Formula 1 chairman and CEO Chase Carey has warned that the sport’s owners Liberty Media is not in the business of handouts and will work with teams and partners to agree on value as it inches toward finalizing a heavily modified 2020 calendar.
The teams have been implementing significant cost-saving measures during the COVID-19 pandemic, and all are currently observing a mandatory shutdown of nine weeks. As F1 looks to start the 2020 season behind closed doors in Austria in July, Carey admits the deals that are in place with sponsors, promoters and teams might need revisiting, but says F1 won’t be handing out anything for free.
“I think we are working to achieve what we think would meet the expectations of our sponsors,” Carey said. “At the end of the day these are long-term relationships, most of our sponsors are long-term, and we’ll sit down to work a path forward. We want them to feel good about what we do but equally we have an obligation to deliver a certain value, and if we deliver it we expect to receive a value for it, but we will approach [them] as partners.
“I think as you get to promoters, with fans, certainly that does get much closer to the business as norm. It’s different cases. Was it a race meant for the spring and it’s moved to the fall? That obviously has implications in terms of selling tickets and the like, right now probably the ones on the schedule aren’t really selling tickets given the uncertainties, and probable no one is buying a lot of tickets, with everything that exists out there.
“It is not business as usual, but to the degree we have races with fans, is it a race with fans as you know it or is it a race with certain conditions around those fans? I think all those things we have to engage on. But the way we approach 2020, yes we have agreements in place, but these are long-term partners. They’ve all been very supportive, we want to be fair in addressing this, we want to get fair value and be fair to them, and make sure we’ve got the business in 2021 looking like we expected it to look four months ago, and have the same future we expected to have four months ago.
“So what we’re managing through is a short one-time event for us, we think the strength in this sport, the interest we’ve got, whether from fans or partners, will enable us to get back there.
“We will certainly expect to get fair value this year. We’re not going to play hardball, we will deal with things as partners, with a priority of making sure… it’s not giveaways. Whether it is the teams, promoters or sponsors, we’re not going to be handing out candy to everybody. We’re going to expect to be treated fairly, but we’re going to deal with it as adults, with the expectation that 2021 is going to look like the business we all knew four months ago.”
Carey said the prize fund that teams receive payments from will be significantly lower this year given the loss of income from not being able to race, but no decisions have been made over changing the way teams are paid at this stage.
“Prize fund is a contractual formula, so the prize fund is what it is, realistically we couldn’t unilaterally change it if we chose,” he said. “So since it’s a percentage of profits and profits will be down, the prize fund will be down.
“Would we do something to support certain teams? Again we’re not in the business of handouts, but that being said, we’ll engage with all our partners and figure out how we go forward in a way that makes sense for everybody. But the prize fund itself is defined by a contract as a percentage of EBITDA and as we know what that is I don’t think we really move to the next level until we know what that EBITDA is.
“Obviously we still have a lot of moving parts, we haven’t settled the calendar, we don’t know how many races will have fans, we have a wide range of potential outcomes on the ultimate prize fund. I think when we have a better handle on that we’ll see where we are and if it is appropriate or right for us to do anything. Again, whether with a team or with any of our other partners. But we expect to be dealt with fairly, and we expect them to deal with us fairly.”