Liberty Media takeover casts shadow over F1 new dawn
For the first time in 40 years, an F1 season gets underway without Bernie Ecclestone at the helm. Liberty Media has promised a new era, but an Anti-Trust investigation and a series of gaffes have raised many questions.
The new owners promise an F1 that embraces social media and on-demand TV services in the hope of attracting a younger and more dynamic audience. There is also talk of virtual reality playing a part in viewer participation. The overarching desire is to bring fans closer to the action than ever before.
The litmus test for a sport's popularity is of course TV viewing figures and, on Bernie Ecclestone's watch, F1's audience has struggled to sustain growth in recent years. The average age of a fan now is over 50. More than anything, fans want to see excitement on the track and the key challenge facing Liberty is to make F1 appeal to the masses again - and not simply with "faster and faster cars".
Liberty Media have promised to embrace social media and make the sport more accessible to a younger audience.
"Liberty has spoken about using social media to better effect and changing how it engages with fans. This is an area with enormous potential where the sport can widen its appeal and reach out to younger fans," Friedhelm Lange, of sports consulting and research company Nielsen Sports, told DW. "One method to engage stronger with fans could be to provide access to fans from the pit lane," Lange explained.
"They will, of course, be careful that none of the team’s secrets are revealed, but opening up the team garages to give fans behind-the-scenes access is something that would be hugely popular and would help boosting the connection between fans and the teams. There are innovative and creative ways to reach a new, younger audience."
To Liberty's credit, paddock passes will be available to the public starting this weekend in Melbourne, with recently-appointed F1 sporting boss Ross Brawn admitting: "It's a fact people need to get more for their money." The group has also announced the launch of 'F1 Experiences' to help bring fans even closer with what it calls 'exclusive access'.
But it is ironic that a sport that prides itself on pushing the boundaries of technology has failed to capitalize on digital media, which could dramatically broaden its appeal. F1 chief executive Chase Carey and Liberty owner John Malone - who is known as the 'Darth Vader of Wall Street' for his cut-throat methods - are aiming to succeed where Ecclestone failed.
F1's new CEO Chase Carey in conversation with Red Bull driver Daniel Ricciardo.
'Conflict of interest'
Rather than entering the new season full of optimism however, Liberty are engulfed in a dispute over the very deal that put them in the driving seat. It emerged recently that motor sport's governing body FIA owns a 1% stake in F1's parent company, which it has agreed to sell at a significant profit.
"In 2013 the FIA bought a 1% stake in Delta Topco and although it was told it was worth $70 million (64.9 million euros) at the time, it was offered it for the bargain-basement price of $458,197.34," F1 financial expert Christian Sylt told DW.
"The FIA bought the 1% stake from Delta Topco itself, which was controlled by the private equity firm CVC. The stake came with the crucial condition that it could only be monetized in the event of a sale by CVC and this required the FIA's approval. CVC netted $3 billion for its 38.1% stake whilst Liberty paid $80 million for the 1% leaving the FIA with a $79.5 million profit after deducting the purchase price."
The deal has been scrutinized and subsequently criticized, not least by British MEP Anneliese Dodds, who claimed it appears "extremely likely" that the FIA broke an agreement struck with the European Commission in 2001 regarding commercial conflict of interest.
On top of that headache for Liberty, there also remains the questionable financial relationship between teams and the Strategy Group (made up of Mercedes, Ferrari, Red Bull, McLaren, Williams and the next best team from the previous year), with smaller teams such as Sauber and Force India alleging that the field is rigged in favor of the financially powerful. Liberty clearly has a problem before the season's first race in Australia has even started, and both aspects of the Anti-Trust investigation could turn ugly for Liberty.
While Liberty is yet to address what they plan to do about the Strategy Group, the new owners announced in February that they would be offering teams the opportunity to give up their stakes in F1 in exchange for stock in Liberty - a move to help fund the expansion and move away from the "old boys" ownership structure that currently exists. Thus far, the only team to take Liberty up on their offer - and probably the only team financially capable of doing so - is Ferrari. The overall response to Liberty's offer of "an induced change in how we operate together" has been lukewarm at best.
Then there is Greg Maffei. Liberty's chief executive has been shooting from the hip before an engine has even been revved this season. He has already suggested Liberty might scrap the Grand Prix in Baku, claiming it does "nothing to build the long-term brand and health of the business."
Maffei also angered American broadcaster NBC, describing the $3million paid by the broadcaster for F1 rights in the US as a "popcorn fart." His remarks were startling not only because chief executive Chase Carey has since claimed that the management of F1 won't be played out in public, but because of Liberty's claim that they want to grow the sport in the US.
Cosying up to the likes of NBC rather than alienating them would surely have been the recommended course of action. Liberty could even offer US broadcasters the TV rights for free, in exchange for turbo charging its marketing of F1 in the US, but that scenario seems a long way off.
Such gaffes have not helped Liberty's cause and, on the eve of F1's supposed bright new era, there are more questions than answers about how they will shape the future of the sport.