Having taken over the reins of Formula 1 from CVC Capital, Liberty Media is set to revamp it the ‘American way.’ Will they be successful in turning around a sport that has clearly lost its way?
It’s no secret that Formula 1’s popularity has dwindled over the past few years. Fans have grown disillusioned by one-team domination, while the health of the grid has itself deteriorated.
The 2014 regulations haven’t pleased anyone but the automotive manufacturers, who have steadily increased their control over the sport.
The core of F1’s current troubles lie in its skewed revenue distribution system, which unfairly ‘rewards’ selected teams for their “historic” status. This has left nearly half the grid with financial issues, which, in turn, has had a detrimental effect on their competitiveness.
F1’s decision making body, the Strategy Group, also seems inept to the task it has been bestowed with. It has left the FIA with little authority over the decision-making process, allowing selected teams to make decisions that best serve their own vested interests.
However, all seems set to change under F1’s new owners, Liberty Media. The American media house is taking a more hands-on approach, which is in stark contrast to CVC’s ideology.
Under the previous regime, Ecclestone was given the freedom to run F1 the way he wished to, with CVC exclusively interested in eking out as much money as it can. No efforts were made to invest in the sport or adapt it to the changing business environment.
Liberty, meanwhile, has stated its intention to exploit F1 to its potential. And to achieve this objective, it has decided to take things in his own hands.
Ousting Bernie Ecclestone from the sport he has built into one of the world’s most popular TV spectacles is a big coup for Liberty Media. Equally, getting highly-reputed executives to replace the 86-year-old shows their intention to take F1 to greater heights.
Chase Carey is a well-known figure in the media industry, having previously served as vice-chairman of Rupert Murdoch's empire, 21st Century Fox.
Liberty has also separated the sporting/technical aspects of the sport with the commercial one, by hiring two separate leaders to head each department.
The arrival of Ross Brawn has given the whole paddock something to cheer about. Brawn has the foresight F1 needs, for it has been weighed down by short-term thinking for too long.
Perhaps the best example of F1’s inability to think five-years down the line is the 2017 rule book, which was hastily introduced. While there is no doubt that the new generation of cars will be more spectacular to look and harder to drive, there is no guarantee that the show will be better in the forthcoming season.
In fact, no consideration was made to improve overtaking opportunities in Formula 1 when the rules were devised.
With Brawn now on board as F1’s managing director, one can hope that F1’s next set of regulations will be well thought of.
“[F1] needs to have a plan, and one of the frustrations for me is that there never seems to be a plan,” Brawn told ESPN last year.
“Everything is reactive. I think it would be good for Formula 1 to try and formulate a strategy and a plan of where it wants to be in three or five years time.”
On the commercial side, too, Liberty Media has some baseline plans, although they would be harder to implement than some of those mentioned above. The American company has indicated that it might scrap historical payments to teams like Ferrari, ensuring a more equitable revenue distribution up and down the grid.
Should such a plan see day of light, the financial stability of the grid will vastly improve. Moreover, one can expect the grid to converge, ensuring better racing and higher chances of surprise results.
Equally crucial is the appointment of former ESPN executive Sean Bratches, who will foster the sport’s revenue while coming up with new ways to market it.
When Ecclestone was at the helm, F1 didn’t have a marketing department of its own - a fact that might baffle many who are new to the sport, or come from a business background.
One can only hope that Liberty will be able to market F1 better than it was under the Ecclestone/CVC regime.
Another major complaint raised by fans under Ecclestone’s era was the billionaire’s ‘Go-East’ strategy. The 86-year-old was keen on taking F1 to countries which were willing to pay astounding hosting fee, irrespective of their fan base. The strategy had mostly backfired, with Turkey, India and Korea all dropping out of the calendar after a handful of races.
But Carey has made it clear that he sees huge value in F1’s traditional values in Europe, Brazil and Japan - and will ensure these races stay on the calendar.
The 62-year-old is also keen on exploiting the untapped potential in the US, something Ecclestone couldn’t do despite the much-mooted race in New Jersey.
Moreover, Liberty wants to turn each grand prix into a week-long festival by organising different events around a race.
"We only have one race in every country and we should make these week-long extravaganzas, with entertainment and music and events that capture the whole city, not just events at the track. That is an opportunity for us over time to grow that dimension of the business,’’ Carey said.
Liberty Media has an arduous task in hands and it has made some big promises to revamp the sport. Only time will tell if they are successful in achieving their objectives. However, there is little doubt that F1 is set to undergo massive changes, which can only be a positive thing.
by Rachit Thukral