F1 teams want to increase entry fees: These are their rationale

With the announcement of Andretti Cadillac and the news that the FIA is looking at a process for new F1 teams, it looks like we will be adding an 11th team in the sport in the future. The FIA is excited, but F1 must also give its approval to the plan. That may be where things go wrong for Andretti Cadillac and potential other interested parties, such as billionaire Calvin Lo.

News emerged earlier that the majority of competitors are against any kind of expansion. Only McLaren and Alpine are said to support Andretti Cadillac's project. Alpine will possibly supply the engines to the American team.

The other teams disagree on the entry fee. The amount now stands at $200 million, but Andretti's competitors say that is too little. The teams want F1 to increase the amount for newcomers. This would involve a hefty increase to $500 to $600 million, a huge amount with significant consequences. It would make it almost impossible for new teams to enter F1.

Financial loss and value F1 teams

The teams have several reasons for raising the entry fee. For instance, they fear suffering financial losses once the grid is expanded. This is because the prize pool would have to be split between 11 teams instead of 10, meaning that everyone would receive less money. According to The Race several sources drew a comparison with US leagues such as Major League Soccer and the National Hockey League, where newcomers have to pay $325 million and $650 million respectively.

The rapid rise in the value of F1 teams would also be an argument. The entry fee agreement was signed in 2020 and runs from 2021 to 2025. The original amount of $200 million would have been justified because Williams was sold for slightly less money around the time of signing in 2020. However, two years later, so much has changed that the teams are no longer happy with this amount. A sum of $600 million would be more in line with the amount Audi has to pay Sauber with a view to 2026.

It is additionally feared that the 'low' amount will encourage short-term investment, whereas the sport needs serious, long-term commitments. Theoretically, someone could pay $200 million for the last spot on the grid and then sell it at a significant profit.

Few details on Andretti's project

A team boss told The Race that teams are critical because of the lack of details. Andretti has not revealed where the funding will come from, how much it is and what General Motors will contribute financially and technically. Andretti Cadillac will have to provide such information to the FIA, but the teams will not have access to it. Until Andretti discloses more about its plans, the F1 teams will make their voices heard behind the scenes.