You would have been perfectly justified in thinking that the acquisition of Formula 1 by Liberty Media would prompt serious changes and when former CEO Bernie Ecclestone was released from his duties, you would have been telling your friends, “see? I was right, they are changing things.”
What you may also have been focused on is the changes to the control of the sport, the team impact on the sport and some of the more financially driven aspects of the players involved. This layer of F1 is something that fans at home quite honestly don’t see. It’s a deeper layer and politically motivated by those with agendas and serious financial investment in “the show”.
One team has been there since the beginning and taking care of that team has been something Formula 1 was keen to do over the last several years. Ferrari were the recipients of the historic team payments above and beyond what other teams got in prize money and while fans felt this was not fair to smaller teams, Ferrari understood their long-term commitment and continued commitment was critical to the sport.
When Liberty Media acquired F1, it was most likely aware of the importance of Ferrari’s long-term commitment to the series and as such, it is perhaps no surprise that they are the first team to divest its old position in F1 in favor of a new stock and cash offering that Liberty made to the teams as the Italian car company’s annual report says.
“as a consequence of the change of control, Ferrari exercised the options … and on 22 February 2017 received approximately $11.4 million in cash (including $2.7 million of previously undistributed dividends), 145 thousand Liberty Media Corporation shares and $911 thousand of Liberty Media exchangeable notes”.
Like they were more than 50 years ago, Ferrari is the first team to jump into the effervescent waters of Liberty Media’s new F1. As The Guardian article suggests, the other teams have an option to buy into the program as well but it seems Ferrari were the first.
Liberty Media is keen to expand their product, improve their fan base and financial return on investment as well as expand the US market. The US is the single biggest market for many of the teams and sponsors plastered on the side of their cars and is a huge market for Ferrari in particular.
The good news is that the US TV viewership increased last season to 13 million viewers with the Monaco Grand Prix the high-water mark. That’s a 15% increase for NBC Sports and some of that may have been born on the back of Haas F1’s entry to the sport.
Another interesting point is that the US market barged into the digital streaming portion of F1 at a rate of 10% which is the highest level in the world so it represents a good test bed for Liberty Media’s digital platform tests and monetization options for new media and distribution channels.
This brings up the point I’ve made several times about NBC Sports paying $3 million for the honor of covering F1 exclusively in the US and if there was a digital streaming option, would it be in conjunction with the NBC Sports digital online offerings or as a stand-alone of F1? Initially, my hunch would be that the digital streaming options would be as part of the host broadcaster in order to keep the value of the exclusive package intact.
There is also the time delta to consider as to why the US is the largest digital streaming market. The fact is, most of the races are happening when Americans are sleeping or struggling to shake the dreariness and blur of 4am mornings. The race times for F1 have always been keyed and pinned to the UK prime-time audience and at -5 to -8 hours GMT, the US has always been an afterthought as far as live F1. An errand for only the most dedicated F1 fans stateside.
Because of this start-time relationship, American tend to watch the event a few hours later than live. A ripe market and audience for a premier digital streaming product that offers media-rich content sync’d with timing and scoring and more. The challenge here is that broadcasters like NBC may not be willing to spend millions developing this digital platform having already paid $3m for the honor so it could be a joint effort between Liberty Media and the US broadcaster. Just a hunch.