Site logo

Are F1's free-to-air TV days numbered?

NEWS STORY
23/05/2009

It would be an understatement to say that Bernie Ecclestone is shrewd. So it came as little surprise to hear him imply that he would sue Ferrari if the team tries to leave F1 over its displeasure with the budget cap. Ironically, Ferrari's veto over the FIA is believed to be contained within the contract that the team signed with Ecclestone to stay in F1 until 2012. Now we hear that all the teams are aligned with Ferrari over rejecting the budget cap so what could come next from Mr E? Over to Pitpass' business editor Chris Sylt.

According to Sylt, Ecclestone has at least one ultimate weapon in his arsenal which could see the sport's ringmaster coining it in whilst the teams are left on the back-foot. As ever in F1, it is all down to money.

There would of course be no threat of multiple teams deserting F1 if they had signed a Concorde Agreement committing them to stay in the sport. In 2006 they signed a memorandum of understanding with Ecclestone's company to confirm the amount of prize money they get from the sport but this document is not believed to be legally binding.

It is generally thought that the lack of a Concorde Agreement is of more benefit to the teams than it is to Ecclestone as they can leave the sport at will. However, this may well not be the case. According to the terms of a European Commission ruling on F1 in 2001, "the Concorde Agreement ...guarantees that free-to-air (TV) will be the principal way of transmission to viewers." Without a Concorde Agreement, this cannot be guaranteed.

You might ask how Bernie could benefit from moving F1 off free-to-air broadcasting. Well, just four months ago the TV rights to football's Premier League were sold to two pay-per-view channels Sky and Setanta for a blockbuster 1.8bn. These were just the UK broadcast rights and were only for four years.

In contrast, F1 is believed to be bringing in just 240m from its global TV rights annually - amounting to only 960m over four years. If F1 only received from the UK 60% of the income that the Premier League gets it would still be more than the sport currently gets from its global rights. If similar deals were done in the top five global markets, F1 would be making 20 times more money from TV rights than it currently does. And because the pay-per-view stations have a rich revenue source from subscriptions they can afford to pay high sums for a sport which would bring them many more customers.

If F1 were to focus on pay-per-view TV, the teams' sponsors might not be overly impressed since although Ecclestone's company would be coining it in, the viewing figures would surely drop from the 600m who currently watch the sport. The core reason why sponsors are prepared to pay such high sums to the teams is because of this wide exposure though, of course, if a budget cap is introduced then teams don't need as much revenue from sponsors so they won't need to pay as much and would be less concerned if the viewing figures dropped. Anyone see a grand plan emerging here?

Of course, a drop in viewing figures would also lower the values of F1's trackside advertising which currently brings in around 110m to Ecclestone's business. However, the gain made by the increased TV revenues would more than compensate.

Then there are the circuits. With more money coming in from TV rights, the circuit fees could theoretically be drastically reduced but would they need to be? One of F1's problems at the moment is empty grandstands but if payment of a hefty annual pay-per-view subscription is required to watch the sport on TV for some fans, physically going to see a Grand Prix would be one of the only ways to keep up with the sport. It could be the shape of things to come.

LATEST NEWS

more news >

RELATED ARTICLES

LATEST IMAGES

galleries >

  • Pitpass.com latest F1/Formula 1 images
  • Pitpass.com latest F1/Formula 1 images
  • Pitpass.com latest F1/Formula 1 images
  • Pitpass.com latest F1/Formula 1 images
  • Pitpass.com latest F1/Formula 1 images
  • Pitpass.com latest F1/Formula 1 images
  • Pitpass.com latest F1/Formula 1 images
  • Pitpass.com latest F1/Formula 1 images
  • Pitpass.com latest F1/Formula 1 images
  • Pitpass.com latest F1/Formula 1 images
  • Pitpass.com latest F1/Formula 1 images
  • Pitpass.com latest F1/Formula 1 images
  • Pitpass.com latest F1/Formula 1 images
  • Pitpass.com latest F1/Formula 1 images
  • Pitpass.com latest F1/Formula 1 images
  • Pitpass.com latest F1/Formula 1 images
  • Pitpass.com latest F1/Formula 1 images
  • Pitpass.com latest F1/Formula 1 images
  • Pitpass.com latest F1/Formula 1 images
  • Pitpass.com latest F1/Formula 1 images

POST A COMMENT

or Register for a Pitpass ID to have your say

Please note that all posts are reactively moderated and must adhere to the site's posting rules and etiquette.

Post your comment

READERS COMMENTS

 

No comments posted as yet, would you like to be the first to have your say?

Share this page

X

Copyright © Pitpass 2002 - 2022. All rights reserved.

about us  |  advertise  |  contact  |  privacy & security  |  rss  |  terms