Veteran Formula 1 ringleader ‘uneasy’ about new owners, but who could they bring in to replace him?
Bernie Ecclestone, who has maintained a bulletproof position at the helm of Formula 1 for 40 years, is on the verge of leaving the sport after it was bought for £6bn by Liberty Media.
The US company agreed a takeover last week and has already appointed Chase Carey, the vice-chairman of 21st Century Fox, as executive chairman. The plan is for Carey to work alongside Ecclestone, at least initially.
Liberty are keen to make use of Ecclestone’s expertise. But there are fears the 85-year-old may find it hard to work with the new owners, who want to make radical changes to the way the sport operates.
“Ecclestone has said the company wants him to stay on as chief executive for a further three years but it is believed to be unlikely he will see out that period of time,” says Giles Richards of The Guardian.
“The 85-year-old Ecclestone has run F1 virtually single-handed for almost 40 years but his disinterest in engaging with social media and a younger audience is at odds with Liberty’s intent to expand the sport using digital content, greater promotion and marketing.”
Ecclestone is used to exerting complete control of F1 affairs. His old friend Max Mosley told the BBC that he will “walk away” from Formula 1 if new owners interfere with his running of the business.
The octogenarian is “uneasy” about the deal, says Kevin Eason of The Times. He claims that when news of the deal emerged at the Italian Grand Prix, Ecclestone “called some acolytes together in his forbidding dark grey motorhome to announce that he was finished with the sport”. He only “stepped back from the brink after being convinced by Chase Carey, the new chairman, to stay on”.
So what will happen when Ecclestone finally departs? His role “is expected to split into two – one to oversee commercial affairs and one the sporting side,” says The Guardian. “It is a division that many believe the sport should have implemented some time ago.
Martin Whitmarsh, the former team principal of McLaren and now chief executive of Ben Ainslie Racing, is favourite to take over the sporting role, says Daniel Johnson of the Daily Telegraph. “Ross Brawn, the ex-Ferrari and Mercedes boss, as well as Stefano Domenicali, another former team principal of Ferrari, are also in the frame.”
“For the commercial role, Zak Brown, the founder of the world’s biggest sports marketing company [JMI] and F1’s main sponsor finder, is thought to be the frontrunner. Alejandro Agag, the current chief executive of Formula E, also owned by John Malone’s Liberty, is under consideration as well.”
F1 takeover explained: What now for Ecclestone and the fans?
The £6bn takeover of Formula 1 by the American media company Liberty Media has been hailed as one of the most important moments in the history of the sport and could have a huge impact on the way it’s run.
The US company has agreed to buy Formula 1 from its current owners CVC Capital Partners and the takeover should go through by early next year.
So who are the new owners and what does the potential takeover mean for the teams, the fans and the sport’s 85-year-old F1 ringleader Bernie Ecclestone?
Who are Liberty Media?
In its own words the US company “owns interests in a broad range of media, communications and entertainment businesses”. They include the Atlanta Braves Major League Baseball team, ticketing and entertainment group Live Nation, Viacom and Time Warner.
Chairman John Malone is said to be worth $6.5bn.
How have they gained control?
Formula 1 has a hugely complicated ownership structure and taking over the sport is not a simple matter.
“The two-part manoeuvre will initially see the US media group buy 18.7 per cent of F1 parent company Delta Topco for $746m in cash from a consortium of shareholders led by CVC Capital Partners,” explains the Financial Times. “Liberty will then move to take full control of F1 by early 2017 once the deal has been approved by regulators, the FIA, the sport’s governing body and the US company’s shareholders.
“Once phase one of the deal is signed off, Liberty will pay a further $354m in cash and $3.3bn in newly issued shares,” says the paper.
Liberty Media has also agreed to take on the sport’s $3.6bn debts, which takes the overall cost of the takeover to $8bn.
What does it mean for F1?
This is the big question. Liberty’s initial impact is likely to be on the way the sport is promoted.
“Under overlord Bernie Ecclestone’s long command – and the last decade of ownership by private equity group CVC – the motorsport series has enjoyed remarkable growth in terms of global popularity, profits and new races,” says Dan Roan of the BBC. “Liberty Media will hope to build on these strengths, helping the sport gain new fans, especially in the Americas, and to capitalise on new opportunities around marketing, promotion, digital rights and social media.”
