Why Andretti is struggling to enter F1

No matter how you parse the issue of Michael Andretti and his application to enter Formula 1, it comes down to money. Not necessarily his money, which he assures is present, but the potential loss of prize money for the existing teams—to the tune of 10%.

The total prize money is currently split between 10 existing teams in F1 and the percentage of how much each team gets is based on their finishing position in the Constructor’s Championship order.

On the surface of it, as a fan sitting at home, adding more teams to the grid seems like a great idea. More cars, more competition and more drivers. However, that’s not how the existing teams see the situation. Andretti entering the sport means the prize money is split 11 ways, not 10 and that impacts everyone if Andretti can’t add value to increase the revenue of F1. Reading a nice article over at The Race, Toto Wolff said:

“If we have a true American team with an American driver, that would be very beneficial,” said Mercedes boss Toto Wolff.

“But we have 10 entries today. We divide the prize fund among those 10 entries.

“We have invested considerable amounts over the last 10 years, each of the organizations sitting here on the podium have probably put more than a billion into their Formula 1 projects over the years.

“So it needs to be additive. If a team comes in, how can you demonstrate that you’re bringing in more money than it’s actually costing? Because an 11th team means a 10-percent dilution for everybody else.

“So, if one is able to demonstrate that, then we should all be sitting at the table and
cheering for such an entry.

“But that hasn’t been demonstrated yet. And that may sound a bit dry because it comes down to the numbers but the value of Formula 1 is that it’s a limited amount of franchises, and we don’t want to dilute that value by just adding teams.”

It is said that Andretti looks to enter using a Renault engine supply and that makes sense as Renault has no customers running their power unit. It is also suggested that Zak Brown, friend of Andretti and CEO of McLaren, is in favor of allowing the entry but he feels the name adds value.

“Obviously the Andretti name has a huge history in Formula 1 and various forms of motorsport, and I think would add a lot of value – as long as it’s a team that helps build a sport, unlike some of the other entries that we’ve seen over the years, that have come and gone in year two or three.

“I think we can’t accept teams like that but a very credible racing team with a credible brand with the right resources I think is additive to the sport.

“And that appears to be what Michael has put together, so on that basis we are supportive.”

Mercedes bought Brawn GP when they entered the sport and there’s no doubt they’ve added value. Red Bull purchased the Jaguar F1 team and, again, no doubt they’ve added value to F1. Andretti was said to be speaking with Haas and Sauber Alfa Romeo as that would be the best way to enter F1 without upsetting the applecart of prize money.

However, it doesn’t seem that either of those teams are too interested in selling which does make this notion of Audi purchasing a team for 2026 equally interesting.

If Sauber isn’t interested in selling to Andretti, would they be interested in selling to Audi? Perhaps they feel Audi would pay more for the team than Andretti would? Same for Haas.

Could there be a tie-in between Audi and Andretti? Surely if Renault/Alpine were in line to supply a new Andretti team they would be supportive, right? For the most part, yes.

Alpine CEO Laurent Rossi said: “I’ve talked to Michael, it goes along with the expansion in the US and I think would contribute to the show.

“An American team would directly generate interest in the US, and therefore revenue.
“Then we need to demonstrate that it’s enough to compensate for the dilution that Toto was mentioning.

“Gut feeling, I think it would. But let’s do the job properly and we’ll see.”

This all gets interesting and the notion that Andretti would have to show F1 they can bring enough revenue to the program to cover the amount of dilution their presence would cause in prize money is an interesting challenge to any team interested in entering F1. You can enter but your presence has to generate enough buzz that F1’s revenue will increase and you will pay for yourself. This takes that concept of paying drivers to the team level.

To be fair, Mercedes, Red Bull, Ferrari and all the teams have spent millions, if not billions, on their racing program and simply signing up new teams to run at the back and soak up prize money isn’t something the existing teams are interested in.

The prize money is a bit complicated in how it is divided. There is Column 1 money and Column 2 money (I won’t go in to the gory details of each) that is based on performance and to be honest, it is all centered around the top 10 finishers so right now, everyone gets a piece of the pie. Adding an 11th team would change that.

My hunch is that as F1’s business model changed with teams now largely reliant on prize money to keep them afloat, the points system may have been changed to match the prize money distribution system. In the past, points were only given to the top 6 finishers but now it is the top 10.

This isn’t new to F1, the vetting process and entrance fee has always been stiff. Former F1 owner Bernie Ecclestone used to say that any team interested in entering F1 needed a budget of a billion dollars to be realistic. Those were the old days with no cost cap but you get the point. It takes a lot of money and preferably not money out of the pockets of the existing teams.

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Andrew Page

Good read Todd
Split 12 ways if we include VW correct?

Mike Smith

Good article. I would be interested to hear how the F1 pay structure differs from other racing leagues. Indy and NASCAR specifically. Are other league’s teams kept afloat solely by sponsors or is prize money as important in those leagues as well. Aside from the Indy 500, they seem to follow “the more the merrier” approach and don’t seem worried about watering down the product.

Xean Drury

Seems like a pretty easy problem to solve. Every team wants to be at the top of the pyramid, so keep the price money the same for the top 5 finishers, and the remains get split among the rest based on percentage of points won throughout the year. ~X8

Fabio

Yes, but there are other reasons too.
The supply of the chassis being the main problem.
It’s not just the teams Andretti has to convince, it’s the FIA.