Cadillac F1 has made history by becoming the 11th team on the grid. F1 has had 10 teams for 9 years, starting from 2016. FIA officially announced GM Cadillac to be joining the grid starting 2026.
Given the massive standing Formula 1 has all over the world, gaining entry into it is no small venture. Both teams and drivers spend a huge amount of money to make their way to the sport.
Cadillac is, by no means, a small company. The company was founded back in 1902 and is one of the world’s first motor companies. It has a market cap of $48.88 billion as of February 2025. But how much money will the American company spend to begin their F1 stint?
Entry cost for a team in Formula 1
Currently, Formula 1 has an entry fee set to $200 million for new entrants (as of 2025). However, this amount can change later on. This is to offset the prize pool that will be diluted further because of the entrant.
F1 teams make money at the end of a year, based on their position on the Constructor’s Championship. The money is 50% of F1’s commercial profits generated from the revenue. This money pool can vary from season to season depending upon how F1 does globally.
The team that is first in the WDC takes about 14% of the profits, while the second team will get a smaller amount and so on. The last team gets about 6% of the prize pot. However, Ferrari gets an extra payment of $100 million plus an additional 5% from F1 due to its historic status in the sport, regardless of their position on the board.
If the portions look small, don’t be fooled. F1 reported a revenue of $3.2 billion in 2023. That amounts to $1.6 billion, which is then distributed to the teams. Doing the math will reveal that the teams do NOT receive a small amount by any means.
The entry of another team in the sport means that the prize pool is further divided to account for the new entrant. Hence, the entrance fee is set at $200 million, which is divided and given to the teams instead of Liberty Media or the FIA.
Cadillac’s operational and infrastructural costs
While the $200 million entry fee seems hefty, it is just a fraction of what the team has to spend on the facilities. There are several areas that a team needs to put their money into before they are able to compete in Formula 1.
Teams have to invest heavily in research and development to design, build, and improve their challenger. This can include aerodynamics, chassis building, engine building, etc. The infrastructure alone can run the teams another $250 million. Another structural part required is the Wind Tunnel, which is highly critical for the teams to generate aerodynamics data for the car. These wind tunnels alone can cost $20 million, excluding the electricity bill.
Let’s also not forget the power units. Right now, Cadillac will not be building their own power unit. So for now, they will most likely be purchasing the power units from Ferrari as it was reported before. This will cost Cadillac over $20 million depending on what Ferrari are charging next year.
Personnel and Driver salaries are another huge investment for the teams. No team can operate without these two human factors, and they don’t come cheap.
Formula 1 is at the apex in terms of innovation and technology, hence, it makes sense for its personnel to be highly skilled. These personnel usually have a steep salary, with the drivers being even more expensive. However, salaries, manufacturing, logistics, operational and travel costs all come under the cost cap, which was introduced to keep the competition fair. The cap is $140 million, and any teams exceeding it are fined heavily.
All in all, Cadillac F1 will be spending around or more than $750 million before they even begin racing in F1. However, with the amount of exposure, sponsorships and revenue that Cadillac generates, they will be able to justify their entry as a highly successful investment.
How much revenue can Cadillac generate from F1?
Sponsorships and brand deals play a huge role in generating funds for the F1 teams. As of February 2025, all teams but McLaren have a title sponsor. Title sponsors are brands that have long-term marketing deals and rights with an F1 team. Ferrari and Red Bull were reportedly paid $100 million by only their title sponsors for the 2025 season. If we add the rest of the sponsors, they will be receiving well over $200 million per season from just their sponsorships.
While these numbers can vary from brand to brand, Cadillac is a big name in the industry. The American team will not accept sponsors that don’t bring them enough funds or a vision.
Ferrari to Supply Power Units for Cadillac F1 on Multi-year Agreement
Cadillac needs to choose its brand deals and sponsorships accordingly since it is not just about putting liveries on a car; it is about what those deals can bring to the table. A brand deal is meant to uplift both sides mutually.
Sponsorships help a team with several aspects that can range from technical partnerships to sustainability. Top teams like Ferrari, Red Bull, and Aston Martin have title sponsors that help them with several aspects, but they also earn top dollar.
Ferrari reportedly earns about $250 million annually from its sponsors, making it one of the richest teams on the grid. Cadillac F1 may have the same luck, considering how massive of a standing they have in their country.
On top of the sponsorship funding, as mentioned before, there is the prize money that is distributed from F1’s revenue over the course of the season. This will put a team’s overall revenue generated at over $300 million per season.
