Demystifying Andretti’s failed F1 bid & anti-dilution fees explained
On March 22, 2023, the Federation Internationale de l’Automobile (“FIA”) invited applications for a new team that would participate in the FIA Formula One World Championship (“F1”) starting in 2025 or 2026. Andretti Formula Racing LLC (“Andretti”), a partnership between Mr. Michael Andretti and General Motors (i.e., Cadillac), was the only applicant that FIA approved from a “technical” perspective in October 2023. However, in January 2024, Formula One Management (“FOM”) rejected Andretti’s application based on insufficient “commercial” rationale. In its official statement, FOM stated that “while the Andretti name carries some recognition for F1 fans, our research indicates that F1 would bring value to the Andretti brand rather than the other way around.”[1]
While the legal fraternity has been discussing the legal implications of FOM’s decision, we explore the “commercials” relating to an eleventh team on the F1 paddock and how it affects the “value” distribution among the F1 Teams. This article explores the financial reasons behind the decision, including the impact on existing teams' prize money and the potential need for a higher anti-dilution fee.
This article explores:
- Background of Andretti Bid
- Overview Of Formula One
- Andretti May No Longer Bring Material Benefit To F1 On Or Off The Track
- Anti-Dilution Fee Is Not Reflective Of Prize Fund And Team Values In 2024
- Could Andretti enter Formula One?
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- Tags: Corporate Law | Dispute Resolution | FIA | Formula One | Governance | Motorsport | Regulation | United States of America (USA)
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Written by
Shalabh Gupta
Shalabh Gupta is an Associate Director with Secretariat’s Damages and Forensic Investigations group based in Toronto. Shalabh has provided financial analyses, economic advisory, forensic accounting, quantification of damages and other litigation support services to clients and their counsel for over 10 years. He is a Chartered Accountant (CA), a Certified Fraud Examiner (CFE), and a Chartered Business Valuator (CBV).
Amran Nawaz
Amran Nawaz is a Manager with Secretariat's Damages and Forensic Investigations group based in Toronto. He is a Chartered Professional Accountant (CPA/CA) and a Chartered Business Valuator (CBV). Mr. Nawaz specializes in preparing business valuation and economic damage quantification for commercial litigation, international trade, and investment disputes. His work typically involves financial damages assignments, fraud investigations, dispute analyses, and litigation support.
Daniel Nazareth
Daniel is an Associate at Secretariat, an Expert Services, Litigation Consulting, and Economic Advisory firm. Daniel has provided audit and valuation services at a top global accounting firm. Daniel is a Master of Management & Professional Accounting (MMPA) graduate, Chartered Professional Accountant (CPA) candidate, Chartered Business Valuator (CBV) student, and has passed the Chartered Financial Analyst (CFA) level I exam.
