The Formula One teams are gearing up for an early start to formal negotiations with the sport’s governing body and owners on a new collective agreement. However, it is expected that disagreements over several complex issues will present significant challenges as the sport continues to grapple with the power of its extraordinary growth.
The current Concorde Agreement, the accord between the three parties, is set to be in place until 2025. For Formula One, securing new agreements through the Concorde Agreement has been a tough call in the past, often resulting in last-minute deals or periods without a formal agreement.
Last week, Greg Maffei, the Chief Executive Officer of Liberty Media, the US owners and rights holders of Formula One, suggested talks begin now. Teams present at the 2023 Miami Grand Prix welcomed the opportunity to begin discussions ahead of schedule, a move that Maffei’s comments had endorsed.
Toto Wolff, the team principal of Mercedes, remarked, “We haven’t really started talking properly, but that’s going to happen soon,” adding that he hopes the talks will remain behind closed doors. “It should happen in a constructive way, not maybe live-broadcasted and creating controversy,” he said.
While Formula One is currently witnessing a period of prosperity, driven by the success of the Netflix series ‘Drive to Survive’ and impressive growth rates in the US, that very popularity is creating new headaches that will need to be addressed in these discussions.
Several groups are keen on entering the sport, with notable US-based motor racing operation Andretti teaming up with General Motors to launch an Andretti Cadillac Team. The bid is being led by Michael Andretti, a former F1 driver and son of Mario Andretti, the F1 world champion in 1978.
With the Andretti family’s rich racing history, combined with General Motors and the Cadillac brand, the proposed team is an attractive proposition. However, as always in Formula One, wrangling over the money is likely to ensue.
At present, prize money is divided among the ten teams, with a ‘dilution fee’ of $200 million required by any new entrant. Red Bull’s team principal, Christian Horner, highlights that the teams may push for a significant hike in the entry fee in the new agreement, which would make the arrival of Andretti or any other new team intensely contentious.
“As with all these things, though, it ultimately boils down to, ‘Well, who’s going to pay for it?’ And you can assume that the teams, if they’re perceived to be the ones who are paying for it – or diluting their payments to accommodate it – of course it’s not going to sit that well,” Horner said at the Miami Grand Prix over the weekend.
Formula One CEO Stefano Domenicali indicated that the fee could rise, noting that the $200 million fee was established before the sport’s value boomed dramatically. “Today, the situation is totally different, for sure, and it’s our duty to make sure that we protect the business the best way that we can, and have a bigger picture,” he said to investors in April.
Some media reports indicate that the teams want to see the fee increase to $600 million.
The number of races is another critical issue looming large on the upcoming negotiation agenda, with Formula One having reached 23 events in the season this year, with the November Las Vegas Grand Prix added to the circuit. If the Chinese Grand Prix returned, this year would have seen 24 races. While many venues are pushing for an event, the teams have vocalized their concern that the sport is already at its capacity.
Guenther Steiner, the team principal of Haas, told AFP at the Las Vegas race launch in November, “I think we need stabilization in my opinion. The amount of races…don’t do more, stabilize where we are now.”
Red Bull’s Horner has suggested that some venues could rotate, but it is unclear whether the calendar will be part of the Concorde deal.