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Andretti’s Case For Entry Conflicts F1’s Powers – How Will It Play Out?

Written by Juan Arroyo, Edited by Sharifah Zaqreeztrina

Credit - Getty Images

To the plain eye, Andretti Autosport has a strong case to enter Formula One in 2026. But despite their resources and history in racing that remains unrivaled by other applicants, Michael Andretti’s pursuit of a spot on the grid remains a complicated subject.


The FIA has closed the process to submit an expression of interest to join Formula One, with the governing body and Liberty Media having a say in the potential expansion. This process is tied to the renewal of Formula One’s Concorde Agreement, which is set to expire in 2025.


It’s important to distinguish between each player’s role here. The FIA is tasked with governing the racing side of things. ‘Formula 1’ as a brand is property of Liberty Media, and it will act in its best interests commercially. Essentially, it wants its current teams to make as much money as possible.


While the FIA has voiced its support for new entries, especially through current President Ben Sulayem’s public embrace of the team on social media, F1 itself is an old boys club reluctant to admit new members in order to protect their wealth. An eleventh team means a reduced portion of the money for the rest of the grid.

Formula One’s paddock isn’t happy to open up space for new teams, physically and metaphorically. Credit: Motorsport Images

Stefano Domenicali would act in the current teams’ best interest as the CEO of F1. His ideal ‘franchise’ model of the sport sees teams earn profit off by simply being on the grid — money that is only generated if their value is protected.


One would argue that Porsche and Audi were granted entry, but they will partner with an existing team as an engine manufacturer, rather than come in as a new constructor.


“This is a very interesting question (what is the right number of teams) because there are different positions and there are also legal implications to what we have to say,” Domenicali recently told F1’s ‘Beyond the Grid’ podcast.


“If the real value that it is bringing to the sport is important and is real and stable for the future, there is also another consideration that you have to take. If the contest is growing — which is what we can see today — I think 10 teams are more than enough to create the show or the business and the attention that we want to see on the track.


“There is an evaluation going on today that involves the FIA and us to make the right call for the future. This is something that is also connected to the future discussion that will happen with the renewal of the Concorde Agreement, that we need to remember is expiring in 2025, so we have still a long time to go.


“But it’s an evaluation that we need to take considering in this period of time where in the past there were teams that were coming in, getting out with zero value. Now the teams are stable, very profitable and very strong in terms of also technical capability to be competitive on the track.


“Therefore, the right answer is that in the next months it will be a very important point of discussion that we need to tackle. That is, do we need to stay with 10, do we need to have more teams, or we can give the exemption to a future possible team to be really very, very strong that can join F1? This is all a topic that will be part of the discussion for the future.”

Mohammed Ben Sulayem and Stefano Domenicali found a difference in visions. Credit: James Moy/Alamy

The previous Concorde Agreement, established in 2021, included a $200 million dilution fund for new teams to buy in, preventing any organisations without stable finances from entering—and potentially dissolving within a short time period.


That amount is not a barrier for Andretti, however, thanks in part to its partnership with General Motors. Prior to their joint announcement of intent in January, Andretti Global, the parent company of Andretti Autosport, broke ground on a brand-new factory in Fishers, Indiana.


The facilities would serve as a base for their various entries in IndyCar, Formula E, Formula 1 and potentially even NASCAR further down the line. This alone should tell the story of the team’s ambitions.


But ambitions alone don’t address the long-term income loss for the rest of the teams. At best, the one-off $20 million payment to each of the current teams on the grid would cover losses for the next three to four years.


A $5-10 million loss per annum is perhaps nullified by the sheer size of the bigger teams’ backers. For a privateer like Williams, which relies heavily on funding from a single capital investment fund, the impact is heavily felt.


A dilution figure of around $500-600 million is believed to be the minimum necessary to garner support from the paddock, with Formula One teams’ valuations rapidly approaching the $1 billion mark.


Other teams that have capitalised on the recent influx of US-based companies might reasonably fear a mass defection; forced to compete with a US-based team for sponsors where they would be able to offer massive media coverage and a core American fanbase. The Andretti/Cadillac names offer recognition in markets where most European constructors couldn’t.

Haas faces tough competition if another US-based team is to join Formula One. Credit: Andy Hone/LAT Images

For the front-runners, whose focus isn’t necessarily on survival so much as it is on results, there is also the competitive factor, where Andretti’s resources—pre-existing facilities, personnel, sponsors—make for a strong contender in the field.


Renault’s former F1 Technical Director Nick Chester was appointed in last April to lead development in the early stages, while Cadillac would bring expertise in building the engine, with successful programs in multiple championships previously.


That is if the deal in place with Renault, which Andretti denied in an interview with Forbes, sees Cadillac only badge the powertrain as opposed to developing it in full.


It would not help their case in appealing to the current Formula One higher-ups that want to diversify engine supply. In a deal with Renault, it would be inconceivable for the French manufacturer to allow General Motors to tinker with its intellectual property. The promise of Cadillac as an engine manufacturer would be, to F1’s disappointment, more akin to Tag Heuer’s badging of Red Bull’s powertrains in 2016.


The situation, perhaps, is a matter of constructors fearing what they can’t control. Besides whether they view the newcomers as a threat or not, the fact that they are able to influence the decision showcases the conflict of powers at play. The team doesn’t have to convince Domenicali, it has to convince the grid.


Michael Andretti made an attempt at the Miami Grand Prix in early 2022. He reportedly spoke to Formula One team principals over the weekend, looking for signatures for his petition to waive the $200 million entry fee for new teams. Only McLaren and Alpine agreed.

Michael Andretti was, rather unsurprisingly, unsuccessful in his bid to get the entry fee waived at Miami. Credit - Getty Images

The major driving force in the decision remains financial, as Andretti needs to demonstrate that the value it brings is worth more than the fortune lost from the dilution of commercial income. Thus, their case is the exact opposite to the Formula One’s teams.


Where Liberty Media is trying to penetrate the United States’ mass-spending markets, Andretti reaches those and further as one of IndyCar’s most storied teams, with ventures in other series as well. A prospective second American arrival would amass considerable media coverage—possibly enough to warrant a flurry of new sponsors.


It would be highly convenient for them to then paint the championship’s current boom as a time-limited opportunity to capitalise on their efforts. By allowing entry to an American team, sponsors, and driver, Andretti brings the market straight to Liberty.


For Michael Andretti and the rest of the grid, their new entry needs to increase commercial revenues to the point where the losses from adding an eleventh team are negated by the new growth.


McLaren and Alpine have alluded to their approval, albeit for separate interests. Persuading the remaining eight teams, however, requires proof that a smaller percentage of the pie doesn’t necessarily mean less money if the pie is bigger.


It’s a face-to-face negotiation with a sport driven by boosting its financial health, perhaps justifiably so after what it endured prior to Liberty Media’s takeover. Should Andretti continue in its pursuit of the eleventh spot, a long year of baking and lobbying with F1’s powers awaits


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