F1 sold to Liberty Media. Bernie Out?

[Andres125sx]

The introduction of those tracks surely was great for MrE bank account but, do you think that was good for F1 or we fans?

Many of those new tracks were in emerging markets, so yes, it is both good for F1 as well as it's fans.

While MrE bank account has continued raising, F1 audience has continued dropping. MrE bank account does not tell the whole picture bhall

Neither does audience numbers, because together with the drop in audience, the revenue has increased.

Thanks to the increase in fees, both for tracks and TVs.

But if people buying those tickets and subscriptions continue the drop trend it´s just a matter of time revenues start decreasing too.

What will they do once audience is so low revenue can´t be compensated increasing fees? Moreover, before reaching that point there will be a cascade effect. If audience is low, sponsors are no longer interested on paying huge ammounts of money. No money, and F1 is done

[Andres125sx]

The idea that the "Ecclestone business model" might be a stumbling block with promoters...

Who exposed that idea? I´ve never read that.

That´s what MrE is good at. But he´s too old to know what F1 fans want. At least new fans (read, younger than 25 years old), and that´s a huge problem for someone in his position.

How many F1 fans do you know below 25? I know none. There will be but F1 is supposed to be the pinnacle, what people interested in motorsports is most interested to follow. Right now F1 is far from that when you talk with young people


Do you think MrE bank account, his unquestionable power, or his awesome negotiating qualities will be worth for F1 if that brings toghether this worrying tendency to decrease audience and ignore new fans?

How long do you think F1 will survive if only we traditional fans are interested but no child bother to watch? How MrE qualities will solve that? He´s failed in that task repeatedly in last decade at least

[wesley123]

Thanks to the increase in fees, both for tracks and TVs.

But if people buying those tickets and subscriptions continue the drop trend it´s just a matter of time revenues start decreasing too.

What will they do once audience is so low revenue can´t be compensated increasing fees? Moreover, before reaching that point there will be a cascade effect. If audience is low, sponsors are no longer interested on paying huge ammounts of money. No money, and F1 is done

Simple, as has been done before; Go to another venue.

Ticket prices are the organisators' problems afaik, to hold the venue is just a fixed sum. If the track then can't turn even or make a profit is none of F1's concern.

[djos]

Thanks to the increase in fees, both for tracks and TVs.

But if people buying those tickets and subscriptions continue the drop trend it´s just a matter of time revenues start decreasing too.

What will they do once audience is so low revenue can´t be compensated increasing fees? Moreover, before reaching that point there will be a cascade effect. If audience is low, sponsors are no longer interested on paying huge ammounts of money. No money, and F1 is done

Simple, as has been done before; Go to another venue.

Ticket prices are the organisators' problems afaik, to hold the venue is just a fixed sum. If the track then can't turn even or make a profit is none of F1's concern.

Iirc, the track doesn't even get ad revenue from signage etc, afaik they get a pretty raw deal considering they should have a stack of revenue streams from holding a race but Bernie cut them out of most of them.

[Moose]

If F1 is going to be successful in USA you need an oval race . Michigan or Texas would have been nice venues

Nope - if F1 is going to be successful in the USA there's only one single action that needs to be made. Don't put the races on at 5am (or 8am depending on the coast you're on).

If the races started 4 hours later, F1 would instantly be more popular in the USA.

Most folk would have a DVR (eg TiVo), this makes the broadcast time less of an issue imo.

Man, that's such a year 2000 solution. There's a simpler solution in the modern era (which thankfully the noises liberty media are making make this sound plausible) – make races available online to stream, time shifted.

At $10 a race (qualifying and practice included), Liberty could make a killing on that.

[djos]

Yeah no way I'm paying $10 a race, massive rip off when other content services are less and deliver more.

I'd pay $10 a month tho, that's way more reasonable!

[zeph]

I'd pay $4 or $5 per race. Or $80 per year.

But I agree DVR is just not a viable proposition in 2017. Streaming is what it has to be. Available live and anytime, anywhere after the event.

[Andres125sx]

Thanks to the increase in fees, both for tracks and TVs.

But if people buying those tickets and subscriptions continue the drop trend it´s just a matter of time revenues start decreasing too.

What will they do once audience is so low revenue can´t be compensated increasing fees? Moreover, before reaching that point there will be a cascade effect. If audience is low, sponsors are no longer interested on paying huge ammounts of money. No money, and F1 is done

Simple, as has been done before; Go to another venue.

They´ve done that for the past 15 years and they´ve solved nothing. Audience continue decreasing despite there´s new venues at countries where there had never been before.

New venues at Rusia, Arab Emirates, Malaysia, China, Singapore, Azerbaijan, Bahrain... have not been enough to compensate the audiece drop. Even with all those new countries, audience continue falling. That means something about audience in ´traditional´ countries, means that A LOT of people is no longer interested in F1 and is not watching anymore. Means that there´re more people on traditional countries who did follow F1 but is no longer interested, than new people on new countries that start watching. Simple maths

If they want F1 to become a toy for petrodollar millionaires they´re doing great. Otherwise F1 is on a serious problem

[wesley123]

They´ve done that for the past 15 years and they´ve solved nothing. Audience continue decreasing despite there´s new venues at countries where there had never been before.

