F1: Andretti has them by the balls, they just don’t know it yet (Update)

–by Mark Cipolloni–

One of our readers raised the issue regarding this article, pointing out the fact that the UK and FOM are based in London and hence would no longer fall under EU laws.

This is incorrect.

That would be true if they only did business in the UK – but they do business in the EU (run races there) and therefore would fall under the EU jurisdiction.

The risk of being barred from doing business in the EU would be a showstopper for F1; hence they would back down quickly.

As an example, if you build a passenger plane in the UK, but want to sell it in the USA, you must meet all USA legal requirements. If a lawsuit arises, the UK firm selling the planes would find themselves in a USA court of law.

Ditto for Andretti vs. Liberty/FOM

by Mark Cipolloni

In reality, Michael Andretti has them by the balls over being barred from entering a team in F1, they just don’t know it yet.

Related Article: FOM rejects Andretti’s F1 Application

All this talk of the existing team owners asking Liberty Media to change the Concorde Agreement early to raise the Anti-Dilution Fee paid by any new team wanting to enter F1 from $200 million to $600 million likely has Andretti’s lawyers champing at the bit.

In fact, they are probably hoping and waiting for the day they make the change.

The existing Concorde Agreement (where the $200 million is stipulated) runs through 2025 and any attempt to change it before that will backfire in their face.

That’s when Andretti and his legal team could grab them wear it hurts and squeeze until they beg for mercy.

You see, the European Union has very strict laws against anti-competition.

The F1 team principals have played the media like a fiddle by suggesting that the anti-dilution fee is a franchise fee, demanding that new entrants pay them (as if they were franchisees) compensation for perceived loss of business.

However, the franchisor is Liberty media, and the existing 10 teams are not franchisees and not a dime goes to Liberty media – it all goes to the teams.

If I open a new McDonald’s franchise near an existing McDonald’s, the existing McDonald’s Franchise holder does not get paid a dime in compensation from the new McDonald’s franchise holder – it all goes to the parent company and stays there.

In the case of F1, the Anti-dilution fee goes to Liberty and is then immediately paid out to the existing 10 teams, who do NOT own a single percent of F1.

It is the actions Liberty Media has taken that has made F1 so successful today. Before that, the teams were bleeding so much red ink it was hard to justify their existence.  The only one getting rich was Bernie Ecclestone.

Now the teams are suddenly crowing about the global successes of F1 as though they had driven this and are thus entitled to compensation from new teams.

Even more irony – when they were all offered preferential shares back in early 2017 – before Liberty listed F1 on NASDAQ – they all turned down an offer of options from Liberty. Hence, the teams own no part of F1, only Liberty media who owns 100% of the commercial rights, and the FIA who own the championship, on loan to Liberty for 100 years. The FIA also acts as the regulation body.

Thus, their arguments that they now deserve $600M instead of $200M are defacto restraint of trade moves attempting to stifle competition –  strengthening existing teams and weakening any newcomer(s).

If they are dumb enough to get Liberty Media to agree to raise the entry fee from $200 million to $600 million, Andretti’s lawyers will immediately be on the phone with Brussels and the EU Courts complaining of restraint of trade, and they will ask for relief and will likely get it.

The Andretti Team could ask not only for a reduction of the entry fee back to $200 million, but also legal fees and perhaps additional compensation for ‘alienation of affections,’ that basically says you don’t want me to compete because you don’t like me, and based on all the comments made against Andretti by the team owners, he might win that too.

In addition the EU might slap a fine on them for their actions, perhaps as high as $1 billion as a deterrent from ever trying it again.

The only problem with Andretti taking this action, action he’s likely to prevail with, would be he would further alienate himself with the existing team owners and FOM.

But this is F1, the ultimate Piranha Club, where the knives are always out!

Andretti might be in his office sharpening his now.

Drive to Survive film crews – take note! Season 6 (2023 racing season) might be better than anyone imagined!

Toto Wolff again shouting No, Mikey No!