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Carey to get tough with teams?

NEWS STORY
19/03/2019

Despite paying billions for the sport, in the days that followed the move in early 2017, Liberty Media bosses continually claimed that it had lost its way, been mis-managed, hadn't kept up with the times and was failing to make the sort of money it should have been.

Much of the blame was laid at the door of Bernie Ecclestone, the sport's new bosses critical of his 'one man band' approach.

However, the biggest criticism of the former supremo was that of his dictatorial approach, Liberty insisting that this was not the way to get things done.

With an eye on Aesop's fable, the Wind and the Sun, the sport's new boss insisted that a conciliatory approach was needed in managing the teams, rather than Ecclestone's thumping of tables and clashing of heads.

Only last week, with the June deadline rapidly approaching however, Christian Horner admitted: "At some point they will have to make a decision.

"Bernie Ecclestone was a dictator and that, in some respects, is what this sport needs," he added. "You cannot expect the teams to agree anything among themselves. They are self-interested."

Days later, speaking at the Deutsche Bank Media, Internet & Telecom Conference, Liberty's chief executive Greg Maffei, appeared to suggest that the penny had finally dropped at F1 Towers.

"Chase has tried to take a very conciliatory, constructive tone to bring it all forward and we tried not to draw any lines in the sand but we will see, it may yet come to that," he warned.

"I think the talks are going well," he added. "I think there's general consensus on the need for a cap. I think there's general consensus on improving some of the splits for the lower performing teams and also for giving us greater rewards at the high end if we are successful and guaranteeing some numbers for the teams at the low end.

"The devil is in the details and there is plenty of arm-wrestling still around some of those numbers."

Fact is, up to now it has been a Sunday stroll for Carey and his crew, as they preoccupied themselves with the likes of streaming, fonts and theme tunes, the real task, the heavy-duty stuff in terms of managing the sport is keeping the teams on side and under control.

Without the teams there is no F1, and currently the ten teams that comprise the 2019 grid are only committed to the end of next year.

F1 bosses are due to present their grand plan for the sport post-2020 to the teams before next week's Bahrain Grand Prix, but, quite how thy agree to the plan, without Carey resorting to strong-arm treatment remains to be seen. For without the teams agreement and signatures on the dotted line, Liberty has nothing.

"Probably the biggest challenge is, you know, getting a catalyst for closure," says Maffei. "While a lot has been discussed, bringing it to a head is made more difficult and we see some incentives and reasons why to do it early.

"I think it would benefit everybody in the sport, ourselves and all the teams, their sponsors, knowledge and all that good stuff," he adds. "But history has not always been perfect there and, I think we will do better than this, but last time, they raced for six months without a contract and didn't sign the contract until after the middle of the season it expired. So I believe we will do better than that but actually what is the catalyst to draw them to a head?"

In fact, Maffei's claim is somewhat disingenuous, for though the previous Concorde Agreement wasn't signed until July 2013, six months after it expired, most of the teams had already committed to continue racing six months before their contracts expired at the end of 2012.

According to Forbes, this is confirmed in F1 company documents dated May 2012 which state that "pursuant to individual Team Agreements, a majority of the 12 Teams have committed to participate in the World Championship from 2013 until 31 December 2020".

Central to the delay thus far, other than various quibbles over the technical rules post-2020, of which more later, is the sport's plan to radically overhaul the financial side of things, mainly doing away with the various bonuses, a more equal distribution of the prize pot and the introduction of a budget cap, aimed to limit spending and thereby - and here we head into Alexandria Ocasio-Cortez economics country - help the bigger team 'recoup' some of the money lost following the scrapping of their bonuses.

Change is clearly needed, for, other than the spending war between the likes of Mercedes and Ferrari which has created a two (three) tier sport, currently 49.3% of the prize pot (688m / $913m in 2018) goes to the top three teams, with Ferrari picking up 75m ($100m) before a wheel has turned.

