The Formula 1 grid might expand by 2026. The FIA has already received bids from multiple entries such as Andretti-Cadillac and Hitech GP. However, the existing teams have been against this expansion citing a dilution of value on the grid. Now, McLaren CEO Zak Brown has gone against his colleagues in claiming that an 11th team would only add value to the current teams.
Brown backed up his controversial claim with an in-depth explanation. However, the 51-year-old took a much higher figure of $700 Million as the entry fee instead of the currently set $200 Million. The McLaren boss believed that the $70 Million received by his team from this pool would cover the dilution for at least seven years. Moreover, Zak Brown believed that the entry fee would add up to the value of existing teams and as such make McLaren’s value increase by the same amount.
In such a scenario, the 11th F1 team would not only cover the lost prize money for the current ten teams with the entry fee but would further aid in increasing the franchise value of the entire grid. Certainly a lucrative situation for F1 and the teams.
The McLaren CEO told Motorsport-Total, “I believe I’m not giving up that money… Let’s assume for a moment it is. If they pay the right franchise fee. Which is not 200 million, let’s say it’s 700 million – then I get 70 million. The dilution of an 11th team is about 10 million a year. So, if I get 70, it will be covering me for seven years. Then if it costs 700 just to enter, it’s created 700 million more in franchise value. So, whatever I’m worth today, pick a number… two billion, now I’m worth 2.7 billion.”
Brown pointed out that an 11th team on the grid would lead to a more scarce market for F1 teams. As the new entry would take up one of the two remaining slots for potential teams in the sport. Michael Andretti‘s proposed entry with the backing of General Motors has faced backlash from current teams. However, Zak Brown was convinced that even GM’s efforts would help increase the value of the existing outfits.
The 51-year-old reckoned that if the American carmaker spent around $100 Million in marketing in the sport, this money would trickle down to all teams. As such, Brown believes that if the amount of the dilution fee is correct, then an 11th team would be beneficial to the entire grid.
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Andretti Autosport is thrilled to support the news of Andretti Global and General Motors with @Cadillac, two American powerhouses coming together to pursue the opportunity to compete in the @FIA@F1 World Championship.#CadillacVSeries#AllAndretti
Zak Brown stated, “The teams get 70% of the money that comes into the sport. let’s say… they [General Motors] spend 100 million a year, we get 70 of that. So, all of a sudden, the 100 that they’re taking out of the system, they’re putting 70 of it back or 50 of it back. And then at the right franchise number, I’m not getting diluted.”
As such, Zak Brown has done the maths into the potential economics in Formula 1 with a new team. Currently, the FIA is yet to reveal the winning bid for an 11th spot at the pinnacle of motorsport (if any). Although, it seems that the numbers can indeed bring the existing teams in favor of a new entrant if the sport can raise the proposed dilution fee.
Armaan Agarwal is a Formula 1 Subhead and author at Firstsportz. He has been a Motorsports writer for over six years a journey that started in 2017 with his own F1 blog. Armaan has been part of the Firstsportz for over a year and has published more than 1000 articles. His experience, passion for racing, and in-depth knowledge of the sport enable him to give racing fans worldwide a unique perspective of the sport. Armaan has always loved cars and it was Sebastian Vettel that made him a passionate F1 fan. Armaan is presently studying Mass Communication at St Xavier's University Kolkata.
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