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Financial Times foiled by FOTA press release

NEWS STORY
24/10/2011

Some Formula One websites get a lot of stick and accusations of being amateur because they write articles which are based solely on press releases. This can come across as writing something simply for the sake of it and often leaves readers confused about whether the outlet in question really did get the news itself or just copied it from a press release. If press releases are gratuitously copied, or if the news is presented as being exclusive to the outlet when in fact it is not, then it is easy to understand the criticism. It seems to be a problem peculiar to websites since blogs tend to focus more on the personal insight and expertise of the author rather than regurgitating press releases. It also isn't something which tends to affect newspaper reporting on F1 which is why an article in the UK edition of the Financial Times today is all the more surprising.

The 'news' in the opening line of the article entitled 'F1 media rights up for grabs' doesn't just come from a press release, it comes from a press release which was distributed one month ago and, as recently as last week, was reported by Pitpass.

It focuses on the negotiations about a new Concorde Agreement, the contract which governs the distribution of F1's profits. At the end of 2012 the current draft of the Concorde will expire so it is certainly timely to discuss it. However, reporting news which is already in the public domain is not likely to move things forward very much.

The FT article begins with the line that "the Formula One Teams Association has hired Evolution Media Capital, a boutique investment bank, to assess the value of its media rights before it negotiates a new funding agreement with CVC, the private equity firm that owns the sport." It is news which first became public on 25 September in a FOTA press release which said "the Formula One Teams' Association has announced today that it has concluded agreements with DC Advisory Partners and Evolution Media Capital (an affiliate of Creative Artists Agency) in respect of providing financial and media advisory services."

True, the authors of the article do not focus specifically on writing about the business of F1, and also cover the Olympics, football and the movie, hotel and pubs industries, so they could be forgiven if they did not know about the press release. Nevertheless, the news was no secret as demonstrated by the press release and the fact that early last week one senior team manager emailed Pitpass' business editor Christian Sylt about EMC's agreement with FOTA. Pitpass reported this but it was not presented as news by appearing in the opening line of the piece since Sylt was well aware that FOTA's agreements had been signed weeks earlier.

If we presume that a source told the FT that FOTA had hired EMC then it raises the question of whether the authors typed it into the internet to check if it had already been reported. If so they would have found the FOTA press release and the Pitpass article. All you need to do is type 'Formula One Teams Association and Evolution Media Capital' into Google and the press release comes up as the top link so it is not difficult to find.

If instead we presume that the FT simply got the news from the press release then it raises the question of why it bothered mentioning it in the opening line of the news story when it will have seen that it was a month old. It is surprising in itself that there is no mention of the release in the article and it isn't clear from the piece whether the FT even knew about it. However, according to Sylt, who knows the FT well, this is far from the most surprising practice at the FT. That is a story for another day.

In F1 terms, one month is an eternity. Indeed, it has been such a long time since the press release was issued that, as the article states, FOTA's "future has been questioned by some teams, including Ferrari and Red Bull." There has recently been talk that FOTA may be disbanded which would make the appointment of EMC far less significant than it seemed when the press release was issued.

Interestingly, and completely separately, the FT article also quotes someone "familiar with the situation" who says that "this sport is probably the second or third largest in the world and the teams who take all the financial risk receive a minority share of the revenues." It seems surprising that this statement was not questioned given that CVC took out more debt to buy F1 than any team has had in the history of the sport. Indeed, F1 had $2bn of external debt outstanding at the end of last year which is far more than the external debt held by all the teams put together.

F1's boss Bernie Ecclestone would certainly not agree that it is "the teams who take all the financial risk." He told Sylt that the Concorde Agreement "is a little bit one-sided. We had a Concorde Agreement with BMW and Toyota and when they wanted to disappear they disappeared. We couldn't disappear. If we disappear, they would want to sue. We would never do a deal with anybody normally under those conditions, we would ask for bank guarantees."

He adds that signing a new Concorde "is not a priority... I don't think we need a Concorde Agreement. I don't know if CVC wants one. I think they probably wouldn't want to think is there is going to be a civil war but as there is not going to be one whatever happens it doesn't matter. I have never really discussed the Concorde with [CVC co-founder Donald Mackenzie]. We are happy to have a contract with all the teams, it makes life simpler." He concludes that "I think there probably will be another Concorde... I think the teams want some security."

Red Bull team principal Christian Horner echoes this as he told Sylt that "I think the sport will have to have [a Concorde Agreement]. I think it needs one. The teams need one, it's good for the promoters and I think it's important that the FIA is tied into that." Ultimately, regardless of when EMC was appointed, that is the bottom line for the future of F1.

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