Why $200m won’t convince teams about Andretti’s Formula 1 plans

Record TV numbers, a sold-out crowd and an influx of stars have helped make it one of F1’s biggest events to date, laying the groundwork for expansion to three US races next year a when Las Vegas joins the schedule.

But for Michael Andretti, more needs to be done to increase American interest in F1 by getting a team and a driver on the grid. Since his father, 1978 world champion Mario, revealed his plans in February, Andretti has been pushing to secure an entry into F1 from 2024 and establish a new operation after his failed takeover bid from Sauber last year at the 11th hour.

Andretti was on the pitch in Miami for a series of meetings to discuss his plans with team bosses, F1 officials and FIA President Mohammed Ben Sulayem. Still, the response from the wider paddock remained lukewarm at best.

“There are millions of people embracing it,” Andretti said. “They’re just not the right people right now.”

None of F1’s existing players would deny that having a second American team – after Haas, which has rarely relied on its national identity – would be a huge blow to the grid, especially given the reputation and scale of the existing Andretti operation. The family brand is involved in IndyCar, Indy Lights, Formula E – its deal with Porsche was announced on Friday – as well as Extreme E and Supercars already, knowing what it takes to be both successful and enduring.

“The Andretti name has a long history in Formula 1 and various forms of motorsport, and I think it would add a lot of value,” said McLaren boss Zak Brown, co-owner of the Walkinshaw Andretti United team in Supercars. “A very credible racing team with a credible brand, with the right resources, I think it’s additive to the sport.”

An Andretti entry would not be a repeat of the efforts of Caterham, HRT or Marussia in the early 2010s which all folded within a few years. But as much as Andretti’s interest points to F1’s current strength, it is for this very reason that current teams are reluctant to let anyone else join their closed shop.

Micheal Andretti was present at the Miami Grand Prix

Photo by: Alexandre Trienitz

“We had 10 entries today, we are dividing the price between those 10 entries,” said Mercedes F1 chief Toto Wolff. “We have invested considerable sums over the past 10 years. Each of the organizations sitting here [in the press conference] has probably invested over a billion in Formula 1 projects over the years.

“So it has to be accretive. If a team arrives, how can you demonstrate that you are bringing in more money than it actually costs? Because the 11th team means a 10% dilution for everyone else.

The fear of dilution is something F1 teams sought to address during negotiations for the last Concorde deal which was signed in 2020. Recognizing that a new team would mean a smaller slice of the pie for everyone, from A $200 million fee was put in place for any interested parties who would be split among the current 10 teams. He made sure that any new entry should be serious considering the money it needed to rack up, while protecting the value of existing outfits.

Andretti has maintained from the start that he has the $200 million in place to meet the demands. But as business continues to boom for F1, the fear is that this will not offset the revenue dilution teams would encounter.

“The value of Formula 1 is that it’s a limited number of franchises,” Wolff said. “And we don’t want to dilute that value by just adding teams.”

Red Bull team principal Christian Horner has acknowledged that money will always be an “important factor” in the talks and that it is up to F1, as the commercial rights holder, to decide the approach she wanted to take.

“If they want more teams, obviously they’re going to have to dilute their portion of the fund,” Horner said. “Because it would be unfair to expect other teams to pay for additional new entrants to arrive indirectly.”

Teams fear adding Andretti to the grid will reduce their share of prize money

Teams fear adding Andretti to the grid will reduce their share of prize money

Picture by: Motorsport Images

Horner said the $200 million fee placed “minimal value” on any participant, but stressed the importance of looking at the long-term situation.

“This is the first time in memory that we have 10 healthy franchises,” Horner said. “The $200 million is a lot of money. But in this business, when you divide it by the participants, it doesn’t go very far. And it’s a one shot, it’s not $200 million. dollars every year. So at the end of the day, a conversation like this will always come down to economics.

“It’s true that even if the 10 teams today are sustainable, and we’re going in a very good direction with F1 today, maybe it won’t stay like that in the 5 or next 10 years”, added Frédéric the boss of the Alfa Romeo team. Vasseur. “We have to be careful to avoid being in the situation where it was before the Covid and during the Covid, that you are in the last third of the grid just in survival mode.

The challenge for Andretti will be to demonstrate not only that he has the resources in place to make a new team credible and competitive, but also to prove that the impact of a new team will outweigh the dilution in cash payouts.

Being an American team and planning to field an American driver in Colton Herta will surely help Andretti’s argument. Yet, with Miami booming and Vegas beckoning, skeptics may see them as more beneficial to F1’s growth than what an American team could generate.

There is a long process for Andretti to go through if he wants to make his F1 dreams a reality. The FIA ​​has yet to officially call for any interest in creating a new team, although Andretti said Ben Sulayem would be “supportive in the process”.

Plans are already underway to begin setting up an F1 facility in Indianapolis this summer, which would operate in tandem with an existing site in Europe. Andretti acknowledged it was a risk, but felt it was worth taking: “We have to start the process.”

F1 must consider the added value a new team would bring, the added security of having another entrant should someone withdraw and the impact this could have on prize money payments. ‘coming. The structure in place right now is working for those already at the table, which means it will take some convincing – beyond the $200 million required – to change that.

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