One Mercedes Man Single-Handedly Rescued the Silver Arrows From Facing $7 Million Red Bull Fate

As FIA announced the sanctions on Red Bull for cost cap breach, teams realized how important it was to function within the regulations. The Milton-Keynes-based team was fined $7 million. However, what will have a longer-lasting impact is the reduction of wind tunnel time. Mercedes recently revealed their clever strategy on how they managed their financials all this while.

Mercedes and Red Bull are among the most cash-rich teams in Formula 1. Before the cost cap regulations came in, the Silver Arrows functioned on budgets that went as high as $459 million. In 2021, they carried out their operations within the $145 million ceiling, which was reduced to $140 million in 2022.

Mercedes’ Chief Financial Officer explains his role in managing the budget cap

Red Bull were found guilty of breaching the 2021 cost cap by $1.4 million. While the actual breach was for around $400,000, it was the failure to report tax filing properly that inflated the breach. While Red Bull accepted the sanctions imposed by the FIA, team boss Christian Horner termed them “draconian” nonetheless. Mercedes boss Toto Wolff, however, found the punishment befitting.

In a recent video, Chris Holyoak, Mercedes’ CFO, explained how much of his job involves him managing the budget regulations. He told, “We’re very much about making sure that we comply with the cost cap, working with the FIA.”

“So, a lot of my role is facing towards the FIA, making sure that we’re interpreting the financial regulations appropriately, and making sure that we don’t breach the cost cap or misinterpret things that could obviously damage the reputation of our company, but also trying to make sure we can optimize the performance of the team as well.”

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FIA introduced regulations in 2021 to ensure a level playing field for all teams. While budget cap was one aspect of it, the time allotted to each team for wind tunnel testing was another. The higher a team finishes in the constructors’ standings, the lower their wind tunnel testing time.

Toto Wolff explains how Mercedes are complying with budget cap regulations

Red Bull finished as the champions in the 2022 season. Resultantly, they will have the lowest wind tunnel time. To top that, they had their time reduced owing to cost cap sanctions. This could severely affect their development program for next year’s car. Therefore Mercedes are taking the financial regulations seriously.

Earlier this year in August, Mercedes team principal Toto Wolff revealed how his team is managing. He explained, “We have a tracker with financial engineers that track every single process and every single part that comes into the car.”

“So when we take things out of the truck, the financial engineer notes, the value—when you utilize, it’s being counted for.”

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Do you think the punishment affects Red Bull’s 2023 car development? Or will they once again come out on top against their rivals?