F1 takeover by Liberty could bring meaningful change for the masses
Change is in the air for Formula One. The has dominated discussion since and understandably given that it has potentially huge ramifications for the future. About which there is optimism, so much so that there are now ideas being floated that might be considered positively revolutionary.
Pleasing as it might be to consider Lewis Hamilton noting post-race that he wanted to thank the team for working so hard on his car, making the right strategy calls and helping him deal mercilessly with a group of revisionist collaborators, the drivers will not be manning barricades. Indeed, although Mercedes suffered here under the lights of Singapore last year, unable to make the super-soft tyres work, with Sebastian Vettel , the Briton is confident that his team has identified and dealt with the issues and expect no repeat of the difficulties. On track, with resources now shifted to building the 2017 cars, radical transformation will have to wait until Australia next year at best.
Off track however, what is to be done? Outside the sport, the reaction to Liberty’s purchase and its subsequent announcements of plans to expand it around social media, promotion and marketing has been better than one imagines they expected. The company’s stock price rose by 15% on Tuesday as the volume of shares traded increased dramatically. The money men like it, as well they might given that CVC had made $8.2bn in 2014 since its initial investment of $2bn in 2006. But it is also this economic engine that could be the force for real change.
One of the most pressing issues of recent years has been the very survival of the smaller teams and central to that is the distribution of prize money between competitors. Sauber and Force India have lodged an official complaint with the EU over the current system of dividing revenues that favours the big five – Mercedes, Ferrari, Red Bull, McLaren and Williams – over the rest.
The issue is raised with positively Stakhanovite zeal at the Friday conferences attended by team principals and always provokes the same responses. The smaller teams think it is unfair and the big boys are – in principle – in favour of them receiving more, as long as it does not come out of their share. The vested interests involved created an impasse that has shown no sign of being broken and by which the previous owners were entirely unconcerned as long as it did not affect their bottom line.
While Liberty have said they have no plan for the time being to review the current payment structure, there is still a sense that change is in the air. They have proposed that teams will have the opportunity to participate in the investment in F1, which, although short on detail, has been cautiously welcomed. Might the teams go further though, might they use this as a chance to effect real change, for the long-term benefit of F1?
“The sport has been crying out for a very long time for something like this to happen,” Anthony Indaimo tells me.
Very few will recognise Indaimo’s name, but his opinion is worth bearing out. He is head of corporate at Withers, a law firm with an international sports practice across 18 offices globally involving F1 teams and drivers. It has been part of the sport since 1986, when it arranged the sale of Tyrrell to Benetton, and has been involved in negotiating F1 TV deals and also worked with BMW Sauber, the original Renault F1, Lotus, Marussia, Caterham and now represents two of the current top drivers as well as the modern Renault Sport Racing. They reviewed the current bilateral agreements that cover the teams’ payments and are in place until 2020 and, crucially, were involved with the Teams Association (Fota) – the last time they acted collectively and successfully, when in dispute with the FIA over regulation changes in 2009.
“The dynamics of the different relationship [with Liberty] might force the teams to act together in a way that they wouldn’t be able to do but for this change,” Indaimo explains. “I say this because nobody thought that Fota would be formed or that it would be successful. We were intimately involved with that so we know what happened. This acquisition might prove to be a similar catalyst.”
The redistribution of wealth in F1 centrally concerns three facets. Cost-cutting – which has never worked – redividing the current revenues and increasing the overall revenues so each team receives more. Liberty clearly has plans to achieve the latter but a redivision might also be possible.
Indaimo says: “What you might see is a couple of the top teams sitting in a room and thinking: ‘The financial agreement expires in 2020, that’s set in stone but what should we be doing now to really leverage our position and make our voice heard.’”
This is a collective muscle-flexing that is more than possible, he believes. “In 2014, F1 revenues were £1.8bn approximately and 50% is taken by the owners. There are only a couple of variables you need to discuss and negotiate so that everybody gets more. Prize money to the teams should be 55% as opposed to 50%. A 5% differential of £1.8bn is a lot. Then you also look at the revenue pie increasing and there is more for everybody.
“These are the discussions that need to be had and will be had in the not-too-distant future.”
Against all this is the hard fact that acting in concert in recent years has been painfully hard, as the protracted and often fruitless strategy group meetings on regulation changes have proved. However, the vested interests involved then were less easily solved. Since in this case the idea of fairer payments has already been agreed as long as no one is worse off, acting together would have no direct impact on the racing but would be of benefit to the sport as a whole.
“This might be the time when the teams put their differences aside and come together for a common purpose,” Indaimo says.
It’s an idea at least. And that is where all good revolutions begin.
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