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?

Autosport (UK) - - CONTENTS - By Di­eter Rencken, Spe­cial Con­trib­u­tor

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”

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