Liberty and the year in politics
This might just be the year that Liberty Media finally established true control of Formula 1. It presented a massive regulatory shake-up and looked to reduce the power held by teams in front of, what it says is, a growing audience
One subject dominated Formula 1’s political landscape this year and will continue to do so as we head into next season. Since Liberty Media took over as commercial rights holder in January 2017, the focus of the new management has been on 2021 and the unique opportunity to perform a major reset after the expiration of the current Concorde Agreement. With it goes the complex system of governance that has often strangled attempts to promote change.
F1 reached the end of 2019 with the future road map well defined, bar one crucial element. No teams have signed up to a new commercial agreement and there are still question marks over the long-term commitment of some of the power unit manufacturers.
Having said that, there is no specific pressing deadline and indeed the teams have only recently received all the relevant documentation.
“Part of it’s done, really it’s the governance and the prize fund that we haven’t finalised,” F1 CEO Chase Carey noted at the Abu Dhabi Grand Prix. “We’re not putting a deadline out there. I think those sorts of discussions we have in private and we’ll address it. Others may negotiate in public, we don’t.
“Realistically, we’re in the final stages. The nature of this sport is that there will always be a degree of noise around it.
But I feel good about where we are. Our goal is obviously to have every team in place as soon as possible.
“In fairness to them we put out the basic principles, the actual agreements that support them, for the prize fund and the governance. One of the agreements, we’re just giving them next week, so they don’t actually have the final agreements yet.
“Right now they don’t have documents to sign, but they will have to shortly, and our goal will be to get things finalised as soon as we can. But again, we’ll have those discussions in private and we’re not putting deadlines out there.”
Carey may sound relaxed, but F1 shareholders must be getting a little nervous. The clock is ticking.
Honda addressed concerns about its commitment last month when an extended deal was announced with Red Bull and Toro Rosso – the latter to be called Alphatauri from next year – that includes 2021, although it doesn’t run beyond that. Meanwhile, the suggestion that Mercedes might dilute its works support for the Brackley team won’t go away. However, the biggest question mark surrounds Renault. In October company boss Thierry Bollore, who had only recently taken over from the disgraced Carlos Ghosn, was ousted. The new management soon made it clear that all areas of the organisation, including its motorsport involvement, would be reviewed.
With Mclaren going to Mercedes power in 2021, the French manufacturer has no ongoing customer deals, in theory making it easier to pull the plug.
Taking back control of the future
The process of finalising the 2021 regulations, which has stretched over a couple of years, was a new one for everybody involved. Carey and his F1 colleagues agreed long ago with Jean Todt and the FIA that it was time to consign the traditional piecemeal rulemaking process – with the major teams often leading the process, and little joined-up thinking in evidence – to the history books.
Clear targets were set out – essentially improving the show, closing up the field and reducing costs to make F1 sustainable – and a methodical approach was taken to address them.
Shortly after his arrival in 2017, Ross Brawn began to build up a new technical department at F1 under Pat Symonds, made up of former team personnel. They were given the resources to develop and test a 2021 car concept, which the FIA (through
Nikolas Tombazis) translated into definitive regulations.
On the sporting side, the rulebook was also addressed by F1, with former Tyrrell and Benetton/renault team manager Steve Nielsen overseeing a substantial rewrite. And then there were the new financial regulations – the subject of much scepticism among those who believe that it’s impossible to properly police spending – which were shaped by former Honda/brawn/
Mercedes finance boss Nigel Kerr.
With no ongoing system of governance covering 2021, the deadline for finalising all three sets of rules defaulted to 31 March, thanks to the FIA’S International Sporting Code. As that date approached it was clear that it was way too early and all parties agreed to postpone to 31 October to allow more time.
As part of that arrangement the basics of the financial regulations – including the $175 million cost cap – was set in stone, in essence to stop any lobby for change in the headline number from the top three teams.
There followed a series of key meetings where the future
“Carey may sound relaxed, but F1 shareholders must be getting a little nervous. The clock is ticking”
rules were outlined. For the first time drivers were allowed to offer their input, with the Grand Prix Drivers’ Association sending two or three members to represent their views.
Informal discussions continued each race weekend at
Carey’s Saturday “coffee morning” gatherings, where he met with team bosses.
It was clear that F1 and the FIA had a plan that they did not want to deviate from. The teams, not used to in effect being bystanders as the technical regulations were shaped, expressed some doubts about the direction that was being taken. The main concern was the lack of freedom on the aero side, as Symonds and his colleagues addressed the perennial problem of following other cars.
There was also opposition to a new focus on standard parts, intended to address costs. A proposed move to common gearbox internals was headed off and replaced by a restriction on development, but items such as standard wheel rims and fuel systems did make the rulebook.
