Behind the scenes, discussions have begun on the terms that will define the new Concorde Agreement, i.e. that agreement between the teams and Liberty Media, the holder of the commercial rights of F1, which will establish the methods of management and division of the prizes of the series starting from 2026.
The document includes all the main commercial aspects of the category, including prize money, including proceeds from sponsors, Grand Prix organizers and television agreements, so on an economic level it has great value for the teams in terms of sustainability financial. As Motorsport.com revealed last week, for example, Ferrari will continue to receive extra payment for its historical and sporting value in the championship, even if it will be limited compared to the past.
The last agreement was signed in 2020 but, as it was expiring, the teams also took advantage of it to review certain characteristics of the document, in order to adapt it to the boom experienced by Formula 1 in recent years. The latest innovation would be a change to the dilution fund for new teams that want to join the championship, with a move that would be inserted in a context in which there are several teams on the doorstep, Andretti above all, who want to access the grid in the next future. F1 has become an increasingly interesting business on a financial level, so much so that even in Formula 2 there has been no shortage of ownership changes in recent times.
The dilution fund, which can be seen as a sort of entry tax, is an additional payment that each new team must pay to Formula 1 to enter the grid, in order to help offset the losses that other competitors will suffer by having to share the proceeds with another team. In fact, by adding another team to the list, the current teams would no longer divide the prizes by ten, but by eleven, suffering a loss on the economic front.
Also for this reason there was a certain resistance from the existing teams towards Andretti, underlining how any new team in the world championship would have to bring added value, which in their vision realistically could only guarantee a great world-class manufacturer. Cadillac, at least for the first few years, is in fact only involved as a sponsor by rebranding the Renault engine, while an official entry should only take place in 2028 when a new Power Unit produced in the United States should debut.
In the previous Concorde Agreement it was decided that the fund would correspond to a direct payment of 200 million dollars to be divided among the current competitors. Before the Formula 1 boom, that figure was considered sufficient to compensate for the losses, but with the explosion experienced in recent years, with increasingly higher revenues, the situation has changed. It is no mystery that the teams want to increase the entry tax precisely to cope with the greater losses they would face if a new team were added, which is why this will be one of the discussion points of the new Concorde Agreement in being defined over the course of these weeks.
According to what Motorsport.com has learned, in the latest draft sent to the teams as the basis of the new Pact, the minimum entry figure would not only have increased, but a new dilution system would also have been proposed.
Max Verstappen, Red Bull Racing RB20, leads Charles Leclerc, Ferrari SF-24, Daniel Ricciardo, VCARB 01, Sergio Perez, Red Bull Racing RB20, Carlos Sainz, Ferrari SF-24, and the rest of the field at the start of the Sprint race
Photo by: Mark Sutton / Motorsport Images
Rather than a fixed figure, a formula has been proposed that would compensate current competitors for a fixed period, believed to be five years, effectively potentially the length of the agreement. The initial figure proposed for each new team wanting to join the grid would increase to the equivalent of $600 million, then rise to $700 million starting in 2028, the year that was proposed to Andretti, when the new Power will debut Unit signed by GM.
To this would be added an additional clause that a new team will not be entitled to any prize money for the first year it competes in F1, as was the case in the past. Furthermore, some time ago, prizes were only awarded to the top ten classified in the constructors’ championship, so there was a very heated battle even among the smaller teams to secure the last valid place to access the prize money.
Given such a high figure, triple the current sum, it could push Andretti to reconsider not only the idea of taking part in the world championship, but also of starting from scratch with a completely new project. It is no mystery that the American team evaluated the possibility of buying other teams but, given the high costs, preferred to focus on an independent project. However, with such high figures the situation changes: the money spent to “purchase” entry into the series could be invested in the acquisition of an existing team.
The Audi Sport F1 concept car
Photo by: Sam Bloxham / Motorsport Images
Speaking at the Monaco Grand Prix, Red Bull Team Principal Christian Horner remarked that he is in favor of Andretti’s possible entry into F1. However, at the same time he believes that perhaps the American team should rather acquire another existing team rather than pursue an independent path which presents numerous difficulties.
“I think Andretti has a great heritage. Mario is a legend of the sport. And of course there is Cadillac, a great American car manufacturer. Formula 1 has said that if they were to present their own engine in 2028, they would obviously review their request input”
“But beyond that, if Andretti wanted to come in, a bit like Audi acquired Sauber, to protect the current franchise and the stability that we have in the sport, then obviously their best route is to acquire one of the existing teams ” Horner added.
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