Chase Carey, former vice-president of 21st Century Fox and a board member of News Corporation, is to be installed as chairman. He says he will focus on “increasing promotion and marketing of Formula 1 as a sport and brand”.
His plan includes the following:
“Enhancing the distribution of content, especially in digital – currently a very small percentage of revenue. Evolving the race calendar. Establishing a broader range of commercial partnerships, including sponsorships. Leveraging Liberty’s expertise in live events and digital monetisation to make our events bigger than ever.”
Where does this leave Ecclestone?
The diminutive F1 ringleader has controlled the sport for 40 years and will not go quietly. He has declared that he will stay on for at least three years as chief executive.
He now “faces an unprecedented battle for power” with Carey, says Daniel Johnson of the Daily Telegraph. “Every other executive Ecclestone has been forced to work alongside, he has seen off. But he is likely to find Carey one of his toughest adversaries… Many believe the 61-year-old’s expected appointment could mark the beginning of the end of Ecclestone’s astonishing reign.”
But his knowledge of the sport means that he cannot be tossed aside. “Liberty are probably wise to keep a chief executive whose contacts book boasts everyone from presidents to kings,” says Kevin Eason of The Times. “Ecclestone also remains the key route to the teams with his vast knowledge of how they work and the network of deals that remain.”
And what about the teams?
The deal could be huge for the teams, who have been forced to rely on money from the sport’s previous owners. Under Liberty’s watch “teams will be given the chance to buy a stake in their sport for the first time”, says the Times journalist. “It is not known which teams are interested but McLaren, Mercedes, Red Bull and Ferrari are likely to be the first names in the frame as they bid to secure the future of the sport.”
If they do buy in they will get to enjoy a share of the profits that they help generate. Where it leaves the lesser teams, though, is unclear.
Is it a good thing?
Most people believe so. The previous owners CVC were accused tof skimming off profits from the sport, while Ecclestone’s business model has been looking increasingly outdated and short-term.
Ecclestone relied on selling TV rights and charging circuits more for hosting Grand Prix, but the result has been less F1 on television, higher ticket prices and a drift away from the sport’s heartlands.
“The shift towards pay TV is already damaging Formula One and that can only go on so long. The rise of new media cannot be stopped – Ecclestone is notoriously sceptical about social media – and before long he is going to run out of countries around the world with millions to spend on hosting a race,” says Daniel Johnson of the Telegraph.
Fans will be “relieved to see the back of CVC, which has done very well out of its investment, and excited by the future”, says Dan Roan of the BBC. “But this is also the beginning of the end of Mr Ecclestone’s remarkable reign. Inevitably there will be uncertainty.”
Liberty Media buys Formula 1 in £6bn deal
US company Liberty Media is buying Formula 1 in a £6bn deal, bosses have confirmed.
The first step of the sale sees Liberty Media pay for an 18.7 per cent stake in the business, and Chase Carey, executive vice chairman of 21st Century Fox and a director of Sky News owner Sky Plc, installed as F1’s new chairman.
The remainder of the deal hinges on the approval of the International Automobile Federation (FIA), the governing body for F1, as well as European anti-trust regulators, but is expected to be completed “as early as the first quarter of 2017”, reports CNBC.
Current owners, private equity firm CVC Capital, will retain 65 per cent of the rebranded ‘Formula 1 Group’, but “the voting shares that control the group will pass to Liberty”, The Guardian says.
Bernie Ecclestone, 85, who has been at the helm of Formula 1 for more than 40 years, will remain in place as CEO. “I would like to welcome Liberty Media and Chase Carey to Formula One and I look forward to working with them,” he said.
BBC sports editor Dan Roan has described the sale as “one of the biggest deals in sports history and one of the most important moments in the history of F1”, saying that Liberty Media is likely to try to push the sport to greater prominence in the US.
The new owners are also likely to further embrace a more positive attitude towards digital broadcasting of the sport, something which critics of Ecclestone’s management of F1 say has been holding the sport back.
Liberty Media is controlled by US communications billionaire John Malone, and currently has interests in the Atlanta Braves baseball team and satellite radio service Sirius XM.