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Why $200 Million Won’t Convince Teams On Andretti’s Formula 1 Plans

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Television records, big sell-out crowds and an influx of star power helped make it one of Formula One’s biggest events to date, laying the foundations for an expansion to three US races next year once Las Vegas joined the calendar.

But for Michael Andretti, more needs to be done to increase American interest in Formula 1 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 working to secure entry into F1 from 2024 and establish a new operation after seeing a bid for Sauber last year at the 11th.

Andretti was on the ground in Miami for a series of meetings to discuss his plans with team bosses, F1 officials and FIA President Mohamed Ben Sulayem. However, the response from the wider field has remained lukewarm at best.

“There are millions of people adopting it,” Andretti said. “They are not the right people at the moment.”

None of the current F1 players would deny that having a second US team – after Haas, who rarely relies on their national identity – would be a major coup for the network, particularly given the reputation and scale of Andretti’s current operation. The family brand is already involved in IndyCar, Indy Lights, Formula E, Extreme E and Supercars, knowing what it takes to be successful and sustainable.

“The Andretti name has a huge history in Formula 1 and in various forms of motorsport, and I think it will add a lot of value,” he said. McLaren Chief Zac Brown, who co-owns Walkinshaw Andretti United’s Supercars team. “A very credible racing team with a reliable brand, with the right resources, I think is an added element to the sport.”

Colton Herta, Andretti Autosport w/Corp Ajajanian Honda

Photography: Gavin Baker / motorsports pictures

The entry from Andretti will not be a repeat of the efforts of Caterham, HRT or Marussia in the early 2010s that all folded in a few years. But as much as Andretti’s interest is in F1’s current strength, that’s why the current teams are uneasy about letting someone else join their closed shop.

He said “we have 10 entries today, we split the prize fund by those 10 entries” mercedes F1 chief Toto Wolff. We have invested large sums over the past ten years. Every organization is sitting here [in the press conference] It has probably invested over a billion in Formula 1 projects over the years.

“So it has to be cumulative. If a team joins, how can you prove that you are bringing in more money than it actually cost? Because the eleventh team means a 10 percent commute for everyone else.”

Fear of mitigation is something that the Formula 1 teams sought to address through negotiations for the latest Concorde agreement signed in 2020. Recognizing that a new team could mean a smaller slice of the pie for everyone, a $200 million fee was set for anyone. The interested party will be divided among the current 10 teams. She ensured that any new entry had to be serious given the money that would have to be raised, as well as protecting the value of the existing clothing.

Andretti maintained from the start that he had $200 million to meet the requirements. But with the Formula 1 business still booming, the fear is that this won’t offset the dilution that revenue teams may face. “The value of Formula 1 is that it is a limited amount of perks,” said Wolff. “And we don’t want to dilute that value just by adding a difference.”

Red Bull boss Christian Horner has acknowledged that money will always be an “important factor” in the talks, and that the onus is on F1 as the commercial rights holder to decide which approach it wants to take. “If they want more teams, they will obviously have to dilute their stake in the fund,” Horner said. “Because it would be unfair to expect other teams to pay the extra newcomers indirectly.”

Mattia Binotto, Ferrari Team Principal, Mario Andretti
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Mattia Binotto, Ferrari Team Principal, Mario Andretti

Photo by: Ferrari

Horner felt the $200 million fee set a “minimum value” for any participant, but stressed the importance of looking at the long-term picture. “It’s the first time in memory we’ve had 10 health perks,” Horner said. 200 million dollars is a lot of money. But in this business, when you break it down to the participants, it doesn’t go very far. And it’s one take, not $200 million every year. So at the end of the day, a conversation like this will always reach the economy.”

“It’s true that even if the 10 teams today are sustainable, and we’re going in a very good direction with F1 today, it probably won’t stay that way for the next five or 10 years,” he added. Alfa Romeo Team Leader Frederic Vasseur. “We have to take care to avoid being the situation it was before Covid and during Covid, where you are in the last third of the network in survival mode.”

Andretti’s challenge will be to prove not only that he has the resources to make a new team credible and competitive, but also to demonstrate the impact of a new team that will offset the dilution of award payments. Being an American team and planning to field an American driver at Colton Hertha will definitely help Andretti’s argument. However, with Miami and Vegas booming, skeptics may see them as more beneficial to Formula One’s growth than an American team could generate.

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There is a long process that Andretti must go through if he is to make his dreams in Formula One a reality. The FIA ​​has not yet officially called for any interest in forming a new team, although Andretti claimed Ben Sulayem would be “supportive in the process”. Plans are already underway to begin construction of the F1 facility in Indianapolis this summer, which will operate alongside an existing site in Europe. Andretti acknowledged that was a risk, but felt it was worth the risk: “We have to make the ball roll.”

F1 must take into account the added value that a new team will provide, the added security of having another participant in the event that anyone withdraws, and how it might affect future prize payments. The structure in place is now suitable for those already at the table, which means it will take some persuasion – well beyond the $200 million required – to change that.

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