New teams to fork out $200m
New Formula 1 entrants must pay rival teams a total of $200million as part of a prize-money ‘dilution fund’ if they want to join the grid from 2021.
As part of the arrangements that all teams have signed off with the new Concorde Agreement, special efforts have been made to ensure that the revenues of current entrants are protected. With a much fairer distribution of commercial rights income, there were concerns that new operations could end up diluting the revenues of more established teams by simply turning up and not contributing to the championship’s success.
One of the consequences for the current teams would then be that the prize money fund could be split between 11 or 12 teams rather than the current 10. So in a bid to ensure that teams have a degree of income stability, it has been agreed that any potential newcomer must pay each of its rivals $20m.
Mclaren CEO Zak Brown said the arrangement would not only ensure that any new entrants were serious, but that it also protects the value of the current teams, citing the recent sale of Williams to Dorilton Capital for around $180m.
Speaking at the Tuscan Grand Prix, Brown said: “What the $200m is intended to do is to protect the value of existing teams. If it is as reported on the Williams sale, that’s less expensive [than $200m] and you get a lot more for your money than starting a new team.
“But I think if you believe in the franchise value, growth of Formula 1, you’ll get that $200m back and then some at a future date. Also, the way the regulations are written, there is the ability for Liberty and the teams to agree to adjust that number.”