Formula 1 teams will hold discussions next week on whether to increase the fee new entrants must pay to join the series.
The Concorde Agreement, which sets down the terms agreed between Formula One Management, the FIA and the current 10 teams, states that any new F1 entrant must pay a fee of $200 million (£164m). This is to be distributed between the existing teams to compensate them for any reduction in their earnings arising from the grid’s expansion.The FIA announced this month it had opened a process for new teams to enter F1. This has been met with resistance from many in the paddock due to concerns over its potential impact on the finances of the existing teams.
McLaren Racing CEO Zak Brown said the possibility of increasing the fee will be discussed at next week’s meeting of the FIA’s F1 Commission.
The fee was introduced when the current Concorde Agreement was agreed following Liberty Media’s purchase of F1’s commercial rights in 2016. Since then interest in the championship has risen and the financial health of the teams has improved, which has led to calls for the fee to be increased.
“I think it’s ultimately up to F1 and the FIA to decide what’s an appropriate fee,” said Brown. “When we came up with the fee almost five years ago now, F1 was a totally different place. So I think they need to land on what they feel is appropriate.
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“And it’s good value for money, right? I mean, these franchises are worth quite a bit of money. So it’s an investment as opposed to a fee because these franchises, if not already worth billions, certainly will be in the not-too-distant future like other major sports.”
Brown is among those who have been supportive of Andretti’s attempt to enter. He said McLaren would be open to adding an 11th or 12th team to F1 “as long as they’re additive to the sport”.
“I’ve always been focused on how can we make the pie bigger, less focused on how can I get a bigger piece of a pie that’s not growing,” he explained. “And so as long as a new team is is additive, helps us get better TV deals, brings awareness that drives more sponsorship, pays an appropriate franchise entry fee that’s in line with what the value of what F1 is today, then we’re very supportive of of having up to a 12-team grid.
“Ultimately it’s up to F1 and the FIA to decide what they think those values are. But if all those boxes are ticked, then we’re very happy to welcome additional competition and growth of F1.”
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Sam Crawford
14th February 2023, 9:32
“we’re in favour of adding another team, as long as they line our pockets as much as possible”
S
14th February 2023, 9:49
No, it’s definitely a fee and it all goes straight to the existing participants.
A new entrant is not investing in their competitors – they are buying their approval.
I think I’d be much more appreciative, or at least accepting, of the existing teams’ stance on this if they’d all paid the same (or equivalent) franchise fee too. But none – not a single one – of the teams currently in F1 has paid even a cent to their competitors to be granted access to F1.
And yet they’ve all awarded themselves the power (with Liberty’s blessing as a co-conspirator) to force others to do so.
It’s a disgrace.
At least under Bernie and Mosely, it was clear to all new entrants that they wouldn’t be paid for the first 3 years unless they finished in the top 10 in the championship. No payments to competitors required.
Even Brown is exposing the dark reality in F1 here – even though he supports new entrants, it’s on the condition that his own team makes a financial profit from it.
Coventry Climax
15th February 2023, 12:07
Completely agree with you there.
Witan
14th February 2023, 10:03
Surely the simple and reasonable solution is for Liberty to spread the money they are raking in so the prize money pool is increased to match the number of teams on the grid. Liberty/FOM are adept at turning the question around to make it a team greed problem when really its a Liberty problem of greed.
DB-C90 (@dbradock)
14th February 2023, 10:09
Interesting how the teams think they’re worth billions when those that went broke couldn’t be sold or ended up being sold for a nominal fee
Didn’t RBR pay $1 for Jaguar?
I think they’re dreaming if they think they would command big dollars if they wanted to sell. Imagine buying Haas or Williams…
Imre (@f1mre)
14th February 2023, 11:07
That was 20 years ago.
S
14th February 2023, 11:12
Exactly. $200m would be about the limit for a back-marker.
What did Dorilton pay for Williams a few years ago? $200m, wasn’t it?
Yes, Red Bull was reported to have bought Jaguar for $1, just as Honda reportedly sold their team to Brawn for £1…
Imre (@f1mre)
14th February 2023, 11:09
Make it 1 billion. Then cry when the polularity drops and 2 teams collapse and we are on the brink of a 14 car grid.
A 24-26 car grid would ensure that 2 or 3 dropouts have no significant effect.
MichaelN
14th February 2023, 11:31
How is this not a cartel in violation of EU antitrust law?
Crawliin-from-the-wreckage (@davedai)
14th February 2023, 12:01
I’m glad you brought it up. I’m not a lawyer or US citizen. Best to leave it to someone who has knowledge of US legislation (as you seem to ). The whole thing seems anti-trustwothy to me.
