SUMMARY
- There are 2 ways to enter the sport as a new team.
- The new F1 team will need to get approval from multiple parties.
F1 is one of the most popular sports in the world. However, there are not a lot of teams that are a part of the sport. As it stands, there are only 10 teams having cars on the grid. Given the sport’s popularity, there is no doubt that there will be a number of teams trying to make their way into F1.
There are 2 ways a team can enter F1. One is the most obvious way, to enter as a new team. The other is through buying one of the existing teams on the grid. Both these methods have their own challenges.
How much does it cost to enter F1 as a new team?
In order to enter the sport as a new team, there are a few hurdles to pass. The first is submitting the application. Even to fill out the application, the team will need to have a history in motorsports and will have to pay a few million. There are 2 approvals a new entrant would need before entering the sport.
The FIA
Once the application is submitted, the FIA will check the team’s capabilities to be a part of F1. This includes several aspects regarding the team’s current and future operations.
Every Formula 1 team needs to have some financial stability to survive in the sport. Hence, the FIA will check if the team is capable of acquiring sufficient resources to remain in F1 for a long period of time. If they are not able to do so, the team cannot remain in the team for long and could cause a lot of problems to the sport and the employees working in the team.
#F1 – FIA approves Andretti Formula Racing application after rigorous analysishttps://t.co/iVD8rKzrwn
— FIA (@fia) October 2, 2023
When we look at the operations of an F1 team, the most important aspect is sustainability. The new team will need to make sure that they will be able to operate in a sustainable way. Given that F1 is looking to go net zero carbon by 2030, all the factories must run on sustainable energy. If the FIA feels that the team will not be able to achieve such a goal, they will not accept their bid.
There are a number of other technical aspects that are verified by the FIA. This includes the team’s manufacturing capabilities, design capabilities, infrastructure available, and more. If the team meets all the requirements, the FIA will approve the bid. However, the new entrant will still have to wait for F1’s approval.
The FOM
The second and final approval comes from the FOM (Formula One Management). This group is mainly owned by the commercial rights holder of the sport, Liberty Media. F1’s CEO, Stefano Domenicali, along with other executives will go through the team’s application.
They will look for only one thing; Whether the addition of the new team will increase revenues for the sport and the teams in the long run. If the team is not able to add value to the sport in the long run, it will reduce revenue for the sport and the teams.
BREAKING: Andretti’s bid to become Formula 1’s 11th team in 2025 or 2026 has been rejected by Formula One Management 🏎️ pic.twitter.com/LwLM7ZC4lz
— Sky Sports News (@SkySportsNews) January 31, 2024
As it stands, after each season, a percentage of the revenue is shared among the existing teams in the sport. With an additional team, this percentage will have to be shared with one other team, thus reducing the share to the rest.
For this reason, F1 has kept a high entry fee of $200 million for a new team. There is a chance that this price will increase. This enormous fee will be distributed to the existing teams to cover the losses in the initial years. However, the amount will only cover 2 seasons at the most. This is why the FOM needs to make sure that the new team can increase the overall revenue of the sport. Or else, it does not make any financial sense to add a new team to the sport.
How much does it cost to buy an existing F1 team?
The other way to join Formula 1 is to buy out an existing team. While this may sound easy, it is very difficult to find a team that is willing to sell. Given that the sport is incredibly popular now, none of the teams want to sell their team as the revenue they receive from sponsorships and the cash prize at the end of the season makes the team self-sufficient.
Teams like Haas operate on a very small budget. However, they are able to survive in F1 due to the sponsors they are able to attract with their driver lineup. But even if there is a team willing to sell, there still needs a lot of additional investment.
When a team sells the team, it is likely that the infrastructure they had will not be sufficient to be successful in the sport. Hence, hundreds of millions will need to be invested to renovate the factory, hire top staff, drivers, and a lot more.
Audi F1 pic.twitter.com/CB7gj6THvw
— Audi F1 (@AudiF1NL) February 12, 2024
However, we have seen a lot of teams find success through this method. Red Bull did it when they bought out Jaguar after 2004, Brawn GP did it when they took over for Honda, and then Mercedes did it when they took over for Brawn. So this method is proven and easier than applying for a new team with the FIA and the FOM. However, no one wants to sell their team with today’s success in the sport.
However, there are a few teams on the grid who could choose to leave the sport in the coming years. In 2026, we will see Audi take over as the works team for Sauber F1. We could see something similar happen to Haas if they are not able to provide results. It will be interesting to see how the next F1 team joins the sport.