New teams will have to pay rivals $200m to join F1 grid

Any new teams looking to enter the FIA Formula 1 World Championship from 2021 will have to pay an advance of $200 million (£156m) to rival teams as part of a ‘Dilution Fund’.

McLaren CEO Zak Brown believes the arrangement is intended to protect the current teams – much like Williams’ recent sale to Dorilton Capital – as well as ensure the intent of any new teams looking to join the series.

The ruling was written into the new Concorde Agreement, which binds the teams to F1 until 2025, which includes a more equitable distribution of the prize money pot amongst the ten teams.

Therefore any new addition to the grid would further dilute that prize money, hence the addition of a new $200m payment which would be shared amongst the existing teams to offset the loss of prize money.

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“What that $200million is intended to do is to protect the value of the existing teams – as reported on the Williams sale that’s less expensive and you get a lot more for your money than starting a new team,” said Brown.

“But I think if you believe in the franchise value growth of Formula 1 then you’ll get that $200million back and then some at a later date.

“Also, the way the regulations are written there is the ability for Liberty and the teams to agree to adjust that number. I think what we’re trying to do as an industry is stop what we’ve had in the past where a USF1 announces they are going Formula 1 racing and they never get to the track.

“So the $200million is intended to really make sure that if someone is coming into the sport that they have the wherewithal to do it and we don’t have what we’ve historically had which is random announcements that people are going to come in and then they never make it to the track.

“I don’t think you’d ever see that in other major forms of sport.”

The Commercial Rights Holder can waive the fee, but would require the agreement of all existing teams to do so, if it results in more than ten teams being on the grid.