They solved nothing because there is nothing to solve. There is no problem here. F1 gets a fixed amount from the organisators to hold the venue, if then only one person shows up in the grandstands is, just like turning a profit, not F1's problem

New venues at Rusia, Arab Emirates, Malaysia, China, Singapore, Azerbaijan, Bahrain... have not been enough to compensate the audiece drop.

But that's not really a problem in their business model.

That means something about audience in ´traditional´ countries, means that A LOT of people is no longer interested in F1 and is not watching anymore.

Are they not interested because of F1 itself, or because of their expectations?

Means that there´re more people on traditional countries who did follow F1 but is no longer interested, than new people on new countries that start watching. Simple maths

I do not doubt that. I fully agree; there is less viewership. But between that decline and F1's revenue, is that really a problem? While viewership has dropped, F1's revenue has increased. And in a system with shareholders, revenue is of importance.

If they want F1 to become a toy for petrodollar millionaires they´re doing great. Otherwise F1 is on a serious problem

F1 would have had a problem if there was an alternative, which there isn't. The calendars (mostly) do not conflict, which means that even if there is an alternative, F1 still has all their reach.

[ChrisM40]

Revenues might have increased, but only because there are now 20+ races and not 16. The new tracks have largely done poorly, with some pulling out, closing or going bankrupt. The middle eastern races are little more than ego trips for the resident dictators (sorry, Royals). Eventually new people wont be interested any more.

Even the traditional, older, and frankly more entertaining, better tracks are hanging on by a thread. There is no hope for the new dull tracks after a few years of initial interest.

TV coverage needs a huge overhaul. I can no longer watch F1 live in the UK, because Sky costs a minimum of £58 a month (for little else i would watch), and Channel 4 is only 50% live. Its tragic.

[zac510]

For all the people who are saying that viewing figures are dropping and so forth, can you cite any sources and references for that? Otherwise your argument carries no credibility.

[djos]

For all the people who are saying that viewing figures are dropping and so forth, can you cite any sources and references for that? Otherwise your argument carries no credibility.

They've prolly dropped due to the F1 ending up on Pay TV in many countries that traditionally had it on FTA, eg UK, Australia etc.

[ME4ME]

For all the people who are saying that viewing figures are dropping and so forth, can you cite any sources and references for that? Otherwise your argument carries no credibility.

Here is some info on that:
http://www.f1fanatic.co.uk/2017/01/24/f ... pped-2016/

[zeph]

I read an article one or two years ago that stated not only was viewership declining, it is rapidly aging as well.

F1 can act like it doesn't care because revenue is steady or up, but that is just sticking your head in the sand. Problems like that are not going to go away.


But as much as I enjoy it, I'm not excluding the possibility that maybe it has had its day and it is becoming increasingly incompatible with modern times.

[bhall II]

Liberty doesn't have a solution to that problem, nor is the company necessarily looking for a solution to that problem.

It's clear to me that Liberty Media's plan for F1 is to turn it into something of a loss leader.

The purchase is being fuelled with more than $1bn of cash together with payment in Liberty shares and $351m of debt. Liberty is also taking on F1’s existing $4.1bn in bank debt – meaning Delta Topco has an overall enterprise value of $8bn. It is high-octane and there is good reason for that.

[...]

To insulate against inflation, the key [licensing] contracts contain an escalator clause which increases the amount paid by 10% annually. Only 10% to 20% of them need to be renewed annually as they have an average length of around five years. It gives F1 contracted revenue of $9.3bn up to 2026 which makes it very different to other sports because its financial performance is not related to the events on track.

In other words, Liberty is guaranteed to pocket at least $1.3 billion over the next ten years as long as current revenue streams hold. How does Liberty plan to address that?

We've got to find solutions to make all the promoters have an easier time of running a race. That doesn't involve just reducing the fees because that is simply not the direction that we need to go in. We want to find ways of making a race better value for a promoter so he can make more money up the front and can afford his fees at the back end, not just keep reducing the fees at the backend. I'm not an expert, but that's where I'm optimistic that the expertise of Liberty Media and the people they are bringing in -- Chase [Carey], Sean Bratches and other people - will be able to look at that and put effort and work into doing that.

Austin, for instance, had Taylor Swift on the Saturday night and it was a great success. Then you get fans who may not be big race fans but they are Taylor Swift fans and they see the race as well and you start to get this cross over. Liberty Media have a large shareholding in Live Nation, which is a very important concert promoter, so those cross links come in there and they want to be able to help promoters.

(Incidentally, Chase Carey was COO at News Corp during the "phone hacking scandal" in 2011.)

Swift said the crowd for the show numbered 80,000 and gazing out across the massive throng that filled the field in the middle of the track, the figure seemed entirely plausible. Unlike past years when the Formula One musical entertainment has been a side attraction to the main event, many fans clearly shelled out for $150 three-day race passes specifically to see Swift. (There were no single-day Saturday general admission tickets sold.) Around 3:30 p.m., as the day’s race activities were beginning to wrap up, distinctively Swiftian crowds, loaded with young girls aplenty, were boarding shuttle buses headed toward the track.

(Also, Liberty chairman John Malone's business tactics prompted Vice President Al Gore to dub him "Darth Vader.")

Liberty is not here to do anything about F1's core concerns, which are our core concerns as fans. Liberty just wants grands prix to keep churning out cash by any means necessary, because Liberty's core business--cable--is in rapid decline.

For what it's worth, I was initially very excited about the prospect of Liberty taking on F1's challenges. So, this isn't just a knee-jerk reaction on my part.