The arrival of Cadillac will make us lose money

Cadillac will arrive in Formula 1 by 2026, as part of an agreement with the premier discipline which took time to materialize. First supported by Andretti, the candidacy was finally refocused, at least in terms of image, on the American brand, owned by the General Motors group, much more attractive for the championship and less divisive than Michael Andretti.

However, the fact that Cadillac is assured of a place in F1 does not solve at once all the problems raised by this file for almost two years. Indeed, among the points of tension with the other teams was the question of financial compensation in the face of the loss of income mechanically created by the appearance of an 11th share in the cake of rewards distributed by the discipline at the end of the season.

For several years, F1 has adopted an anti-dilution fund, as part of the Concorde Agreements which govern commercial matters between the championship and the teams. The latter, initially set at $200 million, is supposed to be paid by any new manufacturer entering the discipline and then shared between all existing players in order to compensate for the losses caused by this additional division.

However, it quickly became clear that the current teams, which have all been in the discipline since at least 2016, were not entirely inclined to see a new player appear in a context where the amount of this fund was considered too low given the overall valuation of F1 and its stakeholders. With the end of the current agreements which will arrive at the end of 2025, the sum will be revised upwards, with an announced entry fee of 450 million dollars which Cadillac will a priori have to pay.

But for Toto Wolff, the boss of Mercedes, particularly vehement on this subject since 2023, this is still not enough: “At first, we are losers”he told Auto Motor und Sport. “We do not know what Cadillac will invest in Formula 1. The compensation, which is currently set at $450 million, is too low. It does not compensate for the direct loss of revenue.”

And on the question of the benefit of the arrival of an 11th team, still owned by a global group like General Motors, Wolff reserves his judgment: “Only time will tell what value the discipline will gain from the arrival of an 11th participant. If the value of the championship increases, everyone will benefit. But we don’t know that yet.”

“No one informed me of Cadillac’s exact plans”added Wolff, launching a short sentence which does not fail to remind us without saying it that the arrival of GM will initially be via a team which will buy its engine from Ferrari. “If Cadillac committed to a factory team today and invested a proper marketing budget in Formula 1, it would be a valuable addition to the sport.”