Formula 1 and the FIA have together got themselves into a potentially sticky situation regarding additional new teams. It will be recalled that FIA president Mohammed Ben Sulayem opened up the tendering process for potential new teams a couple of years ago and that Michael Andretti’s Andretti Autosport IndyCar team jumped through the required hoops to apply. Three others have since done so, the most serious-looking of them being Hitech, the Silverstone-based team with a great reputation in the FIA feeder formulas, F2, F3, Formula Regional and F4. It expanded with the help of the father of Russian driver Nikita Mazepin before the FIA placed restrictions on Russian drivers after the Ukrainian invasion. The FIA has yet to approve any of the applicants.
The FIA can decide which applicants get a licence to enter, but has no say in the commercial agreement under which a team would compete. That is the preserve of the commercial rights holder, Liberty Media and its F1 management arm FOM. It is FOM which makes the commercial agreements with the teams, what their share of prize money and TV rights money is, etc. Competing in F1 without taking a share of the income would be a way to lose multiple millions year after year.
Neither FOM nor most of the other teams see the benefit to the sport of any additional teams beyond the current 10. They do not believe the new teams would grow the cake enough (through the extra interest and sponsorship) that each team’s smaller slice would be a bigger number than they currently enjoy. In their judgement the best way to grow the sport and maximise its total revenue is to have a select number of high-quality teams all of which will earn good income from their share of the spoils. In combination with the cost cap on expenditure, everyone should be able to compete and be profitable.
In Liberty’s franchise business model for F1, they argue that if someone new wishes to enter F1 they should buy an existing team. The recent sale of a shareholding in the Alpine F1 team puts a nominal value on that team of £900m.
“At the moment Ben Sulayem is holding a hand grenade”
When the FIA president announced that application process, it rather took Liberty by surprise. There was for sure a power play element to this. Ben Sulayem was keen to be seen in overall charge but his actions and statements have had a certain scatter-gun quality. In theory there is not one body in overall charge. It is the FIA’s championship but with the commercial rights leased out to an entirely separate body. But perception is important. A significant part of the FIA’s income comes from the F1 lease. The F1 CEO Stefano Domenicali is a more serene operator and very smart. He likes to project consensus and prefers to work that way, but there’s a steely purpose within him.
Once Ben Sulayem had opened up the entry process, the FIA was obliged to consider each application and if they meet all the sporting, financial and technical stipulations made, it would be quite tricky to refuse to grant them a licence to compete. Which potentially puts the sport in a position where the FIA publicly approves one or two new teams, but F1 refuses them access to the commercial agreement. That potentially puts the FIA and FOM on a very public collision course.
The question of what happens next is probably in Ben Sulayem’s hands. If one or more of the teams meets all the stipulated criteria, he could simply announce that the FIA has approved their entry and then leave it up to Liberty to announce that the new teams will not be party to the commercial agreement enjoyed by the existing 10 teams. He would effectively be putting the ball in Liberty’s court, being the good guy publicly for bringing new blood into the sport, obliging Liberty to accept them or be the bad guys publicly by refusing to do so.
The chances of Liberty accepting any of the new teams currently looks slim and so if Ben Sulayem makes a unilateral announcement that the FIA has granted licences, Liberty would have to publicly say “no” to any commercial deal for the new teams. So if the FIA did grant the sporting licences and the president then made the unilateral announcement confirming that, it would be a highly charged and very combative position to take with Liberty. It might also trigger legal complications between the teams, the FIA and Liberty.
Would Ben Sulayem have the appetite to go up against Domenicali and Liberty if push came to shove? Or would he prefer to find a way for the FIA to pull itself out of that awkward situation?
At the moment he’s holding a hand grenade and needs a way of not pulling the pin and saving face in the process. One way might be to find good reason why none of the teams have met the criteria. Another might be a simple joint FIA/Liberty statement that although the applicants passed the sporting part of the process, it has not been possible to agree a commercial deal.
Either way, the chances of a new Formula 1 team actually joining the grid any time soon currently look remote.
Since he began covering grand prix racing in 2000, Mark Hughes has forged a reputation as the finest Formula 1 analyst of his generation
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