Currently the likes of Mercedes and Ferrari are spending upwards of 225m ($300m), with F1 bosses seeking to introduce a 150m ($200m) spending limit in 2020 decreasing to 112m ($150m) just two years later.

Currently the teams 'share' 68% of F1's underlying profits, a big increase compared to the 47.5% they received before the previous deal was hammered out.

However, other than the changes to the prize money and bonuses, the big teams are unhappy at being limited on what they can spend, for in their eyes success on track is the result of investment off track, and while one can look at a team like Force India, which regularly punched well above its weight, let's not forget how close we came to losing it last year.

Of course, other than the commercial side of things, the technical rules are also due to be overhauled for 2021 and these regulations will in turn determine how much the teams have to spend.

The regulations are outlined in the Concorde Agreement, which is signed by the teams, F1 and the FIA, and while the current version contains a provision allowing it to be extended until 2030, the new regulations have yet to be finalized, with June being the deadline. Until that happens, the teams are completely in the dark in terms of their budgets which accordingly makes it even more difficult to commit to a new commercial agreement.

Mercedes and Ferrari have already threatened to walk away, while in recent weeks, for various reasons, Red Bull and Renault have made similar threats, not forgetting the likes of McLaren and Williams who have made no secret of the fact that their futures in F1 depend on a successful conclusion to the issue. All this and Haas getting increasingly political.

"At the moment, no decision has been made," said Helmut Marko last month. "We have no regulations, no agreement with the commercial rights holder."

"Progress has been made," said Ferrari's chief executive Louis Camilleri in September, "but we are still far from an agreement that includes everything and can be signed by all the participants."

However, while all that is going on, it is clear that at a time the teams are accused of self-interest, Liberty has its own agenda.

"Cost caps will have the benefit of reducing expenses for the teams and providing them with more upside," insists Maffei. "But, in addition, if we are able to grow the revenue streams, by working together more closely with the teams I think there is an opportunity for everybody to benefit but us to take a larger share of the upside to the degree we can merit it and make it grow faster than it looks like it will without some of the efforts that we put in."

And at a time a poll on the F1 'fan site', Fan Voice, asks; "when attending a race weekend, how willing would you be to pay extra for a separate special car exhibition or display?", never kid yourself that Liberty bought into the sport for altruistic reasons despite the endless references to "the fans".

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READERS COMMENTS

 

1. Posted by Uffen, 23/03/2019 14:07

"Obviously the FIA would differ with you, AlbertoDietz. The FIA makes, writes and approves the rules. They approve what teams can enter F1, they approve the circuit layouts and safety systems. The FIA licenses the drivers and teams, they award the points that determine huge funds that are allotted to the teams. The FIA approves and publishes the race calendar. It is the FIA that proclaims the legality, or otherwise, of the cars and circuits. The FIA can fine operators and penalize them.
Teams cannot do any of that. Circuit owners are powerless in these areas.
Just for example. "

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2. Posted by AlbertoDietz, 22/03/2019 16:43

"GarH is right.

Furthermore, I thoroughly reject the anomaly of total outsiders "owning" F1.

Who, then, are the genuine, natural owners of Grand Prix Motor Racing in general, and of its F1 offspring in particular?

Irrefutable logical deductive reasoning says F1's natural, legitimate owners can only be F1 teams and F1 racetracks.

I also utterly reject anyone other than F1 teams and F1 racetracks having any say whatsoever in F1 rules and their implementation. (The 19th century would have ended on a happier note had De Dion given a bloody nose to the meddling bureaucrat who cancelled his win).

It follows that sponsors, advertisers and so on interested in F1 could only deal with F1 teams and F1 racetracks, therefore cutting out all possible parasites.

It also follows that F1 should have always kept full control of their radio and TV transmissions, and should at the very least have had their own 24/7 sat tv F1 channel via transponders with sound subcarriers (in several European languages) during the last three decades, with former drivers and engineers as the only individuals allowed for race transmission, commentary, etc during the whole weekend at every single race.

