Last Updated on March 13 2024, 12:36 pm

This time last year the Formula One paddock was consumed with the battle between the sport’s governing body – the FIA – and the commercial rights holders – Liberty media. During the race weekend in Jeddah it emerged a possible offer had been made in 2022 by the Saudi Arabian Public Investment Fund to purchase the sport for $20 billion in early 2022.

Liberty Media had acquired the rights to the sport in a $4.6bn deal which was completed in January 2017. Such a whopping price hike in just six years left F1 commentators and observers alike agog at the eye watering numbers.

 

 

 

$20bn F1 sale furore

The rights to monetarise F1 had been negotiated by Bernie Eccleston in 2000 and he was backed by CVC Capital Partners in a deal that saw Ecclestone as the figure head of the organisation until Liberty Media brought in their own team of people.

So a potential sale of $20 billion, therefore would represent a near five-fold increase on the purchase price of the sport something FIA president Mohammed Ben Sulaymaniyah found incredible.

Posting on social media, Ben Sulayem wrote: “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.”

His next thoughts were to inflame Liberty Media who sent a “cease and desist” legal  document forbidding his further comment on the matter.

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FIA to veto F1 buyers

“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,” said the FIA president.

“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.”

Of course the implications of such a deal could see tickets to F1 events sky rocket in price and the price the TV broadcasters would need to pay would also increase substantially.

As part of the deal struck with Bernie Ecclestone to lease the rights to F1 until 2110, the FIA had committed to absolve itself from any commercial matters and merely be the regulator of the sport.

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Ben Sulayem refuses to be cowed

Liberty Media’s shot across ben Sulayem’s bows reminded him of this stating: “The FIA has given unequivocal undertakings that it will not do anything to prejudice the ownership, management and/or exploitation of those rights.

“We consider that those comments, made from the FIA President’s official social media account, interfere with those rights in an unacceptable manner.”

Ben Sulaymaniyah was defiant in his response as quoted by AMuS he said: “The championship is ours. We have only rented it out.” A debate ensued as to whether the FIA retain a “Don King clause” which would give them veto over any potential sale to someone they believed unfit to hold the rights to Formula One.

Since Liberty Media acquired the opportunity to promote Formula One big changes have been brought to ironically what at times can be a slow moving beast. There are now three races in the USA, somewhere Bernie was desperate to crack and never did, and the viewership in the US is at an all time high.

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US sponsorship of F1 rockets

In the states where NASCAR is popular, Formula One now scores as highly with young viewers as it does with the historic form of stock car racing which emerged from the days of prohibition.

A report last November revealed partnerships with US brands currently comprises more than 45% of the total sonship across Formula One as a whole. The number of US companies involved has doubled to 100 in six years and at its current trajectory will dominate European sponsors in just two more years.

Since the war of words erupted between Ben Sulayem and Liberty over the $20bn sale value, the FIA president has suffered a number of attacks with one citing comments he made 20 years ago apparently disparaging towards women.

Further his decision to green light the Andretti application to join Formula One as the seventh team angered a number of senior F1 personnel and resulted in the commercial rights holders refusing to come to a commercial arrangement with Andretti.

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$40bn F1 price tag mooted

Put simply this would mean they are not to share in the price money each year and cold even be refused passes to enter the paddock. Its unclear how this matter will be resolved, but for now it appears as though Mario’s legacy will not include a Formula One team.

In his weekly “in-depth industry newsletter about motorsport” respected and longstanding F1 journalist Joe Saward suggests the reason the FIA president is suffering push back on all fronts from Liberty Media is “because the F1 group is unlikely to be sold for less than $40 billion.”

Saward amusingly refers to the cease and desist letter issued by Liberty to Ben Sulayem claiming his view has no actual basis in reality because “any individual or organisation commenting on the value of a listed entity or its subsidiaries, especially claiming or implying possession of inside knowledge while doing so” – “is a very bad boy and I don’t want Sacha and Renee [legal representatives] chasing after me with handcuffs.”

However Joe is usually a man in the know and its no co-incidence he has just spent the week talking to the great and good at the Saudia Arabian Grand Prix.

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Saudi want two F1 Grand Prix

Saudi Arabia has a race contract which runs until 2023 although the unveiled plans for a unique new circuit to be built near the Qiddiya project. The track was described by Top Gear as “pretty wild” as it will feature a climb to 108 metres around a Mario Kart sale corner named “the blade.”

Saward believes that Saudi promoters may well introduce the mega circuit before the contact for Jeddah finishes and “Saudi Arabia will try to get two Grands Prix by the end of the decade.”

Under the current Concorde agreement which binds the FIA, the teams and the F1 commercial rights holders, the European home of the sport has a protected minus eight races a year. Yet with Liberty Media’s plans to expand the sport to ever more glamorous locations who pay sky high fees to host a race, this year this sees just a third of the F1 calendar racing on much loved traditional circuits.

The Concorde agreement as re-signed every few years with the next due in 2025. It is likely the FIA will veto any plans to diminish racing in Europe any further and also may insist on restricting the number of events being held in the ever expanding Middle Eastern part of the calendar.

This may well be the next trigger point for renewed battle between the sport’s governing body and the cash hungry promoters who now run Formula One.

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