F1 CEO Domenicali reveals teams are refusing offers worth ‘almost billions’

Italian tells Beyond the Grid podcast that he is against expanding grid.
  • McLaren was valued at UK£560m in 2020
  • Audi values 75% purchase of Sauber at US$600m
  • Domenicali against expansion of grid beyond ten teams

Formula One chief executive Stefano Domenicali has revealed teams are refusing offers of “almost billions” from potential entrants.

Speaking on Formula One’s Beyond the Grid podcast, the Italian outlined how the series’ commercial strides have seen team valuations increase exponentially.

“Two years ago, when the new Concorde Agreement [was] signed […] there was a number that was put on the Concorde Agreement,” he explained. “That was US$200 million, which seemed unreachable. There were teams in the past that were sold [for] UK£1.

“Now the market is offering almost billions to teams, and they are refusing that. So that gives you the perspective of what we are building as an ecosystem. We are building important structures, important dynamics, which [means] the more everyone is growing, the better and the strongest [sic] is the business platform that we are all working in.”

Reports surfaced earlier this year that Red Bull might be looking to sell their sister team, AlphaTauri. While this rumour was dismissed by team principal Franz Tost, there are rumours that the valuation of the team sits at a similar number to what Domenicali suggested.

In 2020, McLaren saw a UK£156 million (US$197 million) investment from US-based consortium MSP Sports Capital that valued the team at UK£560 million (US$708 million). The Race reports that Audi’s purchase of Sauber – which is for 75 per cent of the Swiss outfit – values the team at no less than US$600 million.

The difference in valuations in just three years highlights the rate of growth that Formula One is currently experiencing, but Domenicali is hesitant to expand the grid. When asked if he wanted to see more teams in Formula One, he replied that he doesn’t want to see more than 20 cars in the series. He added: “I think that ten teams is more than enough to create the show.”

This “important point of discussion” is likely to rage on the closer we get to the renewal date of the Concorde Agreement in 2025. Previous rumours that teams want the new anti-dilution fee – the amount required to enter Formula One – to rise to US$600 million could now be short of the mark.

However, Domenicali clarified his stance “is not against someone that wants to come in” as he doesn’t want to seem “protectionist”. Instead, the focus needs to be on procuring the right entrant for Formula One.

“I want to see the right one and I also need to respect [the existing teams] that have invested in Formula One. Now, everyone wants to jump in very fast but we need to be prudent [and] we need to take the right decision,” he concluded.

BlackBook says…

The valuation of teams, and the reported external interest in purchasing them, is hardly surprising for a series going from strength to strength commercially.

Currently, it seems the only realistic avenue to enter Formula One is through purchasing an existing team, just like Audi has done with Sauber, due to Domenicali’s stance on expanding the grid.

It’s only seven years since Manor became the last team to exit Formula One due to financial difficulties, while Aston Martin – then Force India – were saved from a similar fate in 2018 thanks to investment from Lawrence Stroll.

The hesitancy to expand is understandable given this context, but it is surprisingly short-sighted. Formula One has never been bigger, and the budget cap now in place means that teams can even be profitable, a far cry from teams struggling from race to race.

Domenicali took issue with Michael Andretti calling Formula One teams “greedy” following the lukewarm reception to the joint Andretti Cadillac entry bid, but it’s hard to argue with that perspective following these comments.

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