Dieter Rencken’s political review
Liberty has arrived to blow away Bernie and CVC (hooray). But still there are inequitable revenues as the rich get richer (boo). Is all well in the F1 political pantomime?
In many ways, 2017 marked a watershed in Formula 1’s future: not only was its former tsar Bernie Ecclestone, who shaped the sport unto his own image for three decades, deposed and “booted upstairs” by incoming commercial rights-holder Liberty Media, but the new owners – at last – ridded F1 of its former managers at CVC Capital Partners. Although the takeover was confirmed in September 2016, change of control was effected on January 24. When F1 decamped in Melbourne eight weeks later, it was clear that fresh winds were gusting through F1 from various directions – albeit mainly from the United States – as much on-track as within the paddock.
For starters, the atmosphere was more relaxed and less restricted, with a can-do attitude prevailing within Formula One Management, the Liberty subsidiary charged with pointing F1 towards the 21st century. Details such as freed-up social media activities and increased paddock pass allocations made the teams bullish about a future under Liberty; yet, to many, this was simply a public tummy-tickling show.
F1’s root evils – its inequitable revenue structure and apartheid-like governance process – are, after all, cast in contracts through to the end of 2020, while the rich-to-poor gap is wider than at any point in recent history, and rivals divides found in most Third
World countries. Forget not that Manor had recently folded, with the difference between success and failure being a single point (not) scored in the penultimate 2016 round.
At a media briefing in Melbourne, Liberty frontmen (Ross Brawn, MD Sport, and Sean Bratches, MD Marketing) presented their visions, with the legendary F1 manager talking about “getting a team within FOM together, a way of working together with teams and the FIA”, while Bratches waxed about “engaging fans in new ways, creating experiences, opportunities and emotions that continue to drive this great sport”.
Come the last race, the teams were irate after being hit by a third-quarter cut of 13% in FOM earnings – the first drop in over a decade, driven mainly by a raft of marketing/media recruits, plus the cost of operating Brawn’s “team” – while fans raged against F1’s new logo, a replacement for the iconic (to many) ‘Flying F’, which most saw as little more than a (costly) attempt at expunging the last vestiges of Bernie.
Were F1’s revenues equitably shared, then the reduction would not be as drastic. But the haves receive substantial bonuses, while the have-nots are, as always, worst hit. True, Liberty voluntarily offered bridging loans, but these need to be repaid when (and if?) revenues rise.
The question is, though, whether teams should be funding F1’s plans in the first place – they are suppliers, not equity partners, and as such should be fairly remunerated for services they supply through entering the championship. Liberty is, by definition, F1’s investor – not the teams, who are stakeholders.
But during 2017 Liberty learned a lot, not least that Ecclestone, unsurprisingly, refused to accept he had lost control of his life’s work. Despite his (and his family trust) being minority shareholders in FWONK (Liberty’s NASDAQ stock exchange ‘ticker’), the octogenarian waged war against those who dared to ‘promote’ him to the position of chairman emeritus.
Among his first moves, apart from giving scathing interviews, was to permit Malaysia to cancel its contract without penalty, costing Liberty an estimated £15 million, plus, crucially, enormous loss of face. His suggestion that “we charged [promoters] too much for what we provided” further compounded the situation. Any wonder Malaysia’s promoter felt ripped off, or that Singapore pushed for reduced fees?
This cancellation of Sepang could not have come at a worse time: just when Liberty planned to grow F1 in Asia and the US, it lost its oldest ‘new world’ event in the most public fashion possible; by year end, talk of future 25-race calendars and three US events had been replaced by speculation about a race in Vietnam, and possibly a round in Miami – if, that is, environmental protesters don’t manage to get in the way.
True, 2018 lists 21 rounds, but Hockenheim is out of contract thereafter, while Interlagos is endangered after teams were subjected to utterly unacceptable security risks, so where to then? As things stand now, ’19 marks the last British Grand Prix after Silverstone gave notice, so F1 is unlikely to hit 21 again unless Liberty converts two (or three) of its “over 40 expressions of interest” for races into reality.
Then, Liberty learned that the governance process devised by CVC is stacked against the CRH for the foreseeable future. Example: no sooner had Brawn unveiled a concept for cheaper,
“F1’ sr oot evil sar ec ast in contrac tst hrough to the end of 2020”