Teams want to own the rights to F1

[johnnoble1990]

http://news.bbc.co.uk/sport1/hi/formula_one/13314790.stm

Not exactly a surprising story. I'm not sure what i make of this idea. It is better than Murdoch getting his hands on it, but teams are likely to do what is best for them and not always for the sport. Then again, maybe with Formula 1 what's best for the sport is best for the teams. After all, it was FOTA who approached Pirelli to get them to change the style of tyre.

 

[FB]

If you don't like the way Bernie runs F1 you wait and see how these numptees would screw the sport...

 

[Brogan]

Could they really do any worse?

I for one would like to see exactly what F1 would be like being managed by those who actually have a vested interest in it as a sport, rather than a business.

 

[FB]

That's exactly the problem, they have a vested interest. Ferrari will want what is best for Ferrari, McLaren for McLaren, etc. etc. There would be no new teams, ever, why would they want to spread the profits more widely. They would stifle any progressive rule changes, look at the problems Max Mosley had when he tried to make the sport safer and try and control the ridiculous amounts of money the teams were spending.

What F1 needs is a more benign dictator than Bernie, one who will be able to work with the teams. He has too many enemies in the sport now to continue for much longer. The problem is as they spend all their time arguing, stabbing each other in the back, stealing one anothers technical info and occasionally racing, if they had control the sport will simply stand still.

The teams don't know what they want. Look how Ferrari are bitching at the perfectly reasonable suggestion to move to 1.6 litre turbos "it's not in Ferrari's interest". Multiply that by 12 if the teams get control of the sport, it would be a recipe for disaster.

 

[Fenderman]

Seems to me that the arguing, or more precisely the debate, is rather healthy. The past couple of seasons have seen some of the best races we've had for years. How would F1 look today if the teams hadn't been so 'uppity' and rebellious. I think it's also a rather interesting idea that teams can't organise pxxx up in a brewery when they seem to do quite well at building the worlds finest racing cars, transporting them around the planet and delivering a show for the rest of us.

 

[Chad Stewarthill]

I think it's also a rather interesting idea that teams can't organise pxxx up in a brewery when they seem to do quite well at building the worlds finest racing cars, transporting them around the planet and delivering a show for the rest of us.

The problem, as FB points out, is not the team's individual excellence at what they do, which is irrelevant to this argument. the problem is their inability to act together in the common interest, due to each having their own agendas and vested interests (Ferrari some more than others). They haven't shown themselves to be any good (or even interested) at this in the past, so there's nothing to suggest they would suddenly become better at it now.

 

[MCLS]

Wouldn't it then be easier for Ferrari et al to break away if there was a 2009 style crisis?

 

[Chad Stewarthill]

Wouldn't it then be easier for Ferrari et al to break away if there was a 2009 style crisis?

Yes and I'm still hoping that they (Ferrari) do, and take Murdoch, Sky, adverts and ppv with them.

 

[Fenderman]

Though I agree with Chad about teams having their own agendas I think the teams do have the capacity to separate the interests of the sport from their interests in competition. The very nature of F1 requires them to have seriously gifted people in all departments. Since they have not had to demonstrate their ability to own and run F1 but rather to continue to compete I'm not sure one can truly assert that they can't work together.

Sure, the teams will argue and debate but are we not engaged in a decent conversation on a forum despite not always agreeing with each other?

At the very least F1 teams have more in common with the interests of the sport than some faceless financier or megalomaniacal empire builder.

 

[FB]

On this specific case, doesn't it strike anyone else as odd that the teams are suddenly interested in having more say in the sport just as someone else is prepared to stump up the cash to to by the commercial rights?

Bernie has offered to sell the commercial rights to the teams on many previous occasions, when he was trying to float the company, before CVC bought it and before that but none of them were prepared to put their money where their mouths were. They were happy to let Bernie take all the risk and, regardless of what people think of him, he has invested much of his personal wealth into F1 and taken risks the team principals weren't prepared to take - supporting circuits, supporting teams in trouble, providing all of the TV coverage we now all enjoy, all the transport to the fly away races, etc, etc.. He has negotiated contracts for the teams that they would never have been able to agree on as a collective and kept F1 going.

