Andretti Cadillac gets FIA approval, but what's next?

The final hurdle could prove to be the toughest one

A very familiar last name in both American and Formula One racing is inching closer to becoming the 11th team on the F1 grid.

The FIA has approved the Andretti Formula Racing entry as the possible 11th team in F1 by 2025 or 2026. The team now advances to the third and final stage of the selection, which involves the discussion between Andretti and Formula One Management (FOM) which holds the commercial rights of F1.

Earlier this year, Andretti Formula Racing expressed their intention to join F1, forming a team along with General Motors which would be known as Andretti Cadillac. The team is led by Michael Andretti, son of 1978 F1 champion Mario Andretti. Michael himself also had a brief stint in F1 when he drove alongside Ayrton Senna in McLaren back in 1993.

The final process, however, might be one of the most complicated hurdles for Andretti to get into the F1 grid. While Formula One is viewed as a competitive sport, there's still that very important business side to it, and that's where the problem lies with Andretti's bid to enter – it's about the prize money involved.

Every season, TV revenues are split evenly amongst F1 teams. This particularly enables smaller teams to sustain their efforts and remain in the F1 grid. In the current state of F1, 10 seems to be the magic number as in the past few years we have not seen a team withdraw from F1 because of financial difficulties. But now that FIA has approved an 11th team, this would mean the existing ones are bound to get a smaller size of the pie.

To compensate for the loss of the prize money, Liberty Media and the teams agreed under the 2021-2025 Concorde Agreement that any new team will have to pay a USD 200 million “anti-dilution” fee, which will also be split evenly to the existing entrants.

However, since F1's popularity has boomed in recent seasons, so does the value of the existing teams. F1 bosses feel that the USD 200 million fee is too low with regard to the current popularity of F1 and that the value should now be somewhere in the USD 500 million range. Of course, they can't change that for now; teams will have to wait until 2025 when a new Concorde Agreement is set to be signed. This is when the increased “anti-dilution fee” is expected to be reflected.

America has also become one of the biggest markets of F1 ever since Liberty Media took over, and the addition of another American team with the possibility of having an American F1 driver could make the sport a lot more popular on that side of the globe. Currently, the only American team in F1 is Haas, but they currently have Kevin Magnussen and Nico Hulkenberg in their cars. Andretti on the other hand is intent on getting the services of Colton Herta.

What Andretti has to do now is to convince teams that by letting them in on the grid, the pie being shared would grow with their presence. So even if it's a smaller size by percentage, the bigger pie would mean it's still a net gain for the rest. However, time is not on their side. 2023 is about to end, and 2025 is a very short period to put up an F1 team from scratch, let alone build a competitive car. 

We'll see if the deal pushes through.