4 October 2019

New teams

There have been rumours for several weeks about potential new teams in Formula 1, with a couple of projects being floated in the media, clearly because those involved want to have their names out there in an effort to attract attention, presumably as they wish to raise money.

This has obviously irked the Formula One Group (for some reason) and it issued a statement yesterday saying that "following publicity in recent days from several entities that have indicated their ambition to participate in the FIA Formula One World Championship from 2021, while Formula 1 appreciates their interest, we can confirm that there are no serious discussions with any persons or companies about the admission of a new team".

It is clear that the Formula One company in its modern form is not given to feeding out lots of rumours about what it is doing and prefers to keep things quiet until they are done. This is probably related to the fact that it is listed on the NASDAQ Stock Exchance and has to follow the Securities and Exchange Commission's rules and regulations, which aim to stop all kinds of market manipulation. Companies cannot stop rumours about their activities - but they can deny stories which are not true.

There have been rumours for some time that there are plans for a $200 million entry fee for the future. This may sound like a great deal of money, but it makes sense as new entrants are effectively going to be buying prize money if they are accepted as Liberty wants all those involved to have the same basic rewards, rather than the top 10 getting all the money and the others being unable to compete. The reason that there is such a high limit being proposed is because the teams are being asked to share the available money between 12 (or even 13 entrants) and that would obviously mean a reduction in what they would be getting, so the fees would be split between the teams to offset the losses. In exchange new teams (if there are any) would get instant payments from both Column 1 and Column 2, rather than having to wait to start receiving money. Thus, a new team would be able to earn about $40 million in its first season (for finishing last).

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