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Liberty Media Plots Formula One’s Route to Revenue Growth

Variety logo Variety 1/16/2017 Leo Barraclough
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On Tuesday Liberty Media will seek the approval of stockholders for its acquisition of motor-racing business Formula One in a deal that values the latter at $8 billion. What will potentially follow is a shakeup of the sport to maximize revenue.

Since Liberty Media announced in September that it had agreed to buy Formula One and that Chase Carey would serve as the sports business’ new chairman, working alongside CEO Bernie Ecclestone, Liberty Media’s president and CEO Greg Maffei has been keen to spell out how his company will ramp up revenue.

One area of growth would be to increase the number of races from the present 21 a year to up to 25, with Miami and Las Vegas among the proposed new venues. “Obviously there is a limit on how much you can do — just getting the cars around the world [is difficult] — but I think we can expect to grow the amount of races to a mild degree,” Maffei told investors at the Morgan Stanley Technology, Media and Telecoms conference in November.

A Formula One insider told the Financial Times that the company wanted to make each Grand Prix “the equivalent of the Super Bowl.” Instead of being merely weekend events they would be extended to fill a whole week with the addition of ancillary elements.

Maffei also sees potential in increasing the competitiveness of the races, moving away from the existing dominance of teams like Mercedes and Ferrari, which would increase the popularity of the sport.

He also believes that switching the television coverage from free TV to pay would increase revenue significantly, following the example of the U.K., where pay-TV provider Sky is taking the wheel. Broadcasting accounts for 35% of Formula One’s annual revenues of more than $1.8 billion.

Maffei has said that Formula One should also do more to increase revenue from sponsorship. It has 19 sponsors and three people working in sponsorship. Liberty Media owns the Atlanta Braves baseball team, and Maffei has pointed out that Major League Baseball has 75 sponsors in the U.S. alone.

Digital is one area that has hardly been exploited at all by Formula One, according to Maffei. “Less than 1% of revenues are from digital,” he said at the Goldman Sachs Communacopia conference in late September. “They really have no organized digital effort. I think there’s a lot of things that can be done around gaming, VR [virtual reality] and AR [augmented reality].

“There’s an enormous amount of video feed and data about the races that we are already capturing that we are not in any way processing incrementally for the dedicated fan, or opportunities around things like gambling.”

One of the first moves Carey is likely to make after Tuesday’s vote is to appoint an executive to take responsibility for marketing, sponsorship and media-rights deals, with former ESPN exec Sean Bratches among the front-runners for the role. Where that’ll leave Ecclestone is another matter.


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