Yes, he has made himself very wealthy as a result but he has had to take risks to get there. The teams haven't invested in F1 the sport, only in their own ambitions to win or to get onto the back of the grid. They are the players and are well remunerated as a result. I agree that CVC probably take too much out for themselves but if you had invested $1.8 billion wouldn't you want to see a return?

This is blatant opportunism by the teams just as the Concorde Agreement is up for renewal. They've threatened to break away before but never had the balls, now they've got lucky as they can use the Sky stick to beat a few more dollars out of CVC. This is all about money, not "the good of the sport". Ferrari, McLaren et al only want what's best for them.

 

[Fenderman]

Bernie is just one such example of the business talent that can emerge from "the teams". The empire builder I was referring to was the chap who controls most of the western media. As Eddie has just pointed out in the run up to quali, most of the teams haven't been in a financial position to "buy" in. It's an incredibly complex problem for them since so much of their income is derived from sponsorship so it's not just down to the teams to invest, their sponsors have to buy in as well ... and it's the sponsors who are most likely to jump ship every time the wind changes.

Also, it seems to me at any rate, that they invest plenty in the sport. Their participation costs them a packet. Why else was/is there so much pressure to bring the costs down? Add to that the risks to life and limb (granted, not so much these days), the emotional investment and the investment in jobs and again, as I proposed earlier, the fact that they are the ones providing 'the show'.

 

[Speshal]

Now I could be sorely mistaken here (I usually am) but I'm sure I read somewhere that CVC have now serviced their debt that they took out to "buy" F1 - meaning that now all the money they make out of it goes to the shareholders instead of the bank.

This then begs the question, why would they want to sell up when they a) have a proverbial cash cow and b) another 100 years on the rights in which to milk this cow - That would raise far more revenue than Newscorp could bid. However I think it would be a good idea for the teams to have a larger steak within the sport, after all, no teams, no sport.

 

[Fenderman]

The mystery deepens. If Spesh is correct and I was a shareholder I'd be apoplectic .. but maybe those with the big portfolios want to cut and run to service their own debts.

 

[Jen]

If they are all as old as BE maybe they have decided they want to retire and need the money to do so.

 

[Chad Stewarthill]

Now I could be sorely mistaken here (I usually am) but I'm sure I read somewhere that CVC have now serviced their debt that they took out to "buy" F1 - meaning that now all the money they make out of it goes to the shareholders instead of the bank.

You're almost right Speshal, it seems that they have paid a lot, but not quite all, of the debt off http://www.pitpass.com/fes_php/pitpass_news_item.php?fes_art_id=43021 which still means they are very close to the point where the real benefit of the income from F1 is about to start, as Bernie himself has suggested.

 

[sportsman]

Seems to be a misunderstanding of how private investment companies such as CVC operate.They invest in operations, be it companies, new technology or in this case F1.Actively promote it to increase its value then sell it at its increased value.

http://www.cvc.com/Our-Industry.htmx
The term 'private equity' refers to a specific type of long-term investment. It involves the provision of investment from investors (or limited partners, 'LPs') to finance and acquire equity ownership in private companies that are usually not quoted on a regulated market. The large majority of investors include public and private pension funds, endowments and foundations.
A private equity firm (known as general partners, or GPs) draw on the combined raised capital and borrowed funds, committed for a period of time (the investment period), and seek to invest this in companies which demonstrate the potential for growth in value and enhance their performance and value over a prolonged period. Typically, holding periods last between three and seven years.

 

[Galahad]

First off, I wouldn't worry about Bernie's statements. Telling somebody that something isn't for sale is simply a tactic to increase their offer. CVC don't need to sell, that's true, but nor do they anticipate retaining ownership in the long-term. They've got what they wanted now, to a large extent, all sorts of things could happen in the future to wreck their investment (including a breakaway over the terms of the next Concorde) so a sale is a real possibility.

I understand where FB is coming from, but I don't think there is a perfect solution here. Let's be clear initially: the teams would only own the commercial rights. The FIA would remain as the rulemakers, so in terms of the teams arguing over the regulations, that would only happen to the extent that it does already.

