When the proposed takeover of the Sauber Group, which runs the Alfa Romeo Formula 1 team, collapsed, some might have felt it was a good thing for Andretti Autosport. After all, grand prix teams are notorious money pits and Sauber hasn’t exactly set the F1 world alight in recent times, so what possible sense did this deal make for an organization that’s thriving, with teams involved successfully in six categories around the world? Why would it need F1?
That view might have held water a few years ago, but F1 has been transformed recently. The very fact that Andretti was eager to acquire an 80% stake in Islero Investments, the Sauber holding company, and that the ownership – effectively low-profile Swedish billionaire Finn Rausing – ultimately wasn’t willing to do a deal on workable terms confirms this. For the first time in the 21st century, F1 teams are on the brink of existing as consistently profitable and stable companies rather than being reliant on continual shareholder cash injections or hand-to-mouth struggles to survive.
Looking at the big picture, F1 teams now have to operate to a cost cap. That first appeared this year with a baseline level of $145million (that’s based on 21 races, with adjustments up and down should that number be different), and will drop a further $5m in each of the next two years. The cost cap doesn’t cover everything, with driver costs, the pay of the three highest-paid team executives and myriad other things excluded, but crucially it does cover the design, build, development and operation of a couple of F1 cars over a season.
The cost cap is a hard line, enshrined in a 49-page document that sits alongside the technical and sporting regulations that F1 runs to. And while it has yet to be challenged by a test case, a chunk of those financial regulations are devoted to the procedures for punishing transgressors with draconian sporting sanctions. As F1 managing director Ross Brawn said when it was first announced, the cost cap “has teeth”, and could cost you a championship or worse.
The cost cap means that outgoings are far more under control than they once were. Teams will spend every dollar and cent they can on making the car go faster and this is the mechanism that has driven costs ever-upwards in recent decades, for a period creating a system where only the three biggest teams – Mercedes, Ferrari and Red Bull – could realistically aspire to sustained success. Now, if you are running an F1 team, you have a good idea what you will have to spend.
The income is also better structured thanks to the new Concorde Agreement, the document that binds together the FIA, F1 and the 10 teams commercially, agreed last year. A more equitable split of the chunk of revenue shared by the teams means that all the entries will get a fairer slice of the pie as opposed to under the previous commercial terms, whereby the biggest teams were paid disproportionately purely based on what they could negotiate under the pretense of historic success.
This means all of the F1 teams should be viable and sustainable. And although it’s fanciful to imagine that there won’t still be a hierarchy based on resources, facilities and expertise, over a long enough timeline things should even up. Potentially, this means it won’t only be the biggest teams that can aspire to a valuation of well over a billion dollars. NFL franchises are often used as an aspirational comparison, and you won’t get much change from $2.5 billion even for the lowest-value one of those.
So for Andretti, or any aspiring F1 team owner, the long-term incomings and outgoings were not only more predictable, but also more realistic. This is dramatically different to the past, where even measures such as the resource restriction agreement agreed in late 2008 proved impotent and preceded a period where the likes of Red Bull, Mercedes and Ferrari stoked the spending rises ever more aggressively.
This explains why owning an F1 team might be appealing. But why Sauber, a team that has finished eighth, ninth or 10th in every constructors’ championship since the switch to 1.6-litre V6 turbo hybrids in 2014, and that has only won a single GP in its 28 years in F1?
The simple answer is that it’s a privately-owned team that just might have been willing to sell. Those with manufacturer ownership, even Mercedes (one-third owned by each of Mercedes, Toto Wolff and INEOS), are not for sale, and even if they were, many would be prohibitively expensive. That doesn’t leave many options, especially given two teams that have been available in recent teams are now owned by a Lawrence Stroll-led consortium (Aston Martin) or New York private investment firm Dorilton Capital (Williams). As for Red Bull’s second team, there have been times that AlphaTauri (formerly Toro Rosso) has unofficially been open for offers, but it now suits the company very well to have two teams.
So that realistically leaves Sauber and Haas. The latter, despite some suggesting it would make sense, would not have been a sensible option. It’s a team that has enjoyed some success since joining F1 in 2016, finishing fifth in the constructors’ championship, before its current slump. But it falls far short of Sauber in terms of appeal given its dependence on Ferrari for the supply of the majority of parts that make up the car – effectively, it’s a partial F1 team. What’s more, despite owner Gene Haas’s publicly aired concerns about F1 a couple of years ago, the changes in the financial basis of F1 that have already been discussed and the financial injection from Russian company Uralkali, owned by Nikita Mazepin’s father Dimitry, mean it’s currently not for sale.
So too, it turned out, was Sauber. It’s understood that Rausing was uninterested in selling but eventually acquiesced and at least formulated some basic terms that meant the sale of 80% might be possible. This was the point when the Andretti side seemed confident a deal could be concluded, potentially over the United States Grand Prix weekend, before the amount that needed to be pumped in rose. The bottom line is that now is not a good time to sell a grand prix team.