Formula 1 News: So what are Andretti’s options now? (Update)
In my article below, I questioned why Michael Andretti and GM refused to meet with FOM regarding their application. It made no sense whatsoever.
–by Mark Cipolloni–
Now we know why.
According to AP News, Andretti said the invitation was news to the Andretti camp. Its Information Technology team later discovered the request in a search of the email system was in a spam folder; the email was not from F1 CEO Stefano Domenicali, but a staff member of the series.
“We were not aware that the offer of a meeting had been extended, and would not decline a meeting with Formula One Management. An in-person meeting to discuss commercial matters would be and remains of paramount importance to Andretti Cadillac,” the team said. “We welcome the opportunity to meet with Formula One Management and have written to them confirming our interest.”
I also questioned why Andretti would try to enter F1 in 2025 only to have to throw the design away and design to entirely new specifications in 2026. That also made no sense whatsoever.
Andretti countered Friday that although the FIA approved its application to compete in 2025 or 2026, the organization had been targeting 2026 for launch as the process plodded along. Andretti has already built a car around the 2024 regulations that it has taken to wind tunnel testing, but only because the full specs on the 2026 car have yet to be released.
“Andretti Cadillac has been operating with 2026 as the year of entry for many months now,” the team said. “The technicality of 2025 still being part of the application is a result of the length of this process.”
February 1, 2024
Now that F1 Management (FOM) have rejected the Andretti bid to join F1 despite the FIA’s approval, what are Andretti’s options now?
–by Mark Cipolloni–
While lucrative races, sponsorship deals and television audience are more than welcome, actual American involvement is a non-starter. Sure Haas is an American-owned team, but it never really felt like it – no American drivers, no American fans.
Andretti was viewed by American fans as ‘their team’ so to speak, and per online social media, they are really mad about the rejection.
FOM has dangled some false hope for the Cadillac-backed effort by stating the entry could reapply to join for the 2028 season with some caveats.
Related Article: F1-Insiders slam rejection of Andretti-Cadillac
I feel Andretti has three viable option.
Option F1 – Sue Liberty Media/FOM but then never race in F1
Option 2 – Go 50/50 with Gene Haas on an All-American team, or buy it outright
Option 3 – Just wait for 2028
Option 1 – Sue Liberty Media/FOM, but never race in F1
I covered a lot of this in an article last year titled Andretti has them by the balls, but they just don’t know it yet. While that article dealt more with F1 delaying Andretti so they could increase the anti-dilution fee from $200 million to $600 million or higher, a lot of the same arguments still hold true in this scenario.
I would add that these additional requirements and justifications set forth by F1 fly in the face of, not only precedent, but the actual rules set forth. The rules allow for up to 12 teams with a $200 million buy-in. Period.
However, were Andretti to sue, his chances of ever having a team in F1 would be gone.
Do FOM’s reasons for rejecting Andretti stand up to scrutiny?
FOM Argument – we subsequently wrote to the Applicant on 12 December 2023 extending an invitation to an in-person meeting at our offices in order for the Applicant to present its application, but the Applicant did not take us up on this offer.
(Spot on) We agree with the FOM on this point. If you are hoping to be invited to ‘any club’, you get your entire management team on a plane and you meet with the Club Owners. Whether Andretti refused to meet, or whether they had a conflict on the date of the meeting remains to be seen.
Rejecting the meeting likely pissed off Domenicali. Andretti calling the other team owners greedy for saying the $200 million Anti-dilution fee was too low got the relationship off to a bad start.
It went downhill from there.
Another factor here is how much is Andretti’s rejection part of the ongoing bad blood between FOM and the FIA?
FOM Argument – Our assessment process has established that the presence of an 11th team would not, in and of itself, provide value to the Championship. The most significant way in which a new entrant would bring value is by being competitive, in particular by competing for podiums and race wins. This would materially increase fan engagement and would also increase the value of the Championship in the eyes of key stakeholders and sources of revenue such as broadcasters and race promoters.
(Questionable) How many F1 teams are competing for podiums and race wins in any given year. One can argue not many. If this year’s F1 USA TV ratings tank, and ticket sales drop because rejecting Andretti was a slap across the face of every American F1 fan, they will then understand the value of that 11th team. All polls indicated that the fans were widely in favor of more teams.
To say Andretti would not be competitive when F1 has a history of back marker teams like Haas, Williams, Minardi, Alfa Romeo, etc. is contradictory. In court, F1 would have to prove Andretti would not be competitive – based on what measures? That is a subjective statement. What defines competitive?
The FIA – the governing body of F1, approved the Andretti application after a rigorous review. It will be argued in court the FIA felt the Andretti team would be competitive, and they make the rules and enforce them.
FOM Argument – The addition of an 11th team would place an operational burden on race promoters, would subject some of them to significant costs, and would reduce the technical, operational and commercial spaces of the other competitors.
(Disagree) One of the weakest points made by FOM is adding an extra team would be a challenge for some event promoters. Formula One regulations allow for a grid of up to 26 cars, and as such, circuits unable to fit 22 cars shouldn’t be on the calendar and should have been made to accommodate 26 cars long ago!
FOM Argument -We do not believe that there is a basis for any new applicant to be admitted in 2025 given that this would involve a novice entrant building two completely different cars in its first two years of existence. The fact that the Applicant proposes to do so gives us reason to question their understanding of the scope of the challenge involved. While a 2026 entry would not face this specific issue, it is nevertheless the case that Formula 1, as the pinnacle of world motorsport, represents a unique technical challenge to constructors of a nature that the Applicant has not faced in any other formula or discipline in which it has previously competed, and it proposes to do so with a dependency on a compulsory PU supply in the initial years of its participation. On this basis, we do not believe that the Applicant would be a competitive participant.
