F1 has a new owner: here's everything you need to knowLiberty Media buys controlling stake in Formula One for $6.25bn
Formula One has been sold to American media giant Liberty Media in a deal valued at $8bn (£6.25bn), one that heralds the biggest transformation in the sport for almost 40 years. The head of the entertainment and communications group, the publicity-shy John Malone, has purchased a controlling interest in F1 from CVC Capital. Chase Carey, the executive vice-president of 21st Century Fox and one of Rupert Murdoch’s long-serving and most dedicated lieutenants, has been appointed chairman of the Formula One Group. Bernie Ecclestone, the current and long-standing chief executive, will continue as F1’s de facto boss.
Bernie, of course, is the man who turned F1 from a cult pastime into a global phenomenon matched only in audience reach by World Cup football and the Olympics, enriching himself – and many of F1’s grandees – in the process. He’s also the ultimate survivor, but insiders reckon the Liberty Media takeover will ultimately bring the reign of the remarkable Mr E to a close.
The nuts and bolts of the deal are as follows: Liberty has paid £3.3bn (the overall price includes £3bn of debt) for F1, initially to acquire an 18.7 per cent stake before assuming ownership of the rest once the regulatory bodies have approved the package. This is expected to happen by the end of next year.
Liberty Media’s president and CEO, Greg Maffei, had this to say: “We think our long-term perspective and expertise with media and sports assets will allow us to be good stewards of Formula One and benefit fans, teams and our shareholders. We are excited to become part of Formula One.”
The question is – should we be? Well, we reckon it’s good news. You’d struggle to find anyone in the paddock at a Grand Prix with a good word to say about CVC, which appears to have had zero interest in its investment beyond the amount of cold hard cash it was grinding out of it. A lot, as it turns out. CVC reportedly paid around £1.5bn for a majority stake in F1 back in 2006 and, according to Forbes, has made £6.1bn out of the arrangement. This is a return of 751.3 per cent, a stunning figure even in the world of venture capitalism. Our issue is that barely any of that was re-invested into the sport, which, while no-one’s idea of a socialist state, has alienated many of the faithful by prioritising races in countries whose governments could afford to hold them, to the detriment of the spectacle itself, and failing to nurture smaller teams by divvying up the available prize money in an inequitable manner.
According to some sources, the global television audience has dropped from 600 million to 400 million since 2008, and Ecclestone’s well-known distaste for social media and the internet – primarily because he fails to see how they can be satisfactorily monetised – has allowed motorsport’s premier league to become irrelevant to a generation that probably thinks Jochen Rindt is a German DJ with a Vegas residency.
It’s ridiculously early days, but Liberty Media is in the entertainment business, it understands sport, and it has signalled its intent to expand F1, improving its promotion via digital platforms, the race calendar, and broadening the sponsorship and commercial arrangements. F1 is a business, first and foremost, but it’s one that relies on people actually being interested enough in what’s happening to watch it. On which basis, expect some big changes…
Fortunately, Chase Carey has also acknowledged the importance of F1’s ‘traditional’ venues, while eyeing a bigger prize. “Building the sport in Europe, building on that foundation, has got to be second to none. In the longer term, markets like the US and key Asian markets are opportunities to develop. There are huge audiences there. If we reach those fans using digital platforms and some of the tools that haven’t been exploited aggressively, we can build a whole new generation of fans.”
Liberty is also encouraging the teams to be part of the investment, which signals a more inclusive approach compared to Ecclestone’s declared pleasure in starting fires just so he can then put them out. On the other hand, it could be a case of being careful what you wish for. F1 has long been a hub of ferocious self-interest, and many would argue that it takes a man of Ecclestone’s singular talents to keep a show as complex as this on the road.
These are interesting times.