The recent announcement that Cadillac's application to join Formula 1 has been accepted has sparked excitement, skepticism and much debate. Cadillac's move, distancing itself from the proposed partnership with Andretti Autosports, paves the way for an 11th team on the grid starting in 2026. As fans get excited about seeing 22 cars battle for victory , some F1 team principals, including Mercedes' Toto Wolff, are less optimistic—especially regarding the financial implications.
$450 million dilution fee: Too little, too late?
At the heart of the controversy is the $450 million dilution fee that Cadillac will have to pay to compensate existing teams for their share of Formula 1 revenue. This fee is intended to offset the financial impact of the prize split among an additional team. However, Wolff believes this sum is insufficient, arguing that it does not fully compensate current teams for the revenue dilution caused by Cadillac's entry.
“When you look at it at first glance, we're losing,” Wolff said. “The compensation fee, which is currently set at $450 million, is too low. It does not compensate for the direct loss of income.”
The 2024 F1 season saw over $1.2 billion distributed between the ten existing teams. Cadillac's entry would increase the total prize pool to around $1.65 billion, but with more teams sharing the pot, individual teams are likely to receive a smaller share.
Potential Positive Aspects: The Vision of the Cadillac Factory Team
Despite his concerns about the immediate financial impact, Wolff recognized Cadillac's potential to bring long-term value to the sport. He suggested that if Cadillac enters as a full factory team and invests heavily in marketing, it could become an asset that benefits all teams by increasing F1's overall visibility and popularity.
“Only time will tell how much value the sport gains from the addition of an 11th participant. If Cadillac now comes in with a factory team and invests a proper marketing budget in Formula 1, it will be a valuable addition to the sport,” Wolff said.
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Cadillac has already confirmed its partnership with Ferrari for power units from 2026, marking new momentum for the Italian manufacturer, which obtains a new customer for its engine program. However, questions remain about Cadillac's ability to assemble a competitive team of drivers and personnel in time for its debut.
Concerns among existing teams
Wolff's reservations reflect broader concerns among F1 teams about resource dilution and competition for sponsors, fans and funding. Current teams, particularly top performers like Mercedes, Ferrari and Red Bull, have argued that new entrants must provide significant value to justify their inclusion. Cadillac's entry adds pressure for the American automaker to not only compete, but also raise the sport's profile in key markets.
A strategic bet for F1
The addition of Cadillac comes at a time when Formula 1 is experiencing unprecedented growth, particularly in the United States. With three US-based races on the calendar and a burgeoning fan base, Liberty Media has banked on grid expansion to maintain the sport's upward trajectory. Cadillac, with its rich motorsport history, is well positioned to capitalize on this momentum.
However, as Wolff pointed out, the real impact of Cadillac's entry will depend on how the team integrates and performs, both on and off the track. Will the arrival of Cadillac mark the beginning of a new era of competition and excitement? Or will it prove to be a financial mistake for existing teams? Only time — and performance on the track — will tell.
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