Does the SEC regulate companies there eg would such a body look into claims of who owns what and if their declared customer/viewer figures were accurate. Would it be general oversight, or only in response to share/stockholders query, or in something like .the Twitter takeover.
(If you’re not from USA I apologise)
.
S
14th February 2023, 12:34
+1
In reality, it is.
Reading the laws on this subject literally describe in great detail what is going on in F1 now, despite them not mentioning F1 at any time or in any way.
I guess Liberty is in no hurry to register themselves as a European company….
MichaelN
14th February 2023, 16:23
It’s a shame Sauber and Force India were effectively ‘bought off’ by Liberty Media ahead of the 2018 season after they had previously, together with the team known as Lotus at the time, brought the whole sordid system (Formula One Group) to the EU’s European Commission’s attention. A process helped a great deal by UK EMP Anneliese Dodds of the Labour party.
Also worth noting that the FIA F1 Sporting Regulations, which detail the application process in great detail alongside various appendixes and forms, never mention the Concorde Agreement even once.
Seems like Andretti should just apply following the FIA’s own process, and maybe call Graeme Lowdon of the defunct Marussia team for some insights. Back in 2012 Marussia was also kept out of the Concorde Agreement until a pretty last minute offer was made to them ahead of the 2013 season. That didn’t stop them from racing, though.
S
15th February 2023, 1:04
That’s right. As discussed several days ago, the Concorde Agreement is a commercial agreement – not a regulatory consideration.
It’s not about ‘Who can/should be allowed to participate’ – it’s entirely commercial; ie ‘Who should receive money for their participation.’
Any additional conditions placed on new entrants by Liberty (after FIA’s approval) can only be commercial in nature.
Kinda makes you wonder if Domenicali secretly regrets giving the teams this much power, as it goes against the sensibilities of the commercial rights holder to restrict the number of new entrants (and by extension, growth potential).
If he allows the teams to raise the price above the already ridiculous $200m, you know FOM is getting something substantial out of the deal as well that teams and viewers don’t want.
More sprints, maybe? Something even more controversial, perhaps….
This is all a case of ‘you scratch my back and I’ll scratch yours.’
Lyle Clarke
14th February 2023, 11:52
“Let’s create a massive fee so only serious projects try to enter with proper financial backing”
*Serious projects try to enter for the first time since fee was announced*
“IT’S NOT HIGH ENOUGH, INCREASE FEE”
It’s like Gasly’s potential driving ban all over again…
Esploratore (@esploratore1)
15th February 2023, 11:19
Yes, it’s a joke, both things really, it’s a long time since I bothered look at penalty points cause they have absolutely 0 consequence anyway, no one will hit 12.
Crawliin-from-the-wreckage (@davedai)
14th February 2023, 12:18
Oops I see EU anti-trust law. My question was really about teams and Liberty.
I’m very tired and sore best get a night’s rest and resurface when I can read and make a somewhat sensible comment. Sorry.
Crawliin-from-the-wreckage (@davedai)
14th February 2023, 12:19
* MichaelIN
Dex
14th February 2023, 13:03
To be honest, I preferred these guys when they used to be much humbler. More they earn, more they take this sport away from us, the fans, and what’s even worse, they also stop allowing competition; turning this into an ordinary reality show instead of a (so-so) sport. They mention that word “franchise” ever so often now. That’s not what an F1 team is supposed to be. I don’t watch NBA (or any other American league), and the franchise system is the main reason for that. Ironically, they don’t really have it in Indy as far as I understand it. Bernie was the devil, but it seems that they are right about “the devil you know”… Come back, all is forgiven. Cigarette sponsors were bad (I hate smoking btw), but some Crypto frauds are fine. Only the safety really improved, but that started before Liberty took over. At least for my taste, F1 routinely makes one step forward, two backwards for years now.
Andy (@andycz)
14th February 2023, 13:47
This is crazy…
StefMeister (@stefmeister)
14th February 2023, 14:16
Since it’s pretty obvious they (The teams & Liberty) don’t really want any new teams they should just be clear and change the regulations to cap the grid at 10 teams/20 cars to end the discussion. Or at least just be honest & say they are only interested if it’s a big manufacturer.
