Bud­get caps are not the so­lu­tion


class so­ci­ety in terms of what is spent by teams. You should have an op­por­tu­nity for un­der­dogs to win.”

These are noble sen­ti­ments; hugely phil­an­thropic, even. But dig deeper, and the mes­sage is clear: Liberty in­tend driv­ing down the costs of com­pet­ing, in turn re­duc­ing the nan­cial pres­sures on teams and thus their need to de­mand in­creased slices of F1’s (soon to be) $2bn an­nual in­come.

By im­pli­ca­tion, there­fore, Liberty clearly in­tend to max­imise their take on be­half of share­hold­ers. This is, of course, the pri­mary duty of any pub­licly traded en­tity, and it leaves zero doubt as to where Liberty’s con­trol will take the sport.

In­deed, Carey made that point him­self, shortly af­ter the deal was an­nounced: “Of course, prots are im­por­tant, but real­is­ti­cally the pri­mary goal of the busi­ness that I have been in has al­ways been to build long-term value. So the goal is not what can be achieved in the next 12 months, but where you are go­ing to be in three to ve years.”

While fans can draw so­lace from Liberty’s fo­cus on the long-haul, un­like out­go­ing ma­jor­ity rights hold­ers CVC Cap­i­tal Part­ners, who sought a quick in-out, listed com­pa­nies face quar­terly au­dits by the mar­kets. Hence the com­pany will be sure to scan the bot­tom line on a reg­u­lar ba­sis, tak­ing cor­rec­tive ac­tion when it is nec­es­sary.

The rst ques­tion that arises, how­ever, is whether a com­mer­cial rights holder should have any say over the sport’s tech­nol­ogy, or sway over how teams wish to blow their bud­gets. That surely is down to the tech­ni­cal and sport­ing com­mis­sions of gov­ern­ing body the FIA, both of which are cur­rently fram­ing cost-sav­ing ini­tia­tives. They, surely, are bet­ter placed to make these judg­ments than new rights hold­ers whose fuller un­der­stand­ing of the sport was gleaned af­ter the pur­chase.

If, though, Liberty are sufciently con­cerned about F1’s ‘two-class so­ci­ety’ – and, as a USbased en­tity, they surely un­der­stand bet­ter than most that in­equal­ity ex­ists in all walks – then they would do well to study the root cause of F1’s cur­rent scal im­bal­ance, and thus the rea­sons why ‘un­der­dogs’ can­not cur­rently win.

At the heart of the mat­ter lies a rev­enuedis­tri­bu­tion struc­ture de­vised by re­moved out­go­ing ma­jor­ity rights hold­ers CVC at a time when the ven­ture vul­tures needed to snare big­name teams ahead of a planned-but-aborted list­ing on Sin­ga­pore’s ex­change. CVC man­aged to en­tice them by of­fer­ing, for ex­am­ple, non-per­for­mance-linked an­nual bonuses that en­rich Fer­rari an­nu­ally by twice the amount that Force In­dia spend per sea­son in to­tal.

These bonuses were introduced as ef­fec­tive for 2013, and dis­bursed dur­ing 2014, with the main benecia­ries be­ing Red Bull, Fer­rari and Mercedes. It can be no co­in­ci­dence that the last grand prix won by a team other than a mem­ber of this trio, was 2013’s sea­son opener, which Kimi Räikkö­nen won for Lo­tus. That very team sub­se­quently folded un­der the stress of com­pet­ing on unequal terms against ve ‘bonus’ teams (McLaren and Wil­liams re­ceive more mod­est sums).

The fact of the mat­ter is that un­der­dogs have won races and cham­pi­onships against bet­ter­funded op­er­a­tions since the in­cep­tion of the F1 world cham­pi­onship in 1950 through to 2013 – but not since. That is where F1’s true in­equal­ity lies, not in any lack of no­tional bud­get caps – a con­cept that has been re­jected time and again due to its in­her­ent im­prac­ti­cal­ity.

The moral is sim­ple: sort the rev­enue struc­ture by pay­ing like money for like re­sults, and the rest will largely sort it­self.

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