Max Verstappen, representing Red Bull Racing, races in the RB20 car during the Australian Grand Prix at Albert Park in Melbourne, Australia. This event took place on March 24, 2024 as part of the Formula 1 World Championship.
According to reports, the 10 existing Formula 1 teams are pushing for a reduction in the number of teams allowed on the grid in the next Concorde Agreement. Currently, the agreement allows for the participation of 12 F1 teams once commercial terms are agreed upon, with a $200 million anti-dilution fee to prevent prize funds from being distributed too thinly among more than 10 teams.
To attract new teams, the FIA initiated a bidding process last year. However, only Andretti met the requirements set by the FIA, but Formula One Management (FOM) did not approve their entry for the 2025 season.
Given the increasing value of Formula 1 and its teams, there is a push to limit grid growth in the next Concorde Agreement, which will cover commercial terms for the period between 2026 and 2030. Both F1 and existing teams allegedly want a limit of 10 competitors, making it necessary for new entrants to acquire existing entries.
Since Liberty Media took over Formula 1 in 2017, the sport has adopted a franchise model inspired by the United States. Understandably, current teams would hesitate to share revenues with new entries, considering the challenges they faced to reach the current lucrative period, including financial difficulties caused by the Covid pandemic in 2020. According to McLaren CEO Zak Brown, the 10 existing F1 teams are now valued at nearly £1 billion each.
If a limit on the number of competitors allowed in the series cannot be implemented, it is highly likely that the dilution rate for prospective teams will increase significantly from their current $200 million. Another potential concern, as pointed out by reporter Joe Saward, is the ownership structures of the teams. There have been discussions suggesting that it would be beneficial for the series if each team were independently owned. This raises questions about the ownership of the parent company of Red Bull, which owns both Red Bull Racing and the Faenza-based team, RB, a structure that has been in place for almost two decades. Zak Brown, among others, argues that Red Bull should become an independent entry, citing cost caps and fairness in sport as reasons for this change.
New commercial agreements for the next Concorde Agreement, covering the period from 2026 to 2030, are expected to be finalized by the end of next year.