(Point about 2025 Spot On) This would have been addressed in Andretti’s proposal to the FIA. They make the technical and sporting regulations and enforce them. Their review of the Andretti application, and subsequent approval, would have looked at this one would think.
Our opinion? What the heck was Andretti thinking? A new team trying to staff up and build out facilities, and they were going to build a car for 2025 and then throw it all away and start from scratch with the new regulations for 2026? Near impossible!
So why did Andretti want to be on the grid for 2025? The answer is easy – to avoid paying the higher anti-dilution fee. He’s lost that battle now.
FOM Argument – Our assessment process has established that the presence of an 11th team would not, on its own, provide value to the Championship. The most significant way in which a new entrant would bring value is by being competitive. We do not believe that the Applicant would be a competitive participant. While the Andretti name carries some recognition for F1 fans, our research indicates that F1 would bring value to the Andretti brand rather than the other way around. We were not able to identify any material expected positive effect on CRH financial results, as a key indicator of the pure commercial value of the Championship.
(Disagree) To say F1 brings more value to the Andretti brand than Andretti brings to F1 is preposterous. That can be said about most teams in F1 except perhaps Ferrari.
To say Andretti would bring no real value to F1 is just silly. And given the uproar by the fans on social media, it is clear they really wanted Andretti to be approved. If this year’s F1 USA TV ratings tank, and ticket sales drop because rejecting Andretti was a slap across the face of every American F1 fan, then we will know just how much Andretti mattered to the F1 customers.
How much value does a team named Visa Cash App RB bring to F1? What about back marker Haas?
More cars, more drivers = more fans. Every team and driver on the grid brings some level of fan engagement and fans are always interested in the underdog. FOM has no idea just how many new sponsors Andretti would bring into F1.
Or maybe the real issue was whether Andretti would poach some of the American sponsors already in F1 with other teams. There are many.
FOM Argument – 2025 will be the last year of the current regulatory cycle and 2026 will be the first year of the subsequent cycle, for which an entirely different car to the previous cycle will be required. The Applicant proposes, as a novice constructor, to design and build a car under the 2025 regulations, and then in the very next year to design and build a completely different car under the 2026 regulations. Further, the Applicant proposes to attempt this with a dependency on a compulsory supply from a rival PU manufacturer that will inevitably be reticent to extend its collaboration with the Applicant beyond the minimum required while the Applicant pursues its ambition of collaborating with GM as a PU supplier in the longer term, which a compulsory PU supplier would see as a risk to its intellectual property and know-how.
(Questionable) Alpine Renault already agreed to supply engines. Yes, the agreement expired, but Renault said they were still open to supplying engines knowing full well that Cadillac was coming and would be happy to sit down and do a new deal with Andretti.
Renault never said it had a problem with it.
Option 2 – Buy 50% or 100% of Haas
The Moneygram Haas F1 team is in turmoil.
The Haas team outsources just about their entire car. They buy what they can from Ferrari (suspension, gearbox, power unit and more) and the tub is designed and manufactured with Dallara.
That model of outsourcing just about everything has resulted in the team being last in Formula 1.
And besides, F1 is supposed to be both the highest form of manufacturer’s championship in addition to, of course, a Driver’s Championship. In my book, outsourcing so much of the car does not constitute a ‘manufacturer’ in the sporting sense.
Andretti was planning to build a factory, so the team could design and build their own cars, and they have Cadillac engaged to design and manufacture the Power Unit.
Would it not make more sense for Haas to sell the team to Andretti so Haas could focus more on NASCAR?
For the amount of money Haas is burning through in F1 to finish last, is it really a good return on his investment?
Buying the Haas team would give Andretti a head start by taking over an existing team and then he could work to transition it over from an ‘outsourcing team’ to an in-house design and manufacturing team.
Another option is for Haas and Andretti to go 50/50 on the team. For his part, Andretti builds Haas a proper factory and brings in Cadillac, and Haas’ 50% is of course, providing the existing team as a starting point for the merger.
The hard part about a 50/50 deal is who calls the shots. Hence, perhaps 51/49 would be better.
Option 3 – Just wait until 2028
Waiting until 2028 is a long time for Andretti to have to kick the can down the road. The majority of personnel already hired would now have to be laid off.
The positive aspect to a delay to 2028 is that Andretti, not officially a team, could do unlimited development, unlimited wind tunnel testing and unlimited on-track testing without restrictions existing teams are bound by.
Under the current Concorde Agreement terms, Andretti would be required to pay $200 million to the rest of the teams as what is described as an anti-dilution fee.
By delaying Andretti past 2025 that will force him to pay $600 million or more instead of the $200 million.
Why pay all that money to the other teams who don’t want Andretti anyway -Andretti should just increase his bid to buy another team by $600 million. That might get a ‘Haas’ to sell.
If he could buy an existing team, instead of building one from scratch, Andretti would be that much further ahead to having a winning team.
Waiting until 2028 would also kill Cotton Herta’s F1 dreams as he would be too old to be starting then.
The question for me is, is there any realistic chance of an Andretti-Cadillac entry being accepted in 2028? If I were GM, I wouldn’t put any more money into it unless I was assured that a future entry would be accepted,