Former racing driver Mario Andretti listens during a news conference on May 1, 2024 in Washington, DC. Rep. John James (R-Mich.) hosted Andretti on Capitol Hill in response to Formula One management denying his family and General Motors the opportunity to compete in the global motorsports series.
Anna Money Tree | Getty Images
The debate over whether to accept US motorsport giant Andretti Global as Formula One’s 11th team has reached a boiling point.
Tensions reportedly spread At the Miami Grand Prix earlier this month, the CEO of F1 parent company Liberty Media told F1 legend Mario Andretti that he “will do everything in his power to ensure that Michael (Mario’s son) Andretti Global Head) will never enter Formula One.” “
Liberty Media declined to comment on Thursday’s NBC News report, which cited sources with knowledge of the incident, but an anonymous source close to Liberty Media said the conversation occurred differently than Andretti’s account.
It’s the latest twist in the Andretti saga, which began in October 2023 when the sport’s governing body, the FIA, approved the American team’s application to join racing. Three months later, F1, the sport’s commercial arm, withdrew its bid, Don’t think Andretti will be competitive in 2025 or 2026. It believes it needs race wins and podium finishes to deliver any significant benefit to the sport.
‘Cartel-like behavior’
A group of US lawmakers accuse F1 of ‘cartel behavior’ The implication is that the sport benefits from America’s vast and lucrative marketing, but without sharing the spoils.
And in recent weeks, House Judiciary Committee launches investigation Enter the legend, and Senators have also called for an antitrust investigation. The U.S. Congress has also sent a letter to F1 requesting an explanation. CNBC has contacted F1 for comment.
Andretti Global also hired Former F1 chief technical officer Pat Symonds earlier this week.
Mario Andretti told CNBC, “We were supposed to have a meeting in Miami but they (F1) didn’t attend because they were upset about receiving a letter from the government.”
The letter, signed by 12 US congressmen, states that the FIA ”has analyzed and approved Andretti’s technical ability to compete with existing teams, which most teams currently in Formula 1 do not meet.” The standard of Formula 1 regularly competes for ‘podiums and race wins’.
It’s those teams that have been most vocal about Andretti’s bid. “Williams objects to adding eleventh team,”Assisted the team leader at the end of last yearHe added that he would support the bid “but only if the financial situation of the 10th team is stable”.
Indeed, F1 does well outside the United States. Team average value up 276% According to Forbes, this figure will reach $1.88 billion between 2019 and 2023, as the prospect of a second U.S. race in Miami attracts major American companies to the sport. “If you look at the partners we’ve brought on recently, Coca Cola, Dell, CiscoGoldman Sachs, these are American companies that previously knew very little about Formula 1,” McLaren CEO Zac Brown told CNBC.
“Not free”
The average value of these sponsorship deals doubled after the third US Grand Prix in Las Vegas last year, according to analytics firm Luscid, and the government’s letter said “limiting the number of Formula 1 cars will increase sponsorship” price or buy an existing Formula 1 team.
But does this constitute anti-competitive behavior? As F1 CEO Stefano Domenicali told CNBC, “Everything we see is not free.”
The investment from F1’s U.S. owner Liberty Media is estimated to be $600 million invested in Las Vegas Grand Prixwhile Domenicali declined to comment on Andretti’s bid, F1 said it believed “F1 will bring value to the Andretti brand, not the other way around”.
Teams fear an XI will dilute their share of TV revenue and prize money. Under the existing Concorde Agreement that determines revenue distribution, new entrants are required to pay US$200 million “anti-dilution” feea number that most teams don’t feel reflects their increased value since the deal was struck in 2020. rumor That apple There may be a willingness to pay up to $2 billion to secure future broadcast rights, while speculation that Saudi Arabia is considering buying the sport outright for around $20 billion will also play into stakeholder calculations.
However, pressure from the US government may force F1 to take action, with teams wanting assurances that their share of growing revenue will not be diluted. One solution proposed by F1 veterans Tim Milne and Lewis Butler is to allow the three new teams to compete as “non-teams” and thus not eligible to share the prize money. These new entrants will also have to operate in areas where there are currently no F1 teams represented.
Formula 1 – United States Grand Prix – Circuit of the Americas, Austin, Texas, USA – October 23, 2022 Tim Cook waves the checkered flag to race winner Max Verstappen of Red Bull Racing
Fresh Mike | Reuters
Another option is to agree to a higher anti-dilution fee. This has been raised by big team principals such as McLaren’s Zac Brown. “The annual dilution for the 11th team is about $10 million,” he explained.
“So if I get $70 (million), it will cover me for seven years. Then if it costs $700 (million) just to get in, it will create $700 million in franchise value.”
This will be a tricky move, however, as the U.S. government is unlikely to accept higher entry fees based on growth driven by the U.S. market.
“If you want to come into our market, if you want to reach our fans, you have to allow access to our companies, you have to allow our autoworkers to come in, you have to allow Americans themselves to come in,” said John James, 12 Members of the U.S. Congress signed the letter.
Andretti explained that support for Andretti isn’t just in Washington. “In Miami, I hugged Fernando Alonso and he said ‘It’s maddening how many problems they give you.'”
About The Author
