prix

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Red Bull team principal Christian Horner has warned the 2022 world championships could be decided in the FIA Court of Appeal if the ongoing row over the budget cap isn’t resolved.

A sharp rise in inflation following Russia’s invasion of Ukraine in February has led Horner and other team bosses to warn they will have to make severe cuts in order to keep their spending within the $140 million (£110.8m) cap imposed for this year. The limit includes certain allowances and adjustments.

While a majority of teams are believed to be in favour of easing the spending restrictions, any change in the rules is being blocked by some of their rivals with smaller budgets.

“Obviously there’s a couple of teams [against] and the voting process for the in-season changes in the budget cap obviously requires a certain threshold which currently there isn’t,” Horner acknowledged.

He called on the FIA to take action and impose new measures to help teams which are struggling to keep their spending within the limits.

“We need the FIA to take early action on this” – Horner
“You’ve got to look at the bigger picture. Is this a force majeure event? I would say an act of war that is driving up the inflation would be classified as a force majeure event.”

He is concerned the outcome of the championship could be thrown in doubt if teams protest rivals for over-spending at the end of the year.

“What we really want is clarity, because none of us want to end up at the end of the season all rushing to courts of appeal in Paris saying ‘he spent a million dollars more than we did’ and so on. So I think we’ve just got to come to a sensible threshold.”

Horner previously same some teams would have to miss races if the limit was not adjusted. “What I was trying to point out last weekend when I was asked the question was it would be the equivalent of we would have to miss numerous races to get anywhere near getting costs under the cap,” he said. “I think everybody, certainly all the major teams are going to breach that 140 count this year.”

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The Financial Regulations impose different penalties depending on how much a team exceeds the spending limit by. Horner said teams were now having to consider the implications of those rules if they exceeded the limit to pay for more upgrades to their cars.

“What we don’t want to end up doing is, there’s a 5% threshold for a minor breach. What is the penalty for a minor breach? What we don’t want to do is end up playing a game of chicken as to say, does he go to 4.9 over, do we go 4.7 over? And that one upgrade could be the differentiating factor of this world championship.

“What we do need is clarity and clarity quickly because quite simply it’s not right to be held to ransom by a couple of teams that aren’t perhaps affected because that was never the design of the budget cap.”

Red Bull already reduced the size of its workforce to meet the budget cap when it was originally introduced last year, said Horner, and may have to go further under the current circumstances.

“The budget cap was there to limit the top teams from a spending frenzy. None of us could predict when we came up with the budget cap figures, which if you remember were reduced by $30 million from where they were originally set during the pandemic, and when we sat around and read those figures nobody could have even contemplated world events that are driving inflation.

“We don’t even know what that inflation is going to be in the second half of the year. And we’re all seeing the cost of living, rising costs and utility bills going through the roof. Where is that going to go in the next six months?

“So we do need the FIA to take early action on this because we’re coming up to the mid-year point and there’s only so much you can do. We have a responsibility to our employees as well. We reorganised, we reshaped, we had to say goodbye to many long time employees through redundancies last year to get down to a point that was consummate with the cap before inflation came along and I don’t think it’s right that the pressure should be put on mass redundancies within the sport.

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“So I think hopefully common sense will prevail. It is a force majeure situation. It is a situation, obviously, that none of us could have foreseen that have driven these costs up. And pragmatically we just need to come to a common sense solution.”

Alpine and Alfa Romeo oppose easing the cap
However rival team bosses said those at risk of breaching the cap should reduce their expenditure on car development.

“If we have some increase on energy or freight the best solution is to switch off the wind tunnel to stop to bring updates every single weekend,” said Alfa Romeo team principal Frederic Vasseur. “We have this situation and sooner or later we 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.”

Alpine team principal Otmar Szafnauer also opposes adjusting the spending limits to account for the rises in inflation. He said Alpine had taken the potential increases into account and were able to bear them.

“Most teams do their budgets in November to December timeframe for the following year and we are no different,” he said. “At that time inflation was already at seven-plus percent. RPI [retail price index] in England was 7.1, 7.2%.

