Inflation is high, but this is very extreme. The F1 teams smell money and want to triple the cost of entering F1.
Yesterday we wrote that Alpha Tauri is for sale. Helmut Marko has since responded to the rumor and neither denies nor confirms it. He says that it is up to the shareholders of Alpha Tauri to decide. But yes, the shareholders of Alpha Tauri, that means… erm… Red Bull. Anyway, we and Nyck de Vries are anxiously awaiting what will happen.
In the meantime, the existing F1 teams are not sitting still. Motorsport report that the existing members of the piranha club have urged the FIA todilution fairyfor new pretenders. This amount of money is intended to compensate the existing teams for lost income as a result of having to share the F1 pie with new teams entering the sport.
Under the current Concorde Agreement this amount has been set at 200 million dollars. The Concorde Agreement is another thing from the time of Bernie and friends. The important stakeholders in the sport (FIA, rights holder, teams) lay down in the Concorde Agreement every so many years what the rules should be for the coming years.
The current deal dates from 2020. As such, it was designed in the middle of the Corona misery, which paralyzed the sport for half a year. There was no budget cap yet and revenues were uncertain. Characteristic: In the summer, Claire Williams sold the family jewels for an apple and an egg to Dorilton Capital.
At the time, an F1 team seemed like an uncertain investment, it could not be ruled out that teams would collapse (and therefore new growth would be necessary) and 200 million was a lot of money. So each team would get 20 million if a new team wanted to enter the sport. However, things have changed somewhat in the meantime. Claire Williams has clearly sold on the bottom. The F1 is boom business as never before.
Due to the growing popularity of the sport, lots of money is pouring in. Sponsors are queuing up, broadcasting rights go up several times in a few years, it can’t be all. Suddenly ‘everyone’ wants to have an F1 team. From manufacturers such as Audi to existing racing teams such as Andretti and Hitech to the wealthy from Asia.
The thing is that the existing teams are not so keen on new parties to divide the suddenly gigantic pie. Certainly not in exchange for one lousy one-time payment of $20 million per team. The risk that a team drops out and less than 20 cars start is suddenly no longer real. And on the other hand, the value of each team seems to only go one way for now. No downside risk and many upward potential So. Sharing is caring, but F1 has never been very strong in that. At least not without a hit or a hit.
Therefore, it is not surprising that the teams the dilution fee want to jack up. It’s just bizarre to what extent they want to do that. There is talk of tripling the amount, to 600 million dollars. And that, according to the source, is still ‘the lowest amount mentioned’.
Although the $200 million is stipulated in the Concorde Agreement, which is still valid until 2025, there is theoretically a procedure to break this open. One thing that is required is that all teams agree unanimously with the change. However, that doesn’t seem to be a barrier per se.
However, the question is whether the FIA and Liberty Media want to join this movement. In fact, the sport’s regulator just opened registration in January for new teams, who want to participate from 2025, 2026 or 2027. It is therefore crucial that an entry into the FIA procedure in 2025 is also possible. That year – for now – the 200 million would still apply as a cost picture.
For Liberty Media there seems to be no reason to support the teams in this. One or two more teams on the grid would probably just improve the show. It has also happened more often in the past that the teams and the rights holder have opposing interests. Strategically speaking, a small group of wealthy powerful teams might be a bit harder to handle than a larger group of divided teams.
Do you think the teams are too stingy in this case? Or do you always grab what you can grab when the opportunity presents itself? Let us know in the comments!
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