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Teams rejecting billion dollar offers, claims Domenicali

NEWS STORY
15/06/2023

F1 boss, Stefano Domenicali claims that existing teams are rejecting offers of "almost billions" from newcomers eager to enter the sport.

Though it isn't officially a franchise system, that is the way that many of the teams, and indeed the sport's owner, see it, and as a result those who already have a slice of the F1 cake are loathe to see anyone else step up to the table.

Even teams that appeared to be on the verge of collapse and those clearly disillusioned are prepared to hang on in there in the firm belief that their franchise will grow in value.

Indeed, while the teams had previously agreed to a $200m anti-dilution fee for potential newcomers, the recent growth of the sport has seen them call for this to rise to at least $600m.

Earlier this year, FIA president, Mohammed ben Sulayem opened up the process for two new teams to enter the sport, much to the annoyance of F1 and the majority of the existing teams.

However, other than the resistance newcomers - such as Andretti - are encountering from F1 and the existing teams the fact is that the cost of entering the sport is prohibitive, not only in terms of starting from scratch but buying an existing team.

"If you look what has happened in such a short term, talking about the value of one team, that was not many years ago, I would say two years ago when the new Concorde Agreement has been signed, when there was the talk about what is the value of a team that has to come in F1, there was a number put on the Concorde Agreement that was 200 million," Domenicali tells the Beyond the Grid podcast. "Which at the time seemed unreachable, because there were teams in the past that were sold for 1.

"Now the market is offering almost billions to teams," he adds, "and they are refusing that. Can you imagine that?

"That gives you the perspective of what we are building as an ecosystem. We are building important structure, important dynamics of which the more everyone is growing, the better and the stronger is the business platform which we are all working in."

Asked if he feels the sport needs another team or two, the Italian is in no doubt.

"I don't think so," he replies, "but that's a personal opinion, I need to say that. If you have a good show, 20 cars are more than enough. If you have two cars or two drivers fighting, the level of attention is mega. So if you have already two teams fighting, that means four cars, it's just incredible. So can you imagine 20 cars, 10 teams are at the level where there is competition on track? It would be impressive."

However, in F1, never say never.

"Let's wait and see," he says. "My 'no' is not against someone wants to come in, I need to clarify that because otherwise it seems that I want to be protectionist, that is not the case.

"I want to see the right one and I need to also respect the ones that have invested in F1 in the last period, because we forget too quickly the respect. Now everyone wants to jump in the coach that is very fast. But we need to be prudent, we need to take the right decision. That's what I'm saying."

In recent years, the biggest deal was the sale of 33% of Mercedes to INEOS, which many claimed put a 1 billion value on the team because INEOS was allegedly initially due to buy 70% for 700 million.

However, in reality INEOS paid the grand total of 208.4m for its 33% stake which puts a 625.2m value on the multiple world champions. That's only around four times what Mercedes paid for Brawn in 2009.

Then there's the little matter of what Daimler UK paid for Niki Lauda's 10% stake in the team in January 2021... but that's for another day.

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READERS COMMENTS

 

1. Posted by trackrecords, 16/06/2023 19:42

"If Mercedes winning multiple world championships and employing the most successful F1 racing driver, only added 400% to the team's value, then either someone got an amazing bargain or the team was undersold massively. Unless, how do I phrase this, there was some "creativity" involved in certain declarations.
Talking of which, looking at the history of some F1 teams, where financial resilience, and good business practices were lacking to say the least in their early days, then putting pre-requisites on prospective new teams will remove their "fight to survive" instinct. "

Rating: Neutral (0)     Rate comment: Positive | NegativeReport this comment

2. Posted by Spindoctor, 16/06/2023 7:56

"It seems to me that the West is in danger of doing with Saudi, Emirates etc what our politicians did when Communism was "defeated" in USSR\Eastern bloc & China embraced "Capitalism". They promoted a laissez-faire market-driven form of globalisation which has not turned-out well for anyone.... The Middle Eastern potentates do not share our democratic values & Saudi in particular promotes extreme Wahabi Islam world wide.

I'm much happier with Saudi & similar interests buying up the "circus" components (Sports) of 21st century Bread & Circuses, than I am with them gaining any more control of the "bread" that they have through fixing oil prices & buying-up critical infrastructure."

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3. Posted by Superbird70, 15/06/2023 11:50

"The Saudis and sports teams up until recently seem to have been a uniquely European issue. North America seems to be the next target (opportunity) with the PGA LIV merger. I can't wait to see which NFL, NBA, MLB or NHL team is first to join the ranks of PIF holdings. "

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4. Posted by rambler, 15/06/2023 10:27

"What a good idea more cars on tracks that are already full.
Its just someone talking up the sport, wave $$$$$'s in front of the greedy and watch them jump.

It is about making money not sport. "

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5. Posted by Max Noble, 15/06/2023 8:42

"Fascinating! Dr L’s “Follow the money” observation holding as true as ever. The only people with enough money to simply buy their way in are the Saudis… I believe the have dropped a couple of dollars on sport in the past…!"

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