“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 even though it was a little bit more expensive than we thought.

“We’re still under the cap and we plan to be there at the end of the year. We’ll adjust the development accordingly just like Fred said. So I think it can be done. Where there’s a will, there’s a way. We set a budget cap and we should stick to it.”

2022 Monaco Grand Prix

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Keith Collantine
Lifelong motor sport fan Keith set up RaceFans in 2005 - when it was originally called F1 Fanatic. Having previously worked as a motoring...
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48 comments on “Solve budget cap row or risk championship being decided in appeal court – Horner”

  1. I read as: “Sure, everybody will cheat on the budget cap.”

    1. Barry Bens (@barryfromdownunder)
      28th May 2022, 12:10

      Binotto already said he doesn’t see how they can not-cheat at Ferrari, so that’s the top teams covered.
      Mercedes surely can’t be brininging much more after they’ve been doodling about for the first quarter of the season.

      1. Mercedes might well decide that this year is lost, in which case, stick closely to the limit, put everything into next year and be ready to ask questions of those ahead @barryfromdownunder, and after those two so blatantly announcing they wouldn’t want to stick to it, well, not sure they should be blamed, right. In any case, maybe I haven’t read it, but they seem very mum about it atm (but indeed, they do have other worries perhaps).

        1. Next year’s car will just be an extension of this year’s car, though. They need to understand it before they can improve it.
          It doesn’t make sense to drop a season this year.

          1. That depends on whether or not they are going to stick to their sidepodless car concept. If they have gave up the idea then they will surely throw all their resources into designing next year’s car.

          2. Yeah, maybe.
            But still, they’d be crazy not to understand and try to optimise what they have before they start again from scratch

  2. Little ground for appeal I guess.
    I once ran out of pocket money, but the judge wasn’t very receptive and let my parents walk.

    1. A better solicitor, or of your budget had stretched to a QC or barrister (someone who knows how to ‘grease’ the wheels of justice), then you have had a more favourable outcome. You really need to hit parents hard where it hurts, maybe even to a fair work commission or ombudsman if the court system has been unsuccessful.

  3. How about reducing drastically drivers’ salaries?

    1. This is about the budget cap so there is zero relevance to your statement.

      1. How about including the three exempted top personal in the cap? How about including hospitality in the cap? And maybe the drivers too. How about asking your petroleum sponsors to stop gouging so shipping cost don’t sky rocket? and more….

  4. Christian is one to talk. They took the pains of painting the show car, then bring a dummy car for the first test and then bring a new car for the 2nd test.

    1. Haha, true!

  5. Jake Andrews
    28th May 2022, 12:18

    Ha, stones from glass houses when his driver’s precious WDC could’ve been decided in court last season

  6. Chris Horton
    28th May 2022, 12:23

    Don’t overspend.

  7. I thought we decided last season that the championship shouldn’t, and wouldn’t, be decided in appeals court?

  8. Waaa I spent all my pennies and it’s all your fault!

  9. Horner concerned that the outcome of the championship could be thrown in doubt. Did I read that right?

    1. There’s no doubt whatsoever about last year, hamilton still got some 15+ luck points over verstappen after the abu dhabi problem.

      1. @Esploratore Max Verstappen WDC*

        1. Masi Verstappen*

  10. I would assign this case to Masi.

  11. So, Horner is saying “because we can’t do it, this rule should be removed.”

  12. Oh, come on, simply stop current car development sooner, as I’ve pointed out before.
    This should make staying within the cap possible. Fred Vasseur’s verdict is the best.

    1. @jerejj

      simply stop current car development sooner

      Yes because doing that & letting the competition run away with the championship will be great for ‘The show’ that Liberty Show Media seem to care about more than the sport.

      Can’t wait to see the whining from fans if Red Bull have to end development early & Ferrari end up running away with the championships in dominant fashion over the last half of the season.

      1. All the big teams will be suffering the same issues, PeterG.
        They’ll all take a bit more and suffer whatever inconsequential penalty they are given.

