With tensions high and accusations flying after Red Bull was found guilty of exceeding Formula One's cost cap last week, Sky Sports News' Craig Slater delves into the drama that is set to erupt off the track at this weekend's United States Grand Prix, with new insights in a must-read report...

The cost cap for Formula One was announced in November 2019 at a press conference in Austin, Texas. Another news conference in Austin this Saturday will highlight how the most divisive issue in F1 has become.

Christian Horner of Red Bull, whose team exceeded the cap, will face the media alongside Zak Brown, whose leaked letter to the FIA claimed exceeding the cap is "cheating."

Brown's letter, obtained by Sky Sports and first reported by the BBC, makes no mention of Red Bull. However, he explicitly refers to the FIA announcement from last week, which confirmed Red Bull's "minor" overspend and "procedural" cost cap breach, as well as Aston Martin's procedural breach. Williams was fined earlier this year for a procedural violation.

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"The overspend breach, and possibly the procedural breaches, constitute cheating by providing a significant advantage across technical, sporting, and financial regulations," Brown claims.

"The FIA conducted a very thorough, collaborative, and open process." We were even given a one-year dress rehearsal [in 2020], with plenty of time to seek clarification if any details were unclear. So there is no reason for any team to claim surprise."

That last remark seemed to allude to Red Bull's "surprised and disappointed" reaction to having exceeded the cost cap. When asked to respond to Brown's letter, Red Bull had no comment. Unsurprisingly, All Sports understands that they vigorously reject any suggestion that they cheated.

Could the FIA penalty make or break the cost cap?

Brown's letter was delivered to the six complying teams as well as F1 President Stefano Domanicali. However, its primary recipient was FIA President Mohammed Ben Sulayem, who is currently overseeing a verdict on Red Bull's breach.

Several senior motorsport figures have told Sky Sports that how Ben Sulayem handles this will be "by far" his most difficult test as president. Could his choices make or break the cost cap? Brown agrees and makes specific suggestions.

"The bottom line," says Brown. "Any team that has overspent has gained an unfair advantage in both this year's and the following year's car development."

"We do not believe that a financial penalty alone would be an appropriate penalty for an overspend violation or a serious procedural violation. In these cases, a sporting penalty, as determined by the FIA, is clearly required.

"We propose that the overspend be penalized by a reduction in the team's cost cap in the year following the ruling, with the penalty equal to the overspend plus a further fine - for example, a $2m overspend in 2021 that is discovered in 2022 would result in a $4m deduction in 2023 [$2m to offset the overspend plus $2m fine].

"In context, $2 million represents a 25-50 percent increase in [an] annual car-development budget, and thus would have a significant positive and long-term benefit."

"In addition, we believe that minor overspend sporting penalties of 20% reduction in CFD and wind tunnel time should be implemented." These should be implemented the following year to counteract the unfair advantage the team currently enjoys and will continue to enjoy."

Whether Ben Sulayem agrees, or what F1's leadership and other teams think of Brown's suggestions, will be revealed in the coming days.

According to a senior member of another compliant team, All Sports: "We all agree that teams can gain a significant advantage by breaking the cap. To disincentivize future violations, the punishment must remove the advantage gained and then some."

Another team boss, also from a compliant team, disagreed, saying, "The FIA should be given the freedom to conduct its own investigation and determine the appropriate penalty; it should not be a case of teams pushing for this or that outcome."

However, they added "It is obvious to us that a penalty must go far beyond a fine, or else teams will simply game the system and regard the fine as a cost of doing business. But it is up to the FIA to find a solution, knowing that failure to do so will mean the end of the budget cap."

Is it necessary to revise the classification of "material" and "minor" breaches? Brown believes the 5% (or $7.25m) overspend threshold for a minor breach is too high and believes it should be reduced by half. He also wants a second minor breach to result in a material breach, to prevent teams from circumventing the rules through cumulative small overspends.

How far has Red Bull gone over the limit, why, and what happens next?

How minor is Red Bull's infringement? The only thing that has been officially confirmed is that it is less than 5%. All Sports has learned that it is near the bottom of the scale, somewhere around 1%. That is, less than half of Brown's suggested threshold should become the reduced "minor" breach limit.

Red Bull's submission is thought to have been several million dollars under the limit. What took them over has yet to be revealed. Has the lack of that information exacerbated the ongoing controversy? All Sports understands that this week may bring more clarity in that regard, but not complete resolution.

Horner's team is now faced with two options. The first step is to sign an accepted breach agreement. This could be resolved within a few days. It would entail Red Bull admitting their submission was incorrect (which they have previously denied) and accepting a penalty. Minor overspend violations would result in "Financial Penalties and/or Minor Sporting Penalties," according to the FIA.

Accepting the breach agreement would effectively end the situation. There is no way for a team to formally protest another team's penalty if they believe it is insufficient.

That last point may be significant. The vigilance of rival competitors is used to enforce F1 rules to a large extent.

Teams seek clarification from the FIA on designs and practices, and the resulting technical directives close loopholes or potential rule violations. The recent cost-cutting questions, Mercedes' questioning of update spending, Ferrari's concerns, and now Brown's intervention have all felt like the public highlighting of controversial bodywork or engineering in order to provoke FIA intervention. However, in terms of financial activities in 2021, it may be too late.

Within the sporting regulations, the cost cap has its own complaints procedure, and the complaints window for 2021 closed in April. Formal complaints may be filed only between January 1 and April 30 of the year following the relevant submission. Notably, no F1 Team used a formal complaints procedure during that time period.

Red Bull could also argue that they stayed within the $145 million cost-cap limit before the FIA's cost-cap adjudication panel. This is a panel of six to twelve independent judges who will hear additional Red Bull submissions before making a decision. Red Bull could potentially appeal their ruling or take their case to court. It would prolong a process that has already diverted attention away from Max Verstappen's dominant victory in the drivers' championship and the team's impending constructors' championship triumph.

What will the FIA eventually decide? It should be noted that the FIA has never accused any team, including Red Bull, of intentional wrongdoing. Recent FIA communications, on the other hand, emphasized how "all competitors" had worked "positively and collaboratively" with administrators. The FIA explained that only a confirmed "material" overspend would result in mandatory constructors championship point deductions when it announced Red Bull's "minor" overspend. Has the governing body established a rough plan for what it intends to do?

Three years after it was announced in Texas, a cost cap is being put to the test. Given that teams submitted their applications in the spring, the entire process has been drawn out rather than quick on the draw.

Nonetheless, the precedents established here will have long-term consequences. The wild west may see some wild words this weekend. Can Mohammed Ben Sulayem be a good sheriff? Keeping everyone happy will undoubtedly be a more difficult task.