Liberty Media did not buy Formula One because it was a passion of either their executives or shareholders. The commercial rights were an opportunity for the media company to increase its wealth both from a revenue and capital perspective.
What has been noticeable this year is more often than not when F1’s CEO Stefano Domenicali speaks publicly it is not about the core component of Formula One – the racing – but about project “build”.
Vegas to generate $500m
Liberty’s CEO Greg Maffei has also been in the news over the past couple of months speaking to Wall Street Investors regularly about the incremental value of Formula One.
He recently claimed the first ever F1 race sponsored exclusively by the commercial rights holder will raise $500m of revenue, which appears even beyond the realms of reality for Las Vegas.
Of course earlier this year there were reports that F1 could be sold to the Saudi Arabia wealth fund for an eye watering $20bn. Bloomberg claimed the bid had been made during 2022 and the Saudi’s were open to even paying a higher price.
FIA clamp down on F1 sale rumours
The speculation led to a reaction from the president of the FIA, Mohammed Ben Sulayem who took to twitter to express his opinion.
“As the custodians of motorsport, the FIA, as a non-profit organisation, is cautious about alleged inflated price tags of $20bn being put on F1.”
“Any potential buyer is advised to apply common sense, consider the greater good of the sport and come with a clear, sustainable plan – not just a lot of money.
“It is our duty to consider what the future impact will be for promoters in terms of increased hosting fees and other commercial costs, and any adverse impact that it could have on fans.”
Liberty Media deny imminent sale
A row then erupted between the FIA and Liberty Media who felt their investment could be adversely affected by the claims made by Ben Sulayem that somehow a sale required tertiary authorisation from F1’s regulatory authority.
Maffei dismissed the notion that Liberty media were looking to sell F1 when speaking at the Moffett Nathanson Inaugural Technology, Media and telecom conference.
“Is there any chance we’re going to sell this thing and incur corporate tax?” he attempted to explain.
“That should stop any discussion that anyone says that our friends, the Saudis, are going to buy it next week or something like that?
“If anybody knows us, they should know that’s just not in our cards.”
Liberty beef up F1 team
The attempt to suggest a corporation is not going to make a huge mark up and sell an asset due to potential tax liabilities being incurred feels like Maffei is protesting too much.
Having recruited Chase Carey as the initial CEO of Formula One, Liberty Media clearly demonstrated they had no idea what they had acquired.
The mistake was rectified with the appointment of Carey’s replacement Stefano Domenicali who has Formula One running through his veins.
Then Mr. Trustworthy, Ross Brawn, was engaged to beef up the technical side of the sport and the implementation of the cost cap has fans believing the playing field is being levelled between the bigger and smaller teams.
Calls for early Concorde agreement
However, recently and somewhat out of the blue Maffei called for all parties to come together and negotiate a quick extension to the current Concorde agreement which regulates the three parties involved in Formula One.
“Stefano Domenicali and I were talking about the next agreement. What we would want and when we would want it.”
“We think it is in everyone’s interest, that of the teams, of us and of the FIA, to consolidate the success we have had together and show the world that we are moving forward together.”
The current agreement runs until the end of 2025 and Liberty Media are believed to be keen to extend this to 2030.
Investors lined up
Of course a longer guaranteed arrangement between the parties involved in F1 would add security to any potential buyer.
“We are very enthused about where F1 is now but [also] where it’s going as well. You look at the big revenue streams there, all have good direction,” added Maffei.
“In broadcasting we have increased fans and we have increased distributors who want to push the product, including new digital distributors and the like. We have promoters who are our partners.”
Despite denials to the contrary it appears Maffei and Domenicali are creating a persistent narrative which talks up the incremental value Formula One is creating in order to seal the deal with the next investors prepared to buy the commercial rights to the sport.
READ MORE: Mercedes detail “game changer” upgrade
What a moment for @danielricciardo! 🥉🙌#F1 #OnThisDay pic.twitter.com/FzfQ5dDbJf
— Formula 1 (@F1) May 11, 2023
Pingback: Saudi Arabia plans to acquire F1 | thejudge13 - Newswire - News that never stops·