Five Years Later - How Has F1 Fared Under Liberty Media?
In January 2017, the FIA gave the green light for a controlling stake of its flagship championship, Formula 1, to be sold to the American media company Liberty Media. The firm already owned 19.1% of the sport’s shares, but the governing body’s move meant that it could acquire the 35.5% stake owned by the private equity firm CVC.
This wasn’t the first time that Formula 1 had changed hands. It was the exclusive domain of the FIA and its subsidiary FISA until a deal was struck between Bernie Ecclestone (the head of the Formula One Constructors Association) and the governing body in 1987.
The deal allowed Bernie to create the company that’s now known as Formula One Management (FOM) which would receive 30% of the revenue from selling television rights. In 1999, a share of FOM was sold to an investment bank, while CVC reportedly spent $2 billion to buy its stake in 2006.
However, Liberty Media’s purchase of FOM was different. Unlike previous transactions, Bernie Ecclestone was stripped of his decision-making powers, giving the new owners the freedom to make big changes to F1.
A Changing of the Guard
This was a freedom that they quickly took up. A new team of executives was installed, including many famous names within the sport such as former team technical directors Ross Brawn and Pat Symonds and ex-Ferrari team principal Stefano Domenicali.
This new team quickly set out to modernize the sport and make it more sustainable. This required reversing many CVC-era decisions, such as the constructors’ payment structure that made big money for large teams and pushed the smaller ones to near bankruptcy.
Another change was to increase the number of commercial partnerships that Formula 1 signed. Under Ecclestone, there were only a handful of sponsors, almost all of whom were targeting older and wealthier men, perhaps the most notable of these was Rolex.
Chuck Carey, the first CEO under Liberty Media compared F1 to NASCAR to demonstrate how few sponsors the former has. In the American series, cars are completely covered in sponsor logos, while many more brands can be seen on the sides of the circuits and on the TV coverage.
Early deals that were struck included one to name Amazon Web Services its “Official Cloud and Machine Learning Provider”, with the tech giant helping to collect new data during races to display to television viewers.
After this, F1 leveraged this information by partnering with an iGaming data company. This allowed sportsbooks to begin offering more markets for F1 races, including in-race bets. This helped to increase the number of fans that are interested in placing wagers on Grands Prix, especially in the US where free bets and other offers are available in abundance.
More recently, the sport has penned more local sponsorship deals, such as one with Ooredoo for the Qatar Grand Prix.
Attracting New Audiences
Under Bernie and CVC, F1 had neglected younger audiences for many years. They saw older fans as more important since they had more cash and could afford the premium products that their sponsors sold.
However, this short-term approach neglects the fact that their older audience will dwindle over time and a new demographic is needed to replace them. Additionally, large markets in Asia, Africa, and the United States were not well served by the sport.
Liberty Media has taken several steps to change this. The first has been to create Drive to Survive, a documentary series on Netflix that helps to show the human side of F1. It’s also devised a new set of rules for 2022 that are aimed at improving the racing action, experimented with innovations like “sprint races”, and added new venues to the calendar.
In 2021, ESPN reported that it saw its viewership of F1 races increase by 54% on 2020, while the US Grand Prix attracted an average of 1.2 million viewers, the highest figure the company has seen since it began airing races in 2018.
In many respects, Liberty Media has made a success of its purchase of Formula 1. There is still a lot of work to do though, and until we see the first few races of 2022, we won’t know if its major rule changes will have worked.
That said, it is clearly taking a long-term approach to the sport, so we can expect much more from it in the coming years.