STRAIGHT TALK
James Allen discusses F1’s next move into Asia with the announcement of a GP in Vietnam
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Since Bernie Ecclestone was replaced at the start of 2017 by the three-man management team of Liberty Media under Chase Carey, everyone was waiting to see what they would produce to grow the business that Bernie had not been able to do.
It’s taken some time. But the announcement of what will surely be at least a five-year deal to host a new race on the streets in Hanoi, Vietnam, starting in 2020, is a genuinely exciting move for the sport. It fulfils Carey’s promise not only to take F1 closer to the people, with street races rather than expensive white elephant circuits as Ecclestone specified in India and Korea. But it also takes F1 to what the American describes as ‘destination’ cities.
Older readers may think of the costly Usled war in the late 1960s and early 1970s when Vietnam comes up, but for younger generations it’s a thriving economy and tourist destination; Asia is expected to drive the world’s growth over the coming decades. Ecclestone saw the potential of Asia and expanded eastwards in the final decade of his reign. Legend has it he became increasingly aware of this by watching big sums being placed by Asian gamblers sitting alongside him in London’s casinos and started making plans.
Singapore breathed fresh life into F1 and defined a new model for grand prix races – creating a festival event around the weekend with a street race as the climax of it and drawing fans from far and wide for an unforgettable experience.
Similar announcements are likely to follow next year; there were public discussions about a race in Miami that has been pushed back, but Liberty have more conversations with other destination – or ‘aspiring’ destination – cities that will come to fruition as Hanoi did.
The one that will be the subject of real focus in 2019 is the possibility of a UK city stepping forward to host the British GP, rather than Silverstone. The track’s owners triggered a break clause in their contract with F1 after the 2019 race, as the financial escalator beyond 2019 threatened to send the circuit into the red. They did so confident the complexities around hosting a street race in London would prove too great – despite a successful parade event in Trafalgar Square in 2017.
This would still seem to be the case, but that doesn’t rule out other UK cities that might want to put themselves on the map in a rebalancing post-brexit economy.
The other potential area for growth is in the media rights space. Ecclestone’s largest deal, done shortly before he was deposed, was the UK Sky TV deal that takes F1 behind an exclusive paywall for live events from next season for five years. That was born out of competition; Ecclestone was talking to BT Sport at the peak of their battle with Sky over Premier and Champions League football and Sky opened their wallet as a defensive move. The two sides have since reconciled since and that deal today would not yield close to the £160m a year fee.
So, the challenge for F1’s owners is to look for where there is competition among the new players in the media space: Netflix, Amazon, Apple. They are spending unheard of sums of money on original series and are starting to explore the sports landscape.
Perhaps even more than taking F1 races to the streets, Liberty’s bet when they acquired F1 was that in a fragmented media landscape the value of live sports rights would rise. That’s why they hired Carey. He had a front row seat this year as a Fox board member, when Disney bought Fox so they can take on Amazon and Netflix.
If Liberty’s hunch is correct, F1 will get involved in the escalating battle between the largest companies in the world.
It’s all to play for.