Formula 1

The $200 Million Question: Reevaluating Formula 1’s Anti-dilution Payment Amid Booming Growth

Published

2 months ago

15/04/2023

As Formula 1 accelerates into an era of unprecedented growth, the sport’s stakeholders are grappling with a high-stakes dilemma: whether to raise the $200 million anti-dilution payment for new teams wanting to join the grid.

The reconsideration of raising Formula 1’s anti-dilution figure has emerged due to the business experiencing faster-than-anticipated growth. At present, new teams wanting to join the sport must pay a $200 million entry fee, which is then distributed among the 10 existing teams as compensation for decreased commercial revenue from Formula 1.

Nevertheless, the strong growth in recent years and a more balanced distribution of prize money from the front to the back of the pack have led to criticism of this amount. This one-time payment of $20 million is now seen as inadequate, given that the difference between constructors’ championship positions is approximately $10 million. As the sport’s finances continue to grow, this amount is expected to rise.

Many people within the paddock view the $200 million figure as insufficient, and there is discussion about potentially tripling it. This comes as the FIA, Formula 1’s regulatory body, begins the process for new teams to express their interest in joining the grid.

Several parties are currently in talks, with some being more visible than others. Andretti is the most prominent, while Hitech GP has been associated with acquiring a team – recent rumors point to Scuderia AlphaTauri – and a Craig Pollock-led group is also on the periphery.

F1 boss Stefano Domenicali acknowledged the FIA’s role in this process, stating, “The process of having another team has been launched by the FIA. Within our system of governance and under our agreement, it is their responsibility to carry out the task.”

“However, a joint evaluation is necessary to ascertain whether the addition of a new team would contribute positively to the league and the sport in terms of technical prowess, athletic performance, and financial stability.

Just two years ago, the anti-dilution payment was set at $200 million. Back then, no one anticipated that the business’s value would rise so significantly.

Today, the situation has changed completely, and it is our responsibility to ensure that we protect the business in the best way possible, considering the bigger picture.

There are many parties interested in joining the sport. Some teams are more outspoken than others, while some remain quieter but still express their interest.

As with any decision in life, someone has to make the evaluation, and we are part of that process. We will implement the suitable measures when the timing is optimal.”

The most logical time for a new team to enter the sport would be 2026, as this is when not only the next generation of power unit regulations will be introduced, but also the next Concorde Agreement.

F1 Entry Fee Review The $200 Million Question: Reevaluating Formula 1’s Anti-dilution Payment Amid Booming Growth F1 Entry Fee Review The $200 Million Question: Reevaluating Formula 1’s Anti-dilution Payment Amid Booming Growth F1 Entry Fee Review The $200 Million Question: Reevaluating Formula 1’s Anti-dilution Payment Amid Booming Growth