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Andretti Formula Racing

Andretti facing biggest hurdle in F1 entry bid

Andretti has gained FIA acceptance for its entry plans, but now faces its biggest hurdle to join Grand Prix racing.

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Analysis
To news overview © XPBimages

Andretti Formula Racing LLC, the name under which the FIA has accepted Andretti's bid to join Formula 1, has, in effect done the easy bit.

Following what the FIA described as a "comprehensive application process", analysing the sporting, technical and financial merits of four prospective entries, only Andretti has moved onto what is known as Phase 3.

Phase 1 was the initial 'Expression of Interest' process back in January, with Phase 2 being the FIA's deep evaluation of the plans to see if any candidate team was worth forwarding onto the final phase.

This involves thrashing out commercial terms with the Commercial Rights Holder (CRH) which is Formula 1 itself.

In response to the FIA's announcement, F1's response was rather lukewarm. The one-sentence statement simply said: "We note the FIA’s conclusions in relation to the first and second phases of their process and will now conduct our own assessment of the merits of the remaining application."

As far as the FIA is concerned, Andretti has met all the criteria a prospective new team needs to, and as such, there is no reason to deny moving the application onto discussing terms with the CRH, with these rights effectively leased out by the FIA to Bernie Ecclestone back in 2001 and now rest with owner Liberty Media.

Essentially, the FIA takes care of the legal, technical and regulatory frameworks, which Andretti has passed, while F1 as CRH takes care of the financial issues - but this is the biggest hurdle Andretti is facing.

Why is F1 so lukewarm towards Andretti?

Ever since the EoI process was opened in January and Andretti immediately announced its interest, F1 has been rather ambivalent towards the process.

Back at the 2022 Miami Grand Prix, Michael Andretti was in the paddock and tried to get team bosses to put their names down to support his then hopes of making it onto the grid.

RacingNews365 understands that only McLaren's Zak Brown and Alpine's then-Otmar Szafnauer agreed while the consensus from the others was largely: 'Go away, come back with a OEM and then we'll think about it again.'

So, Andretti went away and came back with one of the biggest car manufacturers in General Motors and its Cadillac brand in tow. Having done what was asked of him, the EoI process then got underway, with Andretti wisely keeping his powder dry and not trying to bounce F1 into a decision of the finest margins.

The crux of the argument as to why current teams don't want an 11th squad on the grid is simply greed.

Their argument is that 1/10th of a smaller pie is a better prospect than 1/11th of a bigger one, with the fact that they don't believe it to be fair that they have put the hard yards in to help F1 grow into a sustainable business model to now reap the rewards while Andretti - or indeed, any potential new team - could swan in once the boom is underway and not have the scars to show for it.

It is enshrined in the 2021-2025 Concorde Agreement that prospective new teams must pay $200 millon for the privilege to join the grid to effectively offset the loses the incumbent 10 teams would lose. This is known as the anti-dilution fee which it is understood was set at that mark for the price Williams was sold to Dorilton Capital in mid-2020, just as the latest Concorde was being agreed.

There has been talk of tripling this figure to $600 million as a result of the boom in value of even the 'smallest' teams and following the model of new franchises in American sport, with a deal being agreed in May for a new MLS team in San Diego in the region of $500 million.

However, it must be stressed that even though the teams see themselves as 'franchises', they are not, with changes to the Concorde requiring unanimity. The FIA itself is also involved in discussions for the Agreement with its approval needed before final sign-off.

Bluntly, the current 10 teams are rather happy with F1 being a closed shop, not open to new business, with time firmly on F1's side, owing to the fact it has taken most of 2023 for the FIA to merely accept Andretti's bid.

Playing hardball could make 2025 an unrealistic prospect for the team to join, while 2026 will see the new Concorde come into force, perhaps with that tripled anti-dilution fee included.

Michael Andretti © XPBimages

A bad look for F1?

One route onto the grid for Andretti touted in previous months has been to buy an existing team - much like Audi has down with Sauber, with the team gearing up for 2026.

However, this route has proved fruitless for Andretti, with its own team being the only realistic way onto the Grand Prix grid.

To the outside world, Andretti has met every requirement for an entry to the grid, if it had not, the FIA would have sent its application the same way as it did the others.

If F1 was not able, or willing, to come to terms on a commercial agreement, it would raise some serious questions.

Andretti is not some no-hoper - it is one of the most recognisable names in global motorsport coming armed with GM-backing.

At a time when F1 has seemingly cracked the American enigma, to firmly slam the door shut in Andretti's face would take an almighty marketing campaign to square in the eyes of the fanbase and casual viewers when money seems to be at the root of why.

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