Why Andretti is both right and wrong with his F1 "greed" accusations

It did not take long for Formula 1’s first major political battle of 2023 to erupt.

With New Year hangovers barely worn off, Michael Andretti’s announcement of his intention to enter F1 with Cadillac triggered a fight that has divided the paddock. On one side of the debate is Andretti and FIA president Mohammed Ben Sulayem, who both believe that F1 would be a stronger place if the American operation made it on to the grid with the backing of General Motors.

On the opposite side are Formula One Management (FOM) and the majority of F1 teams (but not all of them), who want to slow things down as they are not yet convinced it is a win-win scenario. They want to better understand whether the value Andretti can bring to F1 outweighs any potential downsides.

As had been widely reported this week, there are several intertwining factors at play here for the teams and FOM: the manner in which Andretti has gone about dealing with the politics and publicity around his entry; the questions over Cadillac’s engine plans and, of course, the much talked about $200 million ‘dilution’ fee compensation on offer.

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The first two elements are minor; although the fact Andretti chose to speak out in public this week, criticising the "greed" of F1 in blocking him, may well only serve to further annoy those already sceptical about what he is up to. At the root of it all, as so often happens in F1, is money. It comes down to a stone cold equation that the teams and FOM need to work out.

And it’s quite simple: a new team will only be approved if it is felt that it brings a greater value to the current 10 teams and F1 as a whole than if it is not there. For there is little point in adding an 11th or 12th entry on the grid if it is not competitive, if it doesn’t bring an element that F1 doesn’t already have, or risks destabilising and even killing off any of the current 10 squads. It is the potential downside to having extra teams on the grid, through a dilution of commercial rights income, that has fired up the current competitors the most.

They aren’t worried about being beaten on track. Instead, losing between $6 and $12 million per year of prize money each, in exchange for the $20 million one-off payment they would get under the current ‘dilution’ agreement, is no longer deemed a good enough equation. Talk now is of the dilution fund being raised to around the $500 - $600 million level in the future – so effectively giving teams a five-year payback for any new entrant that comes on board.

Andretti has hit out at the "greed" of F1 and some teams for pushing against his plans

Photo by: IndyCar

From the Andretti perspective, this focus on the ‘dilution’ payment has been interpreted as greed. As he told Forbes earlier this week: “It’s all about money. First, they think they are going to get diluted one-tenth of their prize money, but they also get very greedy thinking we will take all the American sponsors as well. It’s all about greed and looking at themselves and not looking at what is best for the overall growth of the series.”

Andretti is both right and wrong here though. Yes it is correct that this is about money, but when has running an F1 team never been about money?

Money has made racing cars go around for years, and part of the attraction and allure of F1 being the premier motor racing category is that there is such an intense battle to succeed because the prize money at stake is so huge. That battle to come out on top has helped fuel the politics of what has become known as the "Piranha Club" between team bosses. That phrase was supposedly coined by Ron Dennis who, on seeing Eddie Jordan at the 1991 Italian Grand Prix after he had been outmanoeuvred by Flavio Briatore and Benetton for Michael Schumacher’s services, told him: "Welcome to the Piranha Club."

When Haas arrived in F1, it did so knowing that it would have to wait at least two seasons to earn proper commercial rights income; which is why it was so upset over the fact that Force India becoming the ‘new’ Racing Point team in 2018 did not see it face a similar delay

F1 teams are not charities that happily welcome any team in and are willing to share out the cash with anyone. Every dollar is hard fought for because all teams know that money buys performance. So it is naive to suggest that decisions are not fuelled by money. Indeed, Andretti himself would be the first to admit that he is coming in to F1 to succeed, become profitable and make a good and sustainable business.

Amid the focus on the ‘dilution’ fund and insinuations that it’s greed that is driving talk of need for a $500 million payment, it’s important to remember that teams have actually been accommodating to potential new entrants.

Until the latest Concorde Agreement came in to play in 2021, the dilution fund did not exist because new teams on the grid were not entitled to any commercial rights income for the first two years they entered F1. In fact, they needed to finish in the top 10 in two seasons out of three to qualify for the main money payment, which meant there was a risk of a new team coming on board and getting zero back for quite a while. As a way to ease the pain, F1 did briefly have a system to offer them a $10 million compensation package to help cushion the blow.

When Haas arrived in F1 in 2016, it did so knowing that it would have to wait at least two seasons to earn proper commercial rights income; which is why it was so upset over the fact that Force India becoming the ‘new’ Racing Point team in 2018 did not see it face a similar delay. In the end, an out-of-court settlement was agreed to bring that dispute to a close.

Haas effectively had to wait two years before gaining its full commercial rights income

Photo by: Andy Hone / Motorsport Images

This two-year delay for newcomers was good for the current competitors, but ultimately viewed as a hurdle in getting new teams in and stopping them collapsing early on, which is why the process shifted to the ‘dilution’ fund. So the benefit of getting immediate access to commercial rights income for a new team comes at the expense of needing to pay compensation to other teams for having to share their prize money with more rivals from the off.

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While current teams are understandably looking after themselves, you would have to question why anyone would want to give up potential income voluntarily. It is slightly wrong of Andretti to suggest that they are selfish and not considering the health of the overall series by not wanting to give up what they have now.

FOM, which unlike the current 10 teams does have an actual say in whether or not new entrants get in, is crystal clear that its final decision will be wholly based on whether fresh squads bring added value. F1 CEO Stefano Domenicali is well on top of all the interested parties that are considering entering grand prix racing, and a final decision will be made on the benefit that F1 gets as a whole from any new entrant.

It’s why the arrival of Audi was so welcomed; and why Porsche remains a contender despite the collapse of its Red Bull plans. There is also now Ford lining up for an F1 return as its talks continue with Red Bull.

It is understood that there is also no negativity towards what GM is up to. Even if it will not be creating its own bespoke engine, its marketing machine and global reach will be a help to F1 if it enters (with or without Andretti). FOM is not wholly against Andretti - it simply wants to better understand its potential for success and how it plans to deliver a top-line F1 entry that can cut it among the current competitors.

Domenicali knows it would be wrong for him to throw his support behind Andretti at this stage just because the American has gone public with his ambitions. There could be much better options out there that have bigger plans in place and would be good additions to the grid.

What needs to happen is the process needs to play out in the right way – not on social media and with sound bites flying around. All the expressions of interest need to be analysed in detail and a cold hard decision made after an assessment of each of the strengths and weaknesses. And in true F1 fashion, it will be about the best package winning.

So if Andretti is convinced that his Cadillac plans can drive a benefit for F1 as a whole, and are better than what anyone else has to offer, then he really should have nothing to worry about.

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Photo by: Joe Skibinski