New teams must pay $200m to existing constructors to enter F1

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New teams must pay $200m to existing constructors to enter F1

Formula 1

New teams must pay $200m to existing constructors to enter F1

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New teams will have to pay a fee of $200 million to the existing constructors if they want to enter Formula 1 under the terms of the new Concorde Agreement.

Haas team principal Guenther Steiner told RACER when the new deal was announced that there was a significant fee for new teams looking to come into F1, and McLaren’s Zak Brown has now confirmed the figure stands at $200m. The reasoning behind the fee is due to a new team diluting the existing prize fund totals that is split between all teams, ensuring the current 10 don’t take large financial hits, while also protecting the value of those already on the grid.

Despite the substantial figure — that would be split equally between the existing teams — Brown believes the sport’s new structure still makes it a viable business proposition for a new team looking to enter.

“What that $200 million is intended to do is to a) protect the value of the existing teams — as reported on the Williams sale that’s less expensive and you get a lot more for your money than starting a new team — but I think if you believe in the franchise value growth of Formula 1 then you’ll get that $200 million back and then some at a later date,” Brown said. “Also, the way the regulations are written there is the ability for Liberty and the teams to agree to adjust that number.

“I think what we’re trying to do as an industry is stop what we’ve had in the past, where a USF1 announces they are going Formula 1 racing and they never get to the track. So the $200 million is intended to really make sure that if someone is coming into the sport that they have the wherewithal to do it and we don’t have what we’ve historically had, which is random announcements that people are going to come in and then they never make it to the track. I don’t think you’d ever see that in other major forms of sport.”

Despite his optimism that teams won’t be put off by the fee, Brown believes it will be a number of years before a new team would be ready to enter the sport even if it is a more attractive prospect.

“Unless you’re acquiring a team — which obviously is just happening with Williams — I think it takes about two years to build up, and I’m not hearing of anyone that’s imminent to enter.

“I do think that with the changes that Liberty and the FIA have introduced, Formula 1 is much more attractive to enter and be competitive in and ultimately create franchise value and potentially make a little bit of money.

“I think having a Formula 1 team that can be competitive, that isn’t a money pit, which is where Formula 1 has been — if you want to be competitive then it’s a money pit, and that’s not attractive — to now, I think Formula 1 has set on a journey with fairer revenue distribution, tighter rules, budget cap, there’s no reason why other racing teams won’t start to look at Formula 1 and see that it’s a viable business model. So I do think we’ll see more teams but I think it’s a few years away.”

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