The news that Michael Andretti and General Motors are putting together a bid for a Formula 1 entry is great for the sport as it will help to increase interest in Grand Pix racing in the US for the years ahead – if the bid is successful. This will build on the momentum established by the Miami GP, the Netflix series “Drive to Survive” and the forthcoming race in Las Vegas.
It is logical to suggest that once the FIA heard that GM was part of the Andretti bid it agreed to unlock the door into Formula 1, although there are believed to be other bidders with similar ambitions, although we do not know for definite who they might be. If there are other manufacturers involved, the fight for the two available slots is going to be intense. What is very clear is that nothing is going to happen before the 2026 season because the entry process is not the work of a moment, the Formula 1 group also needs to be convinced that more cars are a good idea.
It is unlikely that the other teams will be involved in these discussions because the process is laid out in the secret 2021 Concorde Agreement, which allows for newcomers only if they are willing to pay a $200 million anti-dilution fee which is then divided between the existing teams to balance the revenues they will lose by allowing one or two more teams to share the pot. This is in addition to other substantial entry fees, and the investment required to build up a team over a period of time. This is why buying teams has been the recent trend because setting up a team is more expensive than buying an existing one. However the value of the teams is rising rapidly (and will rise more when the 2022 revenue figures are published in a few weeks) because the team’s revenues are rising, and the cost cap means that the expenditure is reduced and thus teams can be profitable. With no-one willing to sell at the moment (although minority stakes seem to be available for investors who move quickly and are happy to make money, rather than being involved in the day-to-day business).
The FIA selection process to identify possible candidate teams does not means that there will definitely be new teams because the candidates most show that they bring value to the World Championship. To register an expression of interest, bidders must give details of what they are planning and pay a registration fee. The expression of interest must include all the legal documentation required, plus details of the project, including a full list of all shareholders (and beneficial owners), plus CVs of the officers and directors of the companies and details about the technical experience, racing experience, facilities, equipment and engineering resources of the bid. Those who produce complete packages will then move on to the FIA’s due diligence to see whether the candidates have the ability of the team to raise and maintain sufficient funding to allow take part at a competitive level. The applications will be studied not only by the FIA by also by the commercial rights holder and must be considered suitable by both parties. There will be no official announcement about entries being accepted until probably the end of 2023 at which point the successful candidates will need to get to work putting everything together. So there will be no cars built in time for 2024 and to get cars built for 2025 would be a challenge given that teams need people, equipment and facilities. Thus the only sensible target is the 2026 season, when the playing field will be a little more level as the engines will change as well.
If Andretti has a signed engine deal with another manufacturer, it must be with a company which will be there in 2026 and thus it is really not important if the November 15 deadline for engine manufacturers has been missed. This is important in that those who did not register will not be involved in the formal discussions with the FIA, but if one is partnered by someone who is involved in negotiations, one will be represented. If at a later date, a company wishes to rebadge its engines, or produce its own product then the FIA is not going to refuse as the sport is healthier if there are more manufacturers. It is already too late for manufacturers to try to start their own engine programmes from scratch because of the lead teams involved in such programmes, but if one is piggy-backing off another manufacturer, a project is still possible. GM says that its engineers at its Technical Center in Warren, Michigan, will be involved. This is a vast campus with 38 different buildings on a 710-acre site, and something lke 20,000 employees. There is also the new GM Charlotte Technical Center in Concord, North Carolina, which is close to completion.
At the same time, Andretti is busy building a $200 million headquarters on a site in Fishers, Indiana, around 15 miles to the north-east of the team’s current facility in the Indianapolis suburbs. The facility will be 54,000 sqm and will sit on a 90-acre plot of land, next to Indianapolis Metropolitan Airport. The team says that the new campus will create up to 500 new jobs by 2026. The Indiana Economic Development Corporation (IEDC) has committed to invest up to $19 million, in the form of conditional tax credits and additional money in grants for training, while the city of Fishers has also approved additional incentives. If all goes to plan the goal is to for the new facility to be operational in 2025.
The groundbreaking ceremony for the facility took place just before Christmas and Andretti thanked Mark Walter, the CEO of Guggenheim Partners, an investment firm which has made a number of moves into sport, including buying into the Los Angeles Dodgers baseball team and Chelsea FC.
The Andretti organisation currently has two teams running in the UK, headquartered in Banbury (for Formula E and Extreme E) but this does not appear to be a big enough facility for an F1 team.
There is a British registered Andretti Racing Ltd, a subsidiary of the US empire, which was set up in June last year, but the only named director thus far is Dan Towriss, who is the president of the insurance firm Group 1001, which is behind the Gainbridge sponsorship.