There is no secret that Max Mosley has asked FOM to cough up more of the earnings from the commercial rights revenue of F1. He stated that clearly in letter that would have $50MM paid out tot he teams guaranteed. He felt this would increase the small teams chances of staying afloat and might even bring new teams. On this, Max and I agree. Apparently so does FOTA. Showing their ability to no be purely FOM sycophants and that they can work with anyone to improve the show; Luca Di Blah, blah, blah has stated that they are offering a series of cost-reduction ideas to Max Mosley and also looking for Bernie Ecclestone to share more of the F1 revenue with the teams. Surely Honda could have benefited from an additional $50MM this year? No wonder STR could as well.
Now this distribution is only good as long as the show continues to generate revenue in a global recession and many expect it to but time will prove this theory. Should viewership wane and sponsor dollars dry up, Luca and the boys could be in for choppy waters. Here is where you have to give a nod to Bernie for landing LG as a title sponsor when Tag Heuer bailed out a few years ago. In a down market, Bernie has convinced companies that they are getting a reduced price to get in on the worlds premier motorsport. A real price break on the biggest show on earth with 4 wheels with which to brand your products to millions. That’s not a bad approach if you are offering companies a 15-30% discount on sponsorship to get cash flowing and revenue up. Depending on how you fashion it, LG could be a technology partner to F1 and provide their products as a vendor and not necessarily a sponsor but in return they get branding out the backside. The taxable event is reduced by this type of arrangement and yet everyone benefits.
In the end, Luca and Max will have to apply pressure on FOM to open the purse strings a bit more and given the current economic situation Bernie might…temporarily. Bernie also knows that making an emotional decision in the near-term could kill him in the long-term so perhaps limits on this increased dosh would be in order.
“In the short run we’ll organise a meeting with Max Mosley to present him the details of our proposals and to discuss with him how to improve the show our sport offers. Furthermore we also agreed that it’s necessary to meet with Bernie Ecclestone to talk about the distribution as far as the earnings are concerned.”