MEDLAND: Everybody's scared of change

Silverstone, 2018 British GP. Image by Hone/LAT

MEDLAND: Everybody's scared of change

Insights & Analysis

MEDLAND: Everybody's scared of change

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Formula 1 has always been a political animal and that was never going to change, even with the departure of Bernie Ecclestone. It’s no shock that Liberty Media faces an extreme test of its ownership within the opening few years of its tenure.

The next set of agreements between the teams, the commercial rights holder and the FIA will perhaps the most significant development within the sport for the next five years. Coinciding with a planned regulation overhaul, 2021 is targeted as the year that Liberty really shapes F1 in the way it wants to.

And while it pushes on with what it wants to do with the sport, those who had been sitting somewhat comfortably are suddenly facing the possibility of being left behind. And that can lead to dissent, as seen on Monday in London.

Before we go on, a short timeline of the British Grand Prix’s contract history:

  • December 2009: After numerous public disagreements with Bernie Ecclestone – who in 2008 even announced a deal to take the race to Donington – Silverstone finally signs a new 17-year contract. Running until 2027, it includes a significant escalator regarding the hosting fee.
  • January 2017: Liberty Media completes acquisition of Formula 1
  • July 2017: Silverstone activates a break clause in its contract that makes 2019 the final race of the current deal, saying the terms made the race “not financially viable”.
  • As of January 2019, a new deal has not been agreed.

So in many ways it’s not surprising to see the Formula One Promoters’ Association (FOPA) statement expressing concerns with the way Liberty is running the sport, given that the FOPA chairman, Stuart Pringle, is also the British Grand Prix promoter.

Liberty purchased F1 with a number of contracts already in place, and the races generate the sport’s largest single source of revenue. So the sport’s owners are hardly going to bend over backwards when promoters want to negotiate to reduce that revenue..

This is nothing we haven’t seen or heard before during Ecclestone’s era. In fact, the way a disgruntled promoter headed straight for a Fleet Street newspaper – one with an enormous global online presence – to distribute their comments on Monday is also an approach right out of the Ecclestone playbook.

British GP promoter Stuart Pringle. Image by Gold and Goose/LAT

But then, for all the talk of a new dawn, so has been Liberty’s work when it comes to dealing with the promoters.

Liberty has been fighting back against the circuits just the way Ecclestone would have. Already carrying a 21-race calendar this year – matching the largest ever – Vietnam has been confirmed for next year. One more space taken.

The Miami project – while not looking likely – was made public, and plans to add another U.S. race are often discussed. Reports this week suggested the Philippine Grand Prix title has been trademarked, while recently the sport said it “would love” a second race in China.

All of the above makes it seem like there is huge interest in hosting a race, and demand outweighs supply. So if you’re Silverstone, for example, and don’t agree a new contract, then Liberty claims to have races waiting in the wings to take Britain’s place on the calendar. Hence the need for those races most at risk to publicly put the pressure on.

You can’t escape Ecclestone’s influence. The FOPA statement also criticizes F1’s move away from free-to-air broadcasting. This is a particularly significant subject in the United Kingdom, because this year Sky Sports takes exclusive rights to F1, with Channel 4 only getting the British Grand Prix live as part of a late amendment. The original deal? Done by Bernie.

So much has been invested by a number of different stakeholders in F1 for a long-term period – the Sky deal runs until 2024 – that any significant changes Liberty wants to make are always going to be met with skepticism or opposition from somewhere.

As long as Liberty has a different vision for the sport – and that doesn’t necessarily mean it’s for the better – it will be faced with those scared of change.

If Liberty were to cave to promoters’ demands and reduce fees, revenue would drop. Promoters would say they are happy with their new deals, but then the teams would criticize the lower amounts they are receiving from the sport. The problem wouldn’t be fixed – the point of contention would simply shift.

Zak Brown’s comments about Haas and B-teams had as much to do with what’s good for McLaren as what’s good for the sport. Image by Hone/LAT

The teams are also a fickle group. Those currently successful – Mercedes and Ferrari – want to protect their advantage as best they can. Those less so – such as McLaren and Williams – want a reset to allow them to fight at the front again.

Zak Brown recently talked about Liberty needing to address the extent to which an outfit can be a B-team, given the technical, political and sporting ramifications.

“Our belief is a B-team will never be able to compete with the A-team, and therefore while maybe going to that business model in the very short-term could make you more competitive quicker and be fiscally a better proposition, I think you are giving up on any hopes of racing as a championship contender,” Brown said.

“That is McLaren’s intent, and therefore going for B-team status would be throwing in the towel of being a championship contender. And therefore we think it is critical that Liberty, in the new Formula 1 world, addresses that so all teams can have a fair and equal chance to compete for the championship on a more level playing field.”

But if McLaren is never going to opt for B-team status, then surely another team’s decision to adopt that business model should mean it is less of a threat to McLaren in future? Realistically, if McLaren was currently fighting for championships and had other teams wanting to closely align with it, then the B-team model would be just fine, as long as McLaren was the A-team.

Like the promoters’ stance, it’s about self-interest. It’s understandable, but it isn’t taking into account the overall impact on the sport as a whole.

That’s why Liberty has to dig in and implement significant changes if it wants to retain control. Allow itself to be bullied, be it by promoters or by the teams when it comes to the agreements beyond 2021, and the sport really will lack direction, because those doing the bullying are predominantly focused on their own interests.

Take on board what is being said? Sure, but then stand by your own decisions. As the overall manager, your job isn’t to be liked. It’s to deliver results. Like everyone involved, Liberty has its own interests to focus on, the biggest being the overall success of the business, which won’t solely be defined by sporting aspects.

If Liberty stands firm, then expect to hear plenty more dissent from those who aren’t getting exactly what they want. That’s not necessarily a bad thing.

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