Max Verstappen, representing Red Bull Racing, races in the RB20 car during the Australian Grand Prix at Albert Park in Melbourne, Australia. This event took place on March 24, 2024 as part of the Formula 1 World Championship.
According to reports, the 10 existing Formula 1 teams are pushing for a reduction in the number of teams allowed on the grid in the upcoming Concorde Agreement. Currently, the agreement allows for 12 F1 squads to participate once commercial terms are agreed upon, with an anti-dilution fee of $200 million to prevent prize funds from being spread too thin among more than 10 teams.
To attract new entries, the FIA initiated a tender process last year. However, only Andretti met the requirements set by the FIA, but Formula One Management (FOM) did not approve their entry for the 2025 season.
Given the increasing value of Formula 1 and its teams, there is a call to limit the growth of the grid in the next Concorde Agreement, which will cover the commercial terms for the period between 2026 and 2030. Both F1 and the existing teams reportedly desire a cap of 10 competitors, making it necessary for new entrants to acquire existing entries.
Since Liberty Media took over Formula 1 in 2017, the sport has adopted a franchise model inspired by the United States. Understandably, the current teams would be hesitant to share revenue with new entries, considering the challenges they have faced to reach the current profitable period, including the financial difficulties caused by the Covid pandemic in 2020. According to McLaren CEO Zak Brown, the 10 existing F1 teams are now valued at nearly £1 billion each.
If a limit on the number of competitors allowed in the series cannot be implemented, it is highly likely that the anti-dilution fee for prospective teams will significantly increase from its current $200 million. Another potential concern, as pointed out by reporter Joe Saward, is the ownership structures of teams. There have been discussions suggesting that it would be beneficial for the series if each team were independently owned. This raises questions about the Red Bull parent company’s ownership of both Red Bull Racing and the Faenza-based RB outfit, a structure that has been in place for almost two decades. Zak Brown, among others, argues that Red Bull should become an independent entry, citing the cost-cap and fairness of the sport as reasons for this change.
The new commercial arrangements for the next Concorde Agreement, covering the period from 2026 to 2030, must be finalized before the end of next year.