In the end F1 and the FIA held firm on most key principles and the three sets of rules announced in Austin when the deadline arrived are now subject only to fine tuning.
“It was a lot of question marks, whether it was going to be accepted, whether it was going to be moved forward,” Todt said in Abu Dhabi. “I give a lot of credit for the cost cap to Chase, because myself I’m a bit too old to understand all the process to be able to control it, and it has gone through.
“All the teams have been contributing and accepting that as the 2021 regulations. To tell you whether it will give us the effect we hope – we can only hope. I think a lot of effort, never so much effort, so much combination of a group working positively together, has been put together to prepare the future of F1.”
Carey adds: “The nature of this process is you’re not going to get a unanimous view on anything. You have diverging views. I think what you try to do is have an honest engagement, take all those views into account and then decide what’s right for the sport.
“We don’t delude ourselves into saying we’re trying to get to a place where everybody agrees with every component of what we put out there. That’s what compromises are. I think we believe it was thoughtful. Will there be aspects of it that need to be refined? For sure. And we were clear also. It’s a step, we said an important step. But it’s a step, which means there’s more to come.
“We’re certainly not through, I’m sure there are issues that we’ll still have to tackle, refinements that we have to make. It’s why the governance aspect of it is equally important, because today I think we have an overly cumbersome and complicated governance process. We’d like something that is more streamlined so that, as we have to continue to make changes, we can do that more efficiently, more effectively.”
Drive to thrive financially
Race-hosting fees remain the primary way for F1 to boost income, so it was no surprise when a record 22-race calendar was confirmed for 2020. The 2021 rules make provision for an eventual extension to 25 grands prix, something that few involved, other than the Liberty management and F1 shareholders, want to see.
In November 2018, Liberty announced its first all-new race in Hanoi for 2020. In May, there was confirmation of a return to Zandvoort and inevitably the success of Max Verstappen guaranteed a huge demand for tickets.
Vietnam and Holland are big scores for Liberty, but efforts to add a prestigious race in Miami continued to flounder. The original plan to run around the Bayfront Park and port area was abandoned when it proved impossible to get approval from the relevant authorities. The focus switched to the decidedly less glamorous car parks around the Hard Rock Stadium, owned by F1 race promoter
Stephen Ross and home of the Miami Dolphins NFL franchise.
Plans were derailed by local residents, with the requirement to
use one small stretch of public road making life difficult. Local politicians expressed their opposition, but the mayor of Miamidade County intervened and is still trying to broker a compromise.
With the two new races fixed early, F1’s focus turned to keeping the existing events. By coincidence the contracts of five classic grands prix – Spain, Britain, Germany, Italy and
Mexico – came up for renewal. Naturally, their promoters wanted better deals than they had achieved under Bernie Ecclestone, encouraged by the fact that Miami involves a new revenue-sharing model, rather than a huge upfront fee.
Mexico City was perhaps most at threat, due to the loss of government funding, but thanks to new investors a three-year deal was announced in July. After prolonged debate Silverstone and Monza both agreed five-year contracts just before their
2019 events, while in August a one-year reprieve was granted to Barcelona. The loser was Hockenheim, squeezed off the
2020 calendar with little chance of a return in prospect.
A handful of major broadcasting contracts came up for renewal and among those extended were those of Sky Deutschland and Holland’s Ziggo. The latter was one of the first to make express provisions for direct co-operation with Liberty’s own ‘over-thetop’ streaming channel F1 TV.
Liberty has high hopes for the service, but it made slow progress, in part because it remains blocked in those regions – such as the UK – where ongoing exclusivity deals with broadcasters mean it cannot yet be introduced.
The first series of Drive to Survive proved to be a huge success on Netflix, and in July F1 formally green-lit a second series, although filming had been underway all season. Crucially this time both Mercedes and Ferrari were on board, providing at least some backstage access, having opted out first time around. The Netflix deal generated useful extra revenue, but more importantly it did much to raise the sport’s profile worldwide.
However, F1 continued to struggle to make headway on attracting major sponsorship, with only a few minor deals announced during the year and diversions into areas such as car auctions and official fragrances raising a few eyebrows.
But Carey remains bullish about future income.
“We have some momentum today,” he notes. “We’ve had attendance up, we’ve had viewership up, we’ve got a good story, we’ve got new dimensions to the sport. You need to tell that story and may need to develop tools. Sponsors want partnerships that are more tailored uniquely to them. In the past, signs on a wall worked. That doesn’t work now.
“We had to develop the array of initiatives, whether it’s digital initiatives, regional feeds, virtual ads, fan festivals. Until the sponsors are signed, deals aren’t done. But, certainly, I’d say we feel we’ve gotten progressively better as we’ve gone along.”