        Given how many years Mercedes ran away with the championship in recent years, most people are merely grateful that it’s as close as it is right now.
        Can’t expect it to last forever.

        There comes a point where, regardless of whether you like or dislike the concept of a budget cap, you have to accept that it is a current F1 rule and must be both enforced and respected.
        People will always complain about something in F1 – but I personally hope that it isn’t re-writing the rules mid-season again.

        1. Plus by increasing the budget you’d be taking away from the teams that have stayed under the cap legitimately.

          1. Yes. Those who planed well will be punished.

            And with one of those being Alfa Romeo – that would be the second time this year the rules have been changed against their favour after they’ve done so well to stay within them.
            First the last-minute weight increase and now the budget cap… I feel for them.

  13. Force majeure? No, its the usual commercial risk every company has to take.

    FIA should eventually subtract points for teams which are over-spending.

  14. The Dolphins
    28th May 2022, 13:17

    As long as there is One team at the end of the season within the budget cap Red Bull doesn’t have a case.

    1. And there will be for sure seeing as some teams constantly spend less than the cap.

  15. If even one team can make it through the season within the cap, it proves the cap is just fine and Red Bull should just spend less money. They might no longer have the best car when they do that, but that’s part of the point of the cap in the first place: to stop teams like Red Bull spending hundreds of millions on their cars to ‘buy’ results.

  16. I was in favor of the idea of a cost cap back when Max Mosley was first discussing it what 15 years ago now & I was likewise still in favour of the idea of it when it came back up & got adopted this time (Although I’d have preferred the Max Mosley idea of a budget cap with more open regulations rather than the tighter restrictions we ended up with).

    I must admit however that I have really cooled on the idea now that it’s been adopted the way it has & with how some of the unforeseen outside forces can affect it along with how some of the other potential consequences of it have started to come up.

    A championship been decided because a team goes up against the cap basically meaning that the regulations don’t allow them to continue to develop to stay in the title fight or because a team is penalised for going over the cap just isn’t something I want to see.

    Just imagine a scenario where we have this thrilling fight between Charles & Max all year but Red Bull have to halt or just slow development due to the cap with a few races to go while Ferrari can keep spending & end up dominating the end & running away with both titles. I’m just not sure I see that as a positive outcome or look for F1.

    F1 has never been a level playing field & I don’t think it ever really should be. The big teams that have more money should be able to spend it & if smaller teams can’t afford to stick with them then so be it, That’s just what F1 is & how it has always worked. Trying to artificially level the playing field with spending caps or success penalties (The silly wind tunnel/cfd sliding scale nonsense) just cheapens the series (Indycar+ it shall become).

    1. unforeseen outside forces can affect it

      You mean, like a budget in every other application? Thank goodness for that. Would be totally useless if there weren’t external influences, really.

      Just imagine a scenario

      The scenario you describe puts sporting purity above entertainment, @roger-ayles. I’m a little surprised that you don’t like that.

      F1 has never been a level playing field & I don’t think it ever really should be.

      I think the intention (Mosley’s, more so than Liberty’s) is to create a field that is financially level, so that ingenuity, skill, knowledge and dedication make the difference rather than money.
      That is the greatest sporting field imaginable in a technical/engineering motorsport, I think.

      But then F1 gave too much power to the teams to decide the rules, thus ruining it all.

    2. It’ll take the big spenders some time to adjust to the cap, but as has been noted in one of the other comments, plenty of teams never spend more than the cap to begin with even before it came into play, so it’s fine. It’s perfectly possible to run, race and develop F1 cars for less than the cap.

      In the event that, as you say, “the regulations don’t allow them to continue to develop to stay in the title fight” then that’s not necessarily a problem. Firstly because their unsustainable big spending is likely why they were in the championship fight to begin with, and secondly because if the other team(s) in said fight can do a better job while spending less or the same, that in no way devalues their success. Rather, it would show that there’s more to F1 than just spending money on endless (virtual) tests, hiring more and more engineers, and coming up with 20 versions of the same front-wing thereby ‘brute forcing’ the development.

