F1 makes major change to cost cap directives, enforces latest rule to seal longstanding loophole
Alpine team boss Otmar Szafnauer identified this loophole in the cost cap, prompting the FIA to take action.
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The new cost cap directive could impact top teams (Credits : Autoweek)
In recent years, it has become a common practice for Formula 1 teams to recruit experienced technical personnel and assign them to dedicated divisions focused on technical projects. The primary objective of these divisions is to leverage the knowledge and expertise gained from grand prix racing and apply it to various ventures in the broader business world.
By doing so, teams aim to capitalize on their technological advancements and innovations beyond F1, exploring opportunities for commercial applications and partnerships outside the sport. To comply with cost cap rules and prevent suspected performance gains, new FIA regulations now oversee special project divisions outside of F1 teams.
Notably, various F1 teams have established specialized divisions to leverage their technical expertise beyond the scope of racing. Red Bull operates its Advanced Technology division, McLaren has its Applied Technologies division, Mercedes has its Applied Science division, and Aston Martin operates Performance Technologies.
The FIA has intervened in response to suspicions that certain entities were exploiting special project divisions to advance F1 knowledge outside the scope of the cost cap. These suspicions included the possibility of sharing the acquired information with their respective teams without incurring additional costs. The FIA’s intervention aims to address these concerns and ensure fair play by regulating the activities related to these divisions.
The new regulation has placed any transfer of intellectual property under the cost cap
In a recently revised technical directive, the FIA has explicitly stated that F1 teams are prohibited from transferring any Intellectual Property (IP) derived from projects conducted outside of their F1 operations back to the team without including the associated costs within the cost cap framework. This directive clarifies that any work or developments generated outside of the cost cap must not be incorporated into the team’s operations without proper cost considerations and compliance.
The intention behind this directive is to ensure fairness and transparency in adhering to the cost cap regulations and preventing teams from gaining unfair advantages through external projects. Under Technical Directive TD45, teams can continue operating their special project divisions. However, the directive explicitly mandates that any IP utilized by F1 teams originating from these special projects must be included in the cost cap calculations.
However, the transfer of F1 knowledge to the technical divisions of teams is still allowed and can be freely utilized for outside business interests. An F1 insider, speaking to Autosport, confirmed the influence of the latest directive. He said, “It’s had an impact, some have been forced to act because they realized what they were doing is no longer allowed.”
This loophole was identified by Alpine team boss Otmar Szafnauer, which alerted the FIA, prompting them to make these changes. Teams will have been exploiting the loophole since the start of the season, which forces them to address their spending up now and pull it back.
In case you missed it:
- Panicky Christian Horner complains against the F1 cost cap, claims it is paralyzing Red Bull
- Alpine warns F1 against ‘baking in’ a top team advantage, says the cost cap inhibits small teams’ basic infrastructural changes
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Tanuj Sadasivam
(245 Articles Published)