Andretti Autosports’ latest attempt to acquire a Formula 1 team has hit a roadblock. The US-based company headed by CART Indycar champion and former McLaren F1 driver Michael Andretti – son of 1978 F1 champion Mario – filed a bid for Force India in 2018, held tentative discussions with Haas and is said, by sources with knowledge of the talks to have submitted an offer to acquire 80% of Sauber, currently racing as Alfa Romeo.
Crucially, Longbow had not planned on becoming an F1 team owner; nor, though, does the deep-pocketed finance house need to exit Sauber at any cost, particularly after making substantial capital investments in stabilising the company and upgrading the team’s facilities in Hinwil, outside Zürich.
For his part, Andretti sought the ‘right’ opportunity, indicating he was not prepared to enter F1 at any cost. In 2018 Andretti bid 25% of the eventual price for Force India, which provides a pointer to what he considers to be the ‘right’ opportunity. These are just some of the key differences between the parties.
Under the 2013-2020 Concorde Agreement – which defines the relationship between F1, its competitors and the FIA – an average of one team per year either changed hands or folded completely. Yet apart from recent flurries of excitement surrounding a potential Sauber/Andretti deal it has been all quiet on that front this year, with good reason. The teams’ 2021-2025 deal with F1 provides a more equitable revenue structure and streamlined governance process, both which improve the lot of independents.
The latest covenant includes the much-derided and disputed ‘anti-dilution’ fee clause, which artificially boosts team values by demanding that newcomers pay a $200 million (£146m) fee to the current teams to join a ‘franchise’ they don’t even own (!). Thus, the only realistic option for a wannabe F1 team boss wishing to enter before 2026 is acquire an existing team at a premium.
That premium only applies, though, if somebody is daft enough to pay well over the odds given that the fee is likely to be scrapped from 2025. What had been a buyer’s market until the end of last year quickly became no market. Budding team bosses are biding time, ready to invest that $200m in their own teams for 2026 – four years away, a blink of an eye in F1 terms. Why waste $200m on a clause that could prove temporary?
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The 2022 F1 season also sees the arrival of new technical regulations and the first cars designed under the budget cap with less complex (cheaper) technologies. While it is impossible to predict who will get 2022’s regulations right, conventional wisdom has it that there is less scope for teams to get it wrong. The spectacle should improve and income with it, and the teams’ values should increase. Hence Longbow’s belief that Sauber has untapped worth.
Any potential buyer of Sauber also faces complexities created by the team’s location in a non-European Union country with stringent labour laws and one of the strongest currencies in Europe. Ironically, a country that not only bans non-electric circuit racing, but has no established automotive or motorsport industries to call upon.
True, since the beginning of 2021 UK teams are now based in non-EU territory, but they can rely on an extensive supplier network nurtured over many years and draw on a broad pool of personnel able to chop and change teams without having to worry about relocating their families. That labour pool also has considerable depth due to the large numbers of feeder series teams operating out of the UK.
Attracting experienced (mainly ex-UK) F1 staff to Switzerland is no easy task as employees either need to commute on a weekly basis or uproot their families. Once there they are less likely to be poached, but the trick is getting them in the first place. Equally, various British universities offer motorsport degrees of some kind – Switzerland offers little to none of the above, and thus has less homegrown talent.
While average wage rates do not apply to F1 payrolls, they provide pointers about expectations. The UK annual average runs to £31,000; in Switzerland it is the equivalent of £48,000, 50% higher. Clearly labour input costs – whether within the factory or for locally sourced items – are substantially higher, while items sourced by Sauber from traditional UK-based F1 suppliers face duties.
Yet Sauber’s prize money and sponsorship income are paid in F1’s universal currency, US dollars – and more so for Andretti, who would target American partners. These currency factors complicate what is a challenging business environment; Andretti, used to liberated US markets, could do without such distractions. In addition, Alfa Romeo remains unknown in the USA, yet Sauber signed a multi-year extension with the brand.
Against that background the wonder is not that any talks have broken down between Andretti and Sauber, but that they were initiated in the first place. There are few doubts that the Andretti name will eventually make the move into F1; there are even fewer doubts that Sauber will be sold – but both parties are likely to hang about for a while given that F1 is neither a buyer’s nor a seller’s market right now.
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