Red Bull's budget cap penalty to be revealed on Friday

MEXICO CITY -- The budget cap row that has hung over Formula One for the past three races will finally come to a head on Friday, with the FIA set to announce Red Bull's punishment for breaking last year's financial regulations.

A news conference has been called in Mexico at 11:30 a.m. on Friday to address the topic, which is expected to reveal the details of an accepted breach agreement (ABA) between the FIA and Red Bull.

Under the FIA's financial regulations, teams can enter into an ABA with the governing body after a minor breach of the budget cap (under 5%) but must accept the terms of the FIA's penalty and acknowledge that they have broken the rules. The ABA means the case will not go in front of the cost cap adjudication panel, which might have resulted in a harsher penalty.

The ABA is likely to include a financial penalty as well as a sporting one -- believed to be a restriction in the team's aerodynamic testing capacity for next year. Stripping the team of points or titles was never a serious consideration, but a reduction in aero testing for next year represents a significant penalty in terms of future car development as Red Bull already stands to have the smallest quota available under F1's sliding scale of aero testing restrictions next year.

The FIA announced on Oct. 10 that Red Bull had committed a minor breach of the budget cap and has been in talks with the team over the details ever since. The discussions were briefly put on hold last weekend at the U.S. Grand Prix after the death of Red Bull co-owner Dietrich Mateschitz.

Red Bull is believed to have overspent by $1.8 million under last year's $145 million budget cap, but the team has argued that it did not intend to exceed the cap and has disputed the way the FIA's audit had accounted for certain items. Sources at the team also pointed to a failure to claim a $1.4 million R&D rebate from the U.K. tax authorities as a core reason for the overspend compared with rival teams.

Red Bull's breach of the budget cap has been a controversial topic in the F1 paddock, with many suggesting it would have given Max Verstappen an advantage in his narrow championship victory over Lewis Hamilton last season. Some teams have also claimed that an overspend last year would have offered a competitive advantage in the development process of this year's car.

"It's just a bit frustrating," Verstappen said on Thursday when asked about the impact the cost cap row has had on him. "From our side, we feel that we are not wrong but just some things are taken into the budget cap that are very unexpected.

"We'll have to deal with it, but at the end of the day it is not up to me to decide what is right."