I'm in favour of team ownership for three reasons:

• Financial independence of teams - with a bigger share of F1's commercial revenues, teams could survive in an economic downturn without needing sponsorship at all. This provides greater stability of participation, the possibility of a more competitive grid (so HRT don't have to do a rerun of last year's car), and gives team principals an asset that has real value in itself - it should even be possible to run it as a profit-making concern if you wanted to, though of course few would regard that as an aim.
• A more balanced calendar - the teams would select circuits not only on ability to pay sky-high fees, but on where their sponsors wanted the most exposure. Now, this doesn't mean a radical change, obviously places like China, India, Russia and the US would remain high on the agenda. But races that are held solely for the money, with little spectator interest, like Malaysia or Bahrain, might be swapped for events that fans would have more interest in. Plus, there may be more willingness to negotiate preferential deals for countries that are considered important to the championship, but are struggling to pay, like Germany or (maybe) Australia.
• Better TV coverage - under this model, as for circuits, teams would be looking for the deals that maximise their exposure in broadcasting markets, not just taking the highest bid. So pay-per-view F1 would be a much less likely prospect, in my view.

Of course, the teams will still want to make the most of their investments, I'm not naive. If Country X comes along with an offer to pay double the going rate, I'm sure that deal would go through. But at least there would be an obligation to shareholders and partners to reflect their own preferences within the calculation, unlike with a purely commercial owner.

In England, the 20 Premier League football teams appoint a board and chief executive and let them get on with the commercial side. I don't really see why F1 should be any different, since the teams' objectives in this area are very often closely aligned (if not always, admittedly).

 

[sportsman]

I agree in part Galahad.The sponsors however are looking at the new economies,as you say Russia,China and other emerging economies.
For the most part the sponsors have already saturated the European markets and are ever looking Eastwards for new business.
If and its a big IF FOTA do arrange some sort of buyout with Newscorp, that does not necessarily automatically mean pay per view.
Currently all F1 on TV is produced by FOM from their cameras and then sold to terrestial TV companies,in the UK the BBC but in countries some cable companies all of whom get their pictures from FOM's world feed.
I watch F1 on RTL cable with adverts I might add.I can also watch on the local free LNT but this is still a commercial channel with adverts (lots of them).
If FOTA insists on free to air clauses, what is to stop Newscorp selling their coverage to the BBC at same rate as FOM which I understand some £50 million.
There is of course a lot of ground to cover.At present all transportation arrangements and costs for the flyaways are paid for and organised by FOM all the teams need to do is get all their kit including cars to the UK airport and DHL under contract to FOM arrange the rest of it.

Just out of curiosity CTA has members all over the world.Apart from those who can receive the BBC can any other members watch F1 live without adverts.
I can watch F1 live on my cable feed from 6 different TV companies all across various countries from Poland to Russia the Ukraine and many others.They all without exception are commercial channels with adverts.

 

[Galahad]

If and its a big IF FOTA do arrange some sort of buyout with Newscorp, that does not necessarily automatically mean pay per view.

I agree, I think it's unlikely. My feeling is, as with most of the topics this touches on, that team ownership makes retention of free-to-air coverage more likely, but not certain (such is life).

Ultimately the teams have to consider the fans, as it's the fans who support the sponsors, who the teams rely on. So even if we can't all get everything we want, at least we're being thought about. That's not something that affects CVC in such a direct way, if at all.

 

[Chad Stewarthill]

I can watch F1 live on my cable feed from 6 different TV companies all across various countries from Poland to Russia the Ukraine and many others.They all without exception are commercial channels with adverts.

Are they all adverts which interrupt the live coverage as the ITV ones did, or do any of them run 'picture-in-picture, or ticker-tape fashion along the screen with the main picture still running? I have seen that done in the past, but I know the advertisers don't really like it as they don't get the undivided attention of the viewer (not that ITV adverts ever got my undivided attention anyway - just my ever-increasing anger and frustration, and determination never to buy a product from anyone who advertised during a race).