    3. but Red Bull have to halt or just slow development due to the cap with a few races to go while Ferrari can keep spending

      Why would you expect that, instead of the other way round?

      Jus because Horner is complaing now? Red Bull is famous for complaining preemptively, like the usual threat of pulling out both teams if something is not to their liking.

  17. So, they screw up their budget and now they te trying to change the rules mid-season pretending It to be a major concern for all teams?

    This is so Horner.

  18. Horner. Doesn’t. Want. A. Championship. Ending. In. Appeals. Court?

    LOLOLOLOLOLOLOL

    1. To be fair, he didn’t want it last year either.

      I think it would be much more ironic if this quote had come from Wolff instead, who actually did appeal it last year. Twice.

  19. With the increase of Horner’s whining and the nervous responses of Marko, it seems that the rumour about RBR already near the budget limit is somehow true. Ferrari do have the best all around car, it was just lagging to the RBR on the straights.

    RBR realized that strategically introducing upgrades by respecting the budget cap will not reduce the gap to Ferrari because they will also respond with their own upgrades. So they decided to heavily upgrade the car in the first 6 races expecting Ferrari to stick to its development plans then when the budget is over they will lobby a mid-season rule change and put the blame on the war.

    Just curious to see how the FIA with Ben Sulayem in charge will handle this matter because that will be the gauge that the teams will use to measure the FIA’s ability to enforce the rules regardless of the budget cap. Horner is already threatening to throw the sport into dispute. This is where Ferrari need to up their game if they want to challenge for both championships.

    Any concession made is a political victory for RBR and will certainly get them off the hook. Ferrari’s line with the FIA/FOM in general has softened with the sudden death of Marchionne and then they were literally a punching bag after the settlement. I’m not expecting a bold uncompromising approach à la Marchionne but they should make it clear that no mid-season rule change will be accepted.

    1. The problem here for Horner & co is that their scheme is so transparent that even casual fans see right through it. Say what you will about Wolff, but he’s much more crafty about his manipulations of the F1 media and power structures. Horner’s shtick works when it’s in line with Red Bull’s general PR strategy of appearing cool and over the top, but the only real leverage he has is down to Red Bull owning two teams (which should never be allowed in the first place).

    2. Fishingelbow
      29th May 2022, 3:20

      @Tifoso1989 Spot on, Tifoso! Perfect decoding of Horner’s thinking.

      1. Fishingelbow,
        Thank you !

  20. Oh dear, RB have spent up chasing Ferrari.

  21. For me the problem here is that there is a budget cap. The top teams will want to push up to the $140m as close as they can so with inflation running so high are teams meant to be tailoring costs of developments to make sure they are insude it? With lead times on updates its no wonder teams at the start of the season worked out how many updates thay could build in the cap. As has been noted theres no point waiting till the final gps of the season to bring updates cos the title will be over so teams have to bring the updates before this and that means spending money, but if inflation keeps moving the target they are spending money on R&D everyday the moneys been spent already and now so many weeks down the line the energy bills have come in and the expenses have gone up. I agree with the cap its good fir F1 but given the state of the world at the moment how can you expect teams who are pushing the limits to stay inside?

    1. But when does it end, Ed?
      Next year there’ll be something else that they’ll say they need extra money for, and then the year after something else again…
      Life is unpredictable – you can only control what you can control. And in F1’s teams cases, they can only control their own budgets, not inflation or transport or costs from external suppliers, so they have to factor in a safety margin. Perhaps a larger one than they would like.

  22. The budget cap is still a new rule, teams don’t have any experience with it yet. So it’s only natural that some will run over budget the first few years, until they learn how much margin you have to leave in your plan. Even if it could be argued that this years global events have hit the economy in an exceptional way, I see no reason for more knee-jerking. Stick to the limit agreed upon. It will be harsh, but that is kind of the point. You no longer have to make the fastest car possible, you have to make the fastest car possible within budget.

  23. Years ago I mentioned that races and seasons could be decided accountants and budget cap police.

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