Ross Brawn is set to meet with the teams in Formula 1 for the first time in his new role as Liberty Media’s head of motorsport. Brawn says he will continue speaking with the teams in Catalunya at the first test on February 27.
“The commercial rights holder…is going to also focus on making the show as good as it can be and the entertainment and the sport as good as it can be,” said Brawn, who will attend the first pre-season test in Barcelona at the end of the month.
“Every decision that’s going to be made in the future…all have to tick some boxes and those boxes will be ‘does it make the sport better? Does it make it more entertaining? Does it make it more economic?’.”
The challenge for Brawn will be parsing the individual interest of each of the 10 teams as well as the FI and commercial rights holder. Those interests are typically fueled by profit, brand positioning and contractually obligated regulatory oversight and as such, they will not be easy to accommodate. Brawn has a huge task ahead of him.
“I think the message is that we are fighting the corner to make the sport as entertaining and as viable and as economic as we can for the future,” said Brawn.
“I hope with the continued pressure that we can apply, we can steer the sport into a better place.”
Brawn will have historic team payments worth $100 million to deal with in Ferrari’s case and a weighted prize money distribution model that has now caught the eye of a investigating EU commission. Changes to the money distribution will always be met with a cautious eye but Brawn says so far, some teams are positive.
“The teams I have spoken to have been very positive about the changes, and very optimistic about the future,” he said. “So it’s encouraging.”
Most of the teams have been taking the high road on the Liberty Media acquisition saying they are optimistic and welcome the new owners but all of that will be tested when/if the amount of money these teams harvest at year-end is reduced. Everyone is about equity until they have a large portion taken from them to achieve that equity.
Focusing on Ferrari’s historic team payment, the Italians will not be keen to see this eliminated now or at the end of their contract in 2020. Two things come to mind; it was a deal struck by the previous CEO (Luca di Montezemolo). It has runs its full course and served to reward Ferrari’s exit from FOTA so in some respect, they have been rewarded for their loyalty. The onus is on Sergio Marchionne to cut a new deal in 2020 for a renewal of the historic team payment or another similar deal that favors Ferrari. If he can’t, Ferrari have to accept that the historic payment concept was not going to be a forever deal and times have changed.
That’s easy to say but Ferrari won’t be keen to lose the historic team status and I don’t blame them. Perhaps this is where the offer to invest in Liberty Media’s company is supposed to allow teams the chance to gain the upside of profits earned instead of relying on prize money payouts?
In simple terms, if you owned 60% of a company, you would be entitled to 60% of the net profits but as it is, 60% of the profit is placed in a prize money payout and weighted amongst teams as they finished in the Constructor’s championship with Ferrari getting an extra $100m on top of their finishing position payout. Make sense?
I’m not completely confident I understand the complexities of the prize money system to know how much Liberty stock Ferrari would have to own in order to re-capture that historic team amount but it would be a lot, that I’m sure of. I doubt Ferrari would be keen to do this as the stock is said to be non-voting stock.
This is conjecture, of course, but you can start to see the complexities of the issues Ross and team must address…he’s right, there’s no quick fix.
Hat Tip: Reuters