Hoping For The Formula One Deal To Happen
Liberty Media own the rights to Formula One which they purchased in 2017 for a $5 billion sum which seemed like a lot of money at the time. Current valuation tracking over the 5 years Liberty have been the owners has showed the value rise to just over $15 billion.
The Saudi Public Investment Fund tried to purchase the business from Liberty Media last year which was rejected. This week a new bid of $20 Billion was rejected as the Saudi Fund clearly wants this deal completed. A 400% percent rise in value sounds like a good deal over a 5 year time line and suspect the numbers are close for a deal to be done. They have been investing in other sports by purchasing Newcastle United (Premier League) along with sponsoring the LIV Golf Tour.
The deal makes sense as they are the official sponsor ARAMCO as the fuel supplier for Formula One. ARAMCO would benefit as they are the worlds biggest oil producer which would see them offering fuel in sport that is going greener by adding greener additives. This would see them at the forefront of technology keeping their fuel relevant worldwide by having a hand in what is decided.
Surprisingly the FIA President Mohammed Ben Sulayem tweeted that the Liberty Sock is overvalued and has overstepped his mark.
This is not the first time he has interfered and his time as the head of the FIA seems to be on borrowed time. The FIA is a non profit organization running the safety and regulations in motor sport. Let us just say that they are not exactly popular amongst the Formula One teams right now. I tend to feel this could be more political and jealousy as the FIA President is from the United Arab Emirates and would be anti another Arab country obtaining the rights.
What the Saudi Invest Fund offers is far more than what Liberty Media can offer long term with regard to building the sport. There is nothing stating a new owner would increase hosting fees along with other commercial costs as the reality is they don't need the money. Liberty as a business would be the ones pushing for an ever increasing profit margin unlike the Saudi Fund.
Th Formula One teams would like the opportunity of having a bigger prize fund which Liberty Media have kept under tight wraps. Over the last 5 years the prize fund has grown at around 5% per year totaling a 25% increase. The total prize fund stands at $900 million per season which is generated from television rights and track sponsorship deals.
The concern I have is in 2026 new teams are going to be joining the sport and the grid will become that much larger so adding just another 2 teams would dilute the prize fund by 20% as there are 10 teams currently. Would the prize pot rise by 20% as I suspect not.
Liberty were all about growing the sport in the States and were not overly concerned about the sport in Europe as Germany doesn't even host a race anymore since they took over. I think we understand the growth potential, but you cannot throw away what you have already for the sake of earning more revenue. Taking the sport globally is a must and having new tracks at new venues is what the fans want to see, but at the same time some tracks could be swapped out annually, but not lost permanently.
Congratulations @cryptoandcoffee! You have completed the following achievement on the Hive blockchain And have been rewarded with New badge(s)
You can view your badges on your board and compare yourself to others in the Ranking
If you no longer want to receive notifications, reply to this comment with the word
Check out our last posts:
I think more teams would make it a little bit easier for talented drivers to get into the sport. But you are right, it will be problematic for the current teams to split the revenue. I also think it is a shame that Germany is getting more and more cut out of F1 but if you dont invest in talent then this is the ultimate fate I suppose. There is only one driver in the field and the race tracks are not realyy the most modern ones as well. I am interested what the future of this sport will hold.
Well 20 billion $ is a great amount of money, and if you can have it in a small interval of time such as 5 year? it's a deal must be accepted.