What we have had the past year or so where they say they may be open to new teams but seem to be doing everything to put new entrants off just makes them all look pathetic.
bernasaurus (@bernasaurus)
14th February 2023, 16:09
I know nothing in this sport should surprise me anymore, but isn’t there a grown up around to say to them how incredibly short sighted this is? The European Super League was broadly the same concept, locking in those at the top today forever or until they decide they don’t want to anymore. Football fans rallied against it, and won. Do F1 teams think that F1 fans, either don’t care, haven’t realised, or perhaps the hardest to believe, they think the fans think it’s a good idea?
Because which ever it is, they either think we’re dumb, or they don’t care what we think.
SteveR (@stever)
15th February 2023, 1:03
It’s the latter, they don’t care about what we think. And maybe the former also. Tears will be shed by FOM when manufacturers drop out, and they will.
S
15th February 2023, 1:05
Both.
They care about themselves.
mark from Toronto
14th February 2023, 16:53
Simple, the new team only gets a share of INCREMENTAL prize money for the first 10 years from the pool, and the same $ from points as the teams, plus a hefty fee. If you can’t afford it, you can’t afford it.
Dani B. Molina (@esmiz)
14th February 2023, 20:33
Article to keep and take it out the next time someone claims that Formula 1 is a sport. Or when the bubble bursts.
Dale
14th February 2023, 23:11
F1 is probably hoping it hadn’t sent the lawyers letters to the FIA about now.
Without the FIA’s votes, this goes nowhere.
Stephen Crowsen (@drycrust)
15th February 2023, 9:11
I don’t like the idea of a new entrant having to pay such a huge amount of money to compete in F1. I objected to Mr Ecclestone’s idea that new entrants had received no broadcasting rights payout for three years, nor the fact they often were excluded from the TV broadcast coverage of the race, and I object to this notion as well.
Since the teams are saying their income will be affected then that means new entrants are going to be paid a portion of the TV rights payout from the first season they compete in F1, which I am pleased about.
When I look at a breakdown of the TV rights payout for the 2021 season, I see three columns: Column 1 is an equal payout to all teams, so presumably the admission of a new entrant would affect all the teams because that new team would also be entitled to a portion of that too (for the seasons they compete in). So for example, since 10 teams will get $35M each for competing in the 2021 season, that’s a prize pool of $350M, so if that were distributed to 11 teams then each team would get $31.82M, meaning a loss of $3.18M for each of the 10 existing teams, so a total loss of $31.82M to those ten teams.
If we look at Column 2 this is supposed to be a performance based payout, although I must admit the payout doesn’t seem to have a direct correlation to the 2021 season results. For example, how is it Red Bull were paid $32M for being second in the Constructors’ Championship, which was the 5th highest “performance” payout. 4 teams who had less Constructors points got paid more than Red Bull. I’m sure there is a logic to this, but at a casual glance it doesn’t look fair. You would expect the second highest points in the Constructors’ Championship would also get the second highest performance payout. Anyway the prize pool is the same size as for Column 1, which presumably means a loss of $31.82M in prize money across all the other 10 teams.
So we’d have a total loss to the 10 existing teams of $63.64M. Interestingly, if you multiply that amount by 3 you get about $190M, which is fairly close to the $200M the teams are demanding, and 3 years is the amount Mr Ecclestone expected new entrants to not receive any payment. So maybe things haven’t changed very much.
If there is actually merit in compensating teams for a loss in TV rights payouts, then I think the most a new entrant should be charged is something around $60M.
Then we have Column 3 also known as the Bonus Column. This is a prize pool of $294M and is handed out to 4 teams, Ferrari, Mercedes, McLaren, and Red Bull. This is like the proverbial can of worms. While there is merit in rewarding teams for their historical contribution to F1, I don’t think that warrants a prize pool of $294M.
Esploratore (@esploratore1)
15th February 2023, 11:24
Red bull gets a historical bonus but williams doesn’t? Williams is older than red bull!
Stephen Crowsen (@drycrust)
15th February 2023, 18:08
@esploratore1 Williams used to get a historical bonus, but it disappeared a few years ago. Maybe it disappeared in the most recent Concorde Agreement.
Regarding Mercedes, apparently Mr Ecclestone had made an agreement with Mercedes that if they won 2 (I thought it was 3) Constructors’ Championships then he’d give them a special bonus. Since they’ve now won 8 WCC I guess that means they met his conditions to receive a special bonus, but Williams have won 9 WCC and they don’t get one now.
It seems part of the reason for giving a special bonus is to encourage a manufacturer to sign a long term agreement, but I don’t think this is fair to the other teams.
Esploratore (@esploratore1)
15th February 2023, 11:25
Mercedes also has been in f1 less than williams, unless that column has to do with recent championships.