Formula 1
F1 discussing new team $600 million dilution fund formula
Formula 1 is discussing the idea of a new $600 million dilution fund format for new teams as part of the next Concorde Agreement, Motorsport.com has learned.
Jonathan Noble
Published: May 25, 2024, 7:51 AM
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Discussions have begun between teams and F1’s commercial rights holder about the terms of a new Concorde Agreement deal that will define how the series is run from 2026.
The document includes all the key commercial aspects of F1, including prize money and, as Motorsport.com revealed last week, a move to cap Ferrari’s historic extra bonus payment.
Sources have revealed that one other change being looked at is how the dilution fund for new teams is implemented, which comes against the backdrop of the Andretti Global organisation pushing hard to secure an entry.
The dilution fund is an extra payment that a new entrant must pay to join the grid, and helps offset any loss that current competitors would face from needing to share their commercial rights income with an extra 11th team rather than it being split between 10 competitors.
In the previous Concorde Agreement, it had been agreed that the dilution fund would be a straight $200 million payment that would be shared among the current outfits.
But this figure had been settled on when F1 was not in such rude financial health and, based on grand prix racing’s current commercial strength, it was widely viewed as not being enough to offset any losses that teams would face.
That is why a fresh format is being looked at for the next Concorde Agreement.
Motorsport.com has learned that as part of the draft proposals sent to teams as a starting point for the Concorde Agreement discussion, a new dilution fund idea has been proposed.
Rather than it being a set figure, a formula has been proposed that will work to compensate the current competitors over a set period – believed to be five years.
It is understood that the initial figure that has been proposed totals the equivalent of $600 million for a team that wants to join in 2026, rising to $700 million from 2028.
Included in this is an additional stipulation that a new team will not earn the right to any prize money for the first year it races in F1.
The figure is high and, for an ambitious entrant like Andretti, it could prompt it to rethink whether or not it should start with a clean slate or if it should look at purchasing one of the current competitors.
Speaking at the Monaco Grand Prix, Red Bull team boss Christian Horner said he welcomed the idea of Andretti coming to F1, but felt it should perhaps look at taking over somebody.
“I think Andretti has great racing heritage,” said Horner. “Mario is a legend of the sport. And of course, Cadillac, a huge automotive manufacturer from the US.
“Formula 1 have said in 2028, if they were to come with their own engine, they would obviously, I think, review it. But in addition to that, if Andretti were to want to come, a little like Audi acquired Sauber, to protect the current franchise and stability that we have in the sport, then obviously their best route to goal is to acquire one of the existing teams.”
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