The big news this week in the world of motorsport so far has been, without a shadow of a doubt, the rejection by Formula 1 (here, importantly, I’m talking about Formula One Management – FOM – owned by the American Liberty Media) of the application for registration of the Andretti Global for the 2025 season. It was a soap opera that had been going on since October 2, 2023, when the International Automobile Federation (FIA) announced that it had accepted the American team’s application for registration. The justifications for the commercial side of F1 are in a long statement, with 20 items, published on the category’s corporate website (read the full article here – in English). But anyone who thinks that this process is just about the entry of a new team into the biggest category of motorsport is mistaken. It is another chapter in the Cold War between the FIA and Liberty Media, which has been going on since the election of Mohammed Ben Sulayem as FIA president at the end of 2021.
I’ve written a few times here on Flying down about the relationship between FIA and Liberty Media. In recent years, the entity led by Mohammed Ben Sulayem has repeatedly tried to show the Americans from the company that owns the commercial rights to Formula 1, who is boss. However, as we know very well, in motorsport it is money that calls the shots – “cash is king”, a certain seven-time world champion would say. And in this, those who have the advantage are the Americans from Formula One Management (FOM), who have increased the market value and profits of the category since the acquisition at the end of 2016. And that is precisely where we have Andretti Global trying to enter the largest category in world motorsport. And since there are no saints or innocents in business, the interested team decided to take advantage of this Cold War.
Andretti’s first attempt to enter Formula 1 dates back to October 2021. The idea, at the time, was to buy Sauber, which was not going through good times in the category and had sold its naming rights to Alfa Romeo at the time. According to Michael Andretti, former driver and current owner of the company, the deal was practically closed when the Swiss team backed out. About a year later, the team officially sold it to Audi, a Volkswagen Group manufacturer, which will debut in the category in 2026. With this, Andretti began looking for a possible 11th team spot in F1 and signed up to the process opened by FIA on March 22, 2023 – in the absence of Liberty Media. When the American team made this choice, it became a very important “pawn” in Ben Sulayem’s fight against the Formula 1 owners. And a “pawn” with important popularity.
After all, if the FOM denied Andretti entry into Formula 1, a surname with enormous tradition – on and off the track – in motorsport, it would be a huge blow to the category’s popularity. No sooner said than done. Since the FIA announced the approval of the American team’s request, in October last year, a large part of the category’s fans have sided with the team led by Michael Andretti. And, automatically, they put Liberty Media in hot water. Furthermore, the new structure still had the great support of General Motors, which would be the team’s engine supplier through the Cadillac brand from – pay attention to the date – the 2028 season. In short, a combination of unpopularity for Liberty Media in front of fans.
But let’s get to the holes in the story: the registration, however, would be for 2025. In other words: Andretti would have to spend three years as a customer of another automaker to have a power unit. And even more important: I would need to build a car for the current regulations and another for 2026, when the rules will change again. Two points that don’t come cheap in current Formula 1. Not to mention the manufacturers’ resistance to selling engines to Andretti knowing that they could be passing information indirectly to GM technicians, who have never built a power unit for current Formula 1.
As expected, FOM denied Andretti’s registration based on commercial reasons – far beyond what you read in the press. We can discuss all of this, but I read the entire statement a few times. These are very plausible reasons, given the current management of Formula 1. And most importantly – and this detail is essential: Liberty Media closed the doors to Andretti in 2025, but left it open for 2028, when GM/Cadillac will have its power ready to debut in the category, according to the schedule presented by the American automaker. Also according to the statement: “in this case, there would be additional factors to be considered in relation to the value that Andretti would bring to the Championship, in particular with regard to hiring a new prestigious manufacturer for the sport as a supplier of power units “. Makes sense, doesn’t it? In any case, the American team, if it really wants to enter 2025, can still seek justice from the European Union, appealing to antitrust laws. To be checked.
Franchises and the Concorde Pact
Two other important points in the FOM statement – and which I saw few people address: Andretti was invited to a face-to-face meeting with Liberty Media on December 12, 2023 – and did not accept. FOM also emphasizes that “the evaluation did not involve consultations with current F1 teams, but that the impact of the entry of an 11th team on all participants in the championship was taken into account.” And this excerpt takes us to two very important items – one of which should dominate behind-the-scenes discussions at F1 over the next two years.
Since the acquisition, Liberty Media has tried to implement the franchise system in Formula 1, an extremely successful model in American sport. Simplifying it to the extreme, it would mean making the participating teams members of the championship, strengthening them. That’s why important measures were adopted to redistribute prizes, so that the gap between big and small teams would decrease – even though traditional teams maintained their privileges. The result is clear: the Americans took a category with some teams on the verge of bankruptcy and improved – a lot – their financial situation. We haven’t heard anything about it since a few years ago. Liberty’s idea is simple: to increasingly strengthen existing franchises, improve the level of the championship (if the FIA - the regulatory body – doesn’t get in the way, of course) and, only then, open the possibility of expanding to another place.
And finally, the discussion that I said will dominate the next two years. The Concorde Pact, the document that governs Formula 1’s commercial relations, expires at the end of 2025. This document involves three parties: teams, FIA and FOM (Liberty Media). As teams and FOM are aligned, we will have something very much in line with what they intend. And one of the points that must be changed is precisely the registration fee for a new team in F1 – currently US$200 million (R$991 million). This value should increase significantly, mainly due to the appreciation of the category in recent years. It’s another reason why Andretti had its application for 2025 rejected. After all, more money could enter the game with the possible entry of the American team in the 2028 season.
My opinion on all this? Honestly, it doesn’t matter. What I think is important, whenever a decision seems strange in motorsport, is to look behind the scenes, between the lines. Not everything is what it seems. There is much more than a declaration. There is much more than a statement. Wars are usually fought away from the spotlight. This is what we are witnessing now. And, I repeat, in the business world there are no saints or innocents. And F1 is a sport that is a business. Or a business that is a sport. Or vice versa.
At Your Fingertips: Leclerc and Sainz
AT YOUR FINGERTIPS 11/08/2023 – Charles Leclerc and Carlos Sainz