F1 News: Expert Raises Alarm Over Andretti's Formula One Entry

In a recent podcast, F1 business expert Mark Gallagher raised concerns about Andretti's bid to join Formula 1, warning of a potential dilemma if the team's business model relies heavily on F1 prize money. He argued that while Andretti's entry, backed by General Motors, could be appealing, it's crucial to have a solid financial plan beyond just prize money to ensure the sport's longevity.

Key Takeaways:

• Financial Stability Concerns: Gallagher emphasised that a business plan primarily based on Formula 1 prize money is risky. He pointed out the need for a robust financial strategy to avoid a potential crisis in the sport, especially if its popularity wanes.
• Team Dynamics and Entry Challenges: There's a noted tension between Andretti and existing teams. Gallagher suggested that without a convincing operational and financial plan, Andretti's entry might face rejection, despite the alliance with General Motors and their commitment to F1 engines via Cadillac from 2028.
• Historical Lessons and Future Stability: Reflecting on the fate of teams like Manor, Lotus/Caterham, and HRT, Gallagher urged caution in expanding the grid. He warned of the dangers of a popularity decline in F1, emphasising the need for a long-term stability plan to avoid repeating past mistakes.

Gallagher, with his rich experience in F1 with teams like Jordan, Red Bull, and Cosworth, offered a deep dive into the complexities of F1 team management and entry. His concerns stem not just from Andretti's financial planning but also from the broader implications of a new entrant relying heavily on F1's prize money.

On the Flat Chat podcast, Gallagher didn't mince words about Andretti's proposal. He stressed the importance of a detailed operational and financial plan, noting that a reliance on prize money as a significant revenue source is not a sustainable strategy. Gallagher acknowledged the allure of renowned names like Andretti but pointed out that having a "nice name" doesn't automatically qualify a team for F1 entry.

Gallagher explained:

“Basically, Andretti is supposed to outline how he’s going to fund and organise the first five years [with] a whole operational plan – the tactical plan and the financial plan.

“That financial plan is going to be fascinating because if he has got a big sum of money allocated each year coming from prize money, you’d have to say that Stefano Domenicali should reject it because you cannot possibly just imagine that your business plan is going to be predicated on Formula 1 giving you a tonne of money to come and do it.

“I understand the fans saying: ‘Well, Andretti deserves to come in, they’re a great name.’ There has been lots of great names in Formula 1 over the years. I’d love to see a Brabham team, I’d love to see a Lotus team.

“There’s lots of people that I would love to see have a Formula 1 team – people like Trevor Carlin who were desperate to come into Formula 1 and would loved to have done it."

He continued:

“There are lots of other people I could mention who have run excellent teams and lower formulae who’d love to have broken through into Formula 1, so just because you’ve got a nice name over your door [it] doesn’t give you a right to come in. There needs to be a business plan.

“My view is that in the middle of all of what we’re seeing, the only solution isn’t that General Motors are going to make an engine, it’s going to be the dollars on the table.

“How much money is there going to be paid to secure the entry? Or how much money is not going to be taken out of the existing prize fund to enable Andretti to compete in the sport?"

Furthermore, Gallagher's insights extend beyond Andretti's bid. He reflected on the sport's recent history, noting the short-lived existence of teams that entered F1 with inadequate preparation or resources. These cautionary tales underscore his point about the necessity of a strong, viable business model for any new entrant.

“The sport has been through a very long and shaky development at times where teams have come in and then disappeared very quickly.

“People talk about teams failing and they’re talking about the poor team principal or whoever was trying to do it. The thing that I always feel is that I have known suppliers to go bankrupt, I’ve known people to lose their houses because a Formula 1 team went under.

“And this has been in recent times. Those four teams that came into Formula 1 that I [through Cosworth] supplied the engines to in 2010, one of those teams had absolutely no clue what they were doing, a couple were living on a bit of a dream really and one had funding but didn’t really have the expertise to sustain it over any length of time.

“They all came in with the blessing of the FIA and were allowed into Formula 1 and they were all gone within a few years, so this is all quite recent history."

He added:

“We also have a situation where a lot of the teams in Formula 1 today have quite recently faced an existential crisis and it’s only been through this Liberty era that stability has been achieved and we’ve had the benefit of the Netflix effect, the growth and sponsorship in the United States and everybody is suddenly smiling and all the rest of it.

“But what goes up very often comes down. If audience figures drop in any significant way over the next years, it’s not impossible to imagine a future crisis developing.

“All these things are cyclical and Liberty and Stefano Domenicali, as chief executive, will be keeping his eye firmly fixed on what do we need to do to sustain Formula 1 in the next decade.

“Formula 1 itself is promoter of the Las Vegas Grand Prix and have signed a 10-year contract to do that. They need stability in the sport for the next 10 years.

“Those are the fundamental considerations that they have, so it’s got it’s going to be an interesting few months to see how it pans out.”