Despite some reticence over Andretti and GM claiming their interest in joining the Formula 1 grid—despite the FIA president, Mohammed Ben Sulayem (MBS), ruffling feathers over at F1 regarding a recent valuation/offer for the sale of the sport—the FIA launched its formal process to apply and possibly become the next team on the grid.
MBS said:
“The growth and appeal of the FIA Formula One World Championship is at unprecedented levels. The FIA believes the conditions are right for interested parties, which meet the selection criteria, to express a formal interest in entering the Championship.
“For the first time ever, as part of the selection conditions, we are requesting that candidates set out how they would meet the FIA’s sustainability benchmarks and how they would make a positive societal impact through sport.
“The process is a logical extension of the positive acceptance of the FIA’s 2026 F1 Power Unit Regulations from engine manufacturers which has attracted Audi to Formula 1 and created interest among other potential entrants.”
The FIA press release said the applicant process would include:
“All applicants will undergo thorough due diligence. The assessment of each application will cover in particular the technical capabilities and resources of the applicant team, the ability of the team to raise and maintain sufficient funding to allow participation in the Championship at a competitive level and the team’s experience and human resources.
For the first time ever, any candidate would be required to address how it would manage the sustainability challenge and how it plans to achieve a net-zero CO2 impact by 2030. Any prospective F1 team would also need to illustrate how they intend to achieve a positive societal impact through its participation in the sport. This would help meet the mutual aims of the FIA and Formula One Management.”
The non-refundable application fee is $20k.
Here’s the deal:
The current ten teams aren’t too excited about Andretti Autosport and Cadillac joining the series unless they can show how their participation will grow the revenue of the sport and not simply dilute their portion of the F1 prize money. In short, will Andretti/GM make the pie bigger or simply cut the pie into smaller pieces for everyone?
That’s just for one team. The FIA asking for applicants could bring more than one team which would mean even more dilution of the prize money. Something the existing 10 teams wouldn’t be too excited about.
The problem is the business model. When the teams were independent and made their revenue on sponsor money and investment, there was a bit of autonomy but now the majority, or at least a large part, of their revenue comes from the F1 prize money at the end of the year for the top 10 teams.
The situation is made more difficult in that the teams revenue, therefore, is purely dependent on two outside entities in the form of the FIA and F1 itself. If they manage the sport poorly, the team pay the price as well. It’s like having a sales quota that you have to retire in 2023 but you don’t manage the sales force and can’t control their sales activity mix. Your ability to earn revenue is directly tied to the decisions and management of two 3rd party entities that you don’t control. That’s a challenging position to be in.
The FIA surely sees the explosive growth and reckon now is the time to look for new teams and capitalize on this interest. The problem is, is the prize money growing as well and can it handle the addition of one, two or even three more teams?
There’s no doubt the teams know the revenue is increasing and capping the series at 10 teams means their revenue will also increase. This is the trouble with the business model that is this intertwined.
Another, simplistic way to look at this is that the teams are being paid to participate in the series. One might argue that it is more of a revenue-share model in which F1 is sharing their revenue with the teams. Either way, the sport is so technical now that it would be very difficult for new teams to come in to the sport and participate. This means that there is significant leverage in the teams favor. The FIA, by seeking new teams, could be challenging that leverage.
So with the ‘net-zero CO2 impact’ does that include freight and shipping? Doesn’t sound very ‘green’ to me.
Also, how are tracks going to fit an extra two teams in pit lane, Monaco can bearly fit the current grid. That’s also an extra cost to the track owners.
oK focusing on one application for a new team in particular – mine that is – what are you all using for a F1 Fantasy platform? I had used fantasy gp but it’s got a weird placeholder message on its former website. What’s the hot setup with the kids these days?
We use Fantasygp.com and you’re right, the site isn’t there when I just checked. I hope it’s back up because I already paid for next season.
Website is up for me.
Yep, it is for me now too.
I’ve seen a lot of talk about dilution of the prize fund if new teams come in, but my understanding is that only the top 10 teams receive the Tier 1 and Tier 2 prize money anyway. Any team finishing outside the top 10 receives an ~$10m Tier 3 medal for taking part, which really is peanuts when divided amongst the teams. Is it really just the case that the teams closer to the back of the grid feel they are at risk of losing out on prize money, as opposed to an overall dilution of the prize fund?
I completely agree, they’re complaining that there’s no more prize money! (while trying to keep the door closed on their burgeoning vault). It’s all song and dance. ~X8
I agree, it’s confusing for sure. The top 10 teams get prize money so right now, all teams get money. If a new team comes in, some team is at risk of no money. The teams at the back of the grid are customers of the teams at the front of the grid so there’s that too.