Moreover, since the late nineties F1 should have had their own (multilingual) 24/7 TV channel transmitting over the internet.

How about F1 fans?

A single, no-nonsense, annual fee of €12 payable online would give subscribers unrestricted F1 TV access 24/7 until midnight on Dec 31st."

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3. Posted by Uffen, 22/03/2019 15:05

"I understand your comments GarH, but the series is owned by the FIA. Still, the FIA, in operating F1, is "owned" by the national regulators (no tobacco adverts, tax money to support racing, no running on Friday in Monaco, etc.). The teams "own" F1 in that they are the show. If they leave, whether manufacturer or privateer, they get value only from the sale of what they own, at the going rate. There's an old saying about making money in racing. So far, generally speaking, if one team goes another replaces it. The FIA controls that, too.
I say the paying fans "own" F1. And they seem to be exerting some influence. The other "owners" are desperate to improve the show because the fans are complaining and departing.

Manufacturers may not come and go as often, but they do it when it suits them (marketing). Private teams usually disappear when they're forced to (financial).

F1 would be stuffed without manufacturers but that is largely because the FIA made a huge mistake in specifying engines so complex that only manufacturers could produce them (and even then one struggled mightily) and manufacturers drove costs up and up to the point of absurdity. "

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4. Posted by GarH, 20/03/2019 14:00

"@ Bill Hopgood

Don't believe half of what Bernie ever said. Manufacturers don't come and go as often as private teams do. F1 would be stuffed without manufacturers of engines.

All sports are 'owned' by the competitors. Rights holders are new to sport and they're only in it for the money. You have heard of CVC? Sensible sports are their own rights holders, like the English Premier League. Bernie only became the rights holder of F1 because he was dealing with engineers, not businessmen. When businessmen arrived in F1, things started to change. Which is why RB has a very good deal out of F1 despite only being around for a dozen years."

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5. Posted by TokyoAussie, 20/03/2019 3:34

""when attending a race weekend, how willing would you be to pay extra..."

I would certainly be willing to pay less."

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6. Posted by Bill Hopgood, 19/03/2019 17:52

"What I still don't understand is how the participants of the "sport" can shove the rights holder around so much.
When you think about it, the situation should be:
Here is some rules to be able to enter to play.
Here is some rules on how to compete.
Here is the rules of the game.
What F1 seems to have is:
Here is the rules that we would like to put in place, if it is OK with you Mr Competitor...

How hard can it be to just put some rules in place and if teams / manufacturers want to participate, leave it up to them?
The teams and manufacturers can always pack up and leave if they don't like the rules or the deal.
No-one is forcing them to stay, indeed, with the rise of sports cars (GT, GTE) and Formula E, there could be better options for the likes of Merc, Ferrari, McLaren, Honda and Red Bull with their Aston Martin partnership.
Sooner or later either the teams or the F1 guys are going to step back and look at this situation and the penny (or a lot of them) will drop.
From memory, Bernie didn't give two hoots about the manufacturers because the come and go."

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7. Posted by FQITW, 19/03/2019 15:38

"Actually we should be grateful to LM for the greatest show on earth coming up in June ….."

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8. Posted by GarH, 19/03/2019 10:35

"What exactly is LM giving to the teams in exchange for them racing? LM have spent a small fortune on nonsense since they arrived. A new logo, jingles and even more Z List personalities don't help the teams when they can't find sponsors and depend upon second rate pay drivers to sit in their cars.

I've watched some of the NetFlix series. Did the teams and drivers really want the public to know about the rows that go on behind closed doors? Who knew Horner shoots defenceless birds for fun?

Are LM responsible for loss of Ted's Notebook? Did Ted forget to follow the party line too often? I'd like to see a fly on the wall episode set around LM discussing what plans they've got and how they behave behind closed doors.

One last thing, did Zak Brown really say "Make McLaren great again" ? What a ****."

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