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Liberty wanted to buy IndyCar

NEWS STORY
19/12/2019

Shortly after Liberty Media bought F1 in early 2017 it was revealed that the company had been looking at other race series to buy to complement its purchase of the pinnacle of motor sport.

Talking to investors, Liberty's chief executive Greg Maffei put forward the idea of "potentially expanding Formula One into other motor sports".

"That could be interesting," he said. "Ones where we have synergies. Ones where we are starting to get some insights.

"There are emerging sports that could be as well,” he added, admitting that “starting with motor (racing) would be the most natural but that’s not to say there’s nothing else that could work.”

It was widely assumed that the series Liberty was eyeing was IndyCar, a move given added impetus in the years that followed when Sky, in the UK, began broadcasting IndyCar on its F1 channel, a move unthinkable under the old (F1) management.

As it happens, the series, along with the Indianapolis Motor Speedway was recently sold to former F1 team owner and all-round racing legend Roger Penske, however, following completion of the deal the Associated Press reported that "investment bank Allen & Co. was tasked with finding either a buyer or strategic partner and connected the family with Liberty Media".

According to Forbes, Talking at a recent investors conference Maffei admitted that his company was still on the look-out. "We continue to look for M&A (mergers and acquisitions) and synergistic investments," he said. "We think there are things we can do. We like the live event area. We like the sports area. There are things that are synergistic with Formula One. We bid on a bunch of assets.

"Unfortunately prices remain high," he admitted, "we will see but there are things we think we will do over the next four years in this space and we will certainly try."

Maffei's comment about the prices remaining high would fit perfectly with the Associated Press' claim, regarding the IndyCar sale, that "one person familiar with Liberty's talks said the company balked at an initial asking price of $250 million".

Quite why Liberty should be looking to buy other series before getting its own (F1) house in order is a mystery.

While revenue was down 0.7% to 1.37bn ($1.8bn) in the first year of ownership, it rose 2.4% in 2018.

This year saw the mega-deal with Sky kick-in, a deal arranged by Bernie Ecclestone before Liberty took control, and which helped account for an 11.4% increase in revenue over the first nine months of the year.

However, despite a number of initiatives introduced by the sport in the last couple of years, not least betting, there have been no significant series sponsors, while the much-hyped streaming service continues to suffer all manner of bugs which goes in-part to accounting for the poor take-up.

Indeed, while broadcasting brought in 459m ($603.9m) last year, subscription-based services added just 4.6m ($6.1m) to the F1 coffers.

Days into his new job, Chase Carey predicted that the revenue stream "that grows the fastest is probably sponsorships", two years down the line and he admits that "the sponsorship world has probably been more challenging than we would have expected it to be a couple of years ago". Indeed, sponsorship revenue in 2018 was up just 1.7% on 2017.

In terms of the sport's other major money-spinner, race hosting fees, in the five years before Liberty bought F1 these had increased by 14.5% to 498m ($653m) in 2016, an average of 23.7m ($31.1m) per race.

However, in the first two years under Liberty's ownership the total had fallen by 5.6% as the sport, in danger of losing a number of its classic events, not least Silverstone and Monza, had to renegotiate new deals far removed from those, with their crippling built-in annual escalators, done by Bernie Ecclestone.

Under its previous contract, Silverstone's owner, the BRDC, was allowed to pay the hosting fee after the race in order to aid its cashflow. The new deal with Liberty however, means the fee has to be paid in advance.

The financial statements confirm that "the termination of the deferred payment terms associated with the Grand Prix contract will result in 18 months' hosting fee having to be paid within a 12 month period".

However, they add that "no additional funding will be required by the company", which suggests the new fee is significantly lower. New deals for Spain and Italy are also likely to have seen the previous fee heavily reduced.

Meanwhile, Vietnam, a country that Ecclestone rejected, is the only new addition to the F1 calendar, a schedule that the sport's powers-that-be are seeking to increase to as many as 25 races.

The teams, already balking at the thought of 22 races in 2020, are not happy at the thought of 25, insisting that such a schedule would increase costs.

With the teams sharing 68% of F1's underlying profits, this would normally mean that more races meant more money, however, if other circuits demand deals similar to those of Silverstone and Barcelona, this could present a problem.

With all this on its plate, one has to wonder why on earth Liberty would be looking to buy other F1 acquisitions, far less race series.

According to informed sources, there is one acquisition that Liberty seemingly wasn’t interested in, the increasingly powerful Motorsport Network, which in its efforts to dominate the motor sport market appears to have painted itself into a corner as it would need to find another buyer with the wherewithal in order to be sold.

Interestingly, both Motorsport Network and Liberty Global, sister company to Liberty Media, both own stakes in Formula E.

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1. Posted by Uffen, 28/12/2019 18:27

"The world is in the midst of the longest economic boom in modern times and F1 still has trouble attracting sponsors? Hmmm."

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2. Posted by Roli, 19/12/2019 20:14

"Oh for God's sake, what will they buy next that will complement F1....McDonalds, KFC....???
they are an absolute joke..."

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3. Posted by Fambank, 19/12/2019 16:48

"So that's why they are turning F1 into Indycar. "

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