How the new F1 entry fee will work

The much discussed entry fee hike for F1 teams was confirmed this week, as the 2013 Sporting Regulations were published by the FIA.

Under the new rules for 2013, the team that wins the constructors' championship will pay a basic fee of US$500,000 and then $6000 US for every point scored. The other teams will pay the same basic fee plus US$5000 per point.

So, for example, if Red Bull continues scoring points in the three final races at the same rate as they have scored in the last three races then they will end up with around 520 points, which will equate to $3.1 million on top of the $500,000 basic fee, a total of $3.6 million.

This is because the FIA wants a greater share of the approximately $1.5 billion turnover the sport generates each season, as FIA president Jean Todt told the Financial Times,

"FIA is a non-profit organisation but we need to run our organisation," he said. "We need to encourage development of the sport, we need to encourage development of action for road safety. We cannot be a federation without having any revenue. So, where do we find our revenues?"

The FIA sold its commercial rights to Bernie Ecclestone for 100 years starting in 2011, for a fee of around $350 million, which is all ring-fenced in the FIA Foundation and cannot be used for the running of the FIA. Ecclestone's annual payment to the FIA is set to increase to around $20 million from a current level of around $7 million. So the FIA will have around $35 to 40 million annual income from F1 alone. Todt insists that he has not given up any of the FIA's regulatory power in exchange for the cash.

The FIA Sporting Regulations, published this week, state that the basic fee must be paid at the time of entry and the balance is due on November 30th preceding the year the entry is for. Currently none of the teams is entered in the 2013 world championship, as the teams were waiting to know the terms. That is expected to change soon. Normally the entry should be made between 30 June and 15 July.

This year teams will share around $675 million of the commercial revenues between them, but the split is not even; Ferrari gets the most as the Longest Standing Team, with the other leading teams also earning a lot more than teams such as Caterham, Marussia and HRT. Winning the Constructors Championship is worth over $70 million.

Although there are some eye watering numbers being quoted, as Mercedes boss Ross Brawn said today, for most of the midfield teams scoring around 50 to 80 points a season, the costs will not be substantially greater than currently. "I think, for us, we would be delighted to pay it because we would be scoring a lot of points," he said. "In fact, if you're a mid-range team, and considering the fact that all the extra facilities that we pay for separately at the moment are rolled into that entrance fee, I think for a lot of teams it's going to be very similar. It's going to make more substantial difference for those teams who finish in the top three or four of the championship. I was being a bit flippant, but obviously I hope that we can have that problem next year."

FIA president Jean Todt explained in the FT interview recently how he justifies the step up in entry fees,

"At the moment the way things are split is that the teams are paying one entry and then we charge them a service which is retail which is a different service which is supplied to them and those services are recharged to them," he said.

"So, it's not we just murder everybody. The biggest, with more income, will have to pay more. The smallest, with less income, will be able to pay less. The figure that I have been reading and all that are not accurate figures and the intention, rather than having now the entry fee which is 330 euros, something like that, plus the repartition of the cost, which are the result of the services which are supplied, which is about 400 per team, so 350 plus 400, that makes about 750, all that will be included on the item entry fee."