Will Ferrari lose its $100m F1 bonus?

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With the questions lingering on what changes Liberty Media will make to Formula 1 once it’s controlling interest has been officially acquired later this month, perhaps two lingering big rocks are the hottest topics for the Colorado company—Bernie Ecclestone and Ferrari.

Reports suggest that long-time F1 boss Ecclestone could be show the door as early as late January and with that decision comes serious organizational changes—namely, who’s running things and how challenging will it be to dislodge the venerable ring leader of F1 who still owns significant shares in the business?

The other rock is the question of Ferrari who have enjoyed a $100 million off-the-top payment as the longest-running team in F1. Having competed since 1950, Ferrari were given a historic or heritage payment for the trouble but with teams such as Manor, who have slid into receivership, dying on the vine, Liberty reckons a re-structuring of the prize money payout might help balance the series. Forbes has an article that suggest Liberty will be looking to make changes.

“If you’re Ferrari, you have enormous sponsorship revenue that goes directly to you. That’s going to be impacted more positively by great races. So thinking about balancing the team payments, so they’re a little more balanced and creates more fairness, has to be weighed, in Ferrari’s mind, I would expect, by the fact that creating a great platform helps our sponsorship revenue, too, so there’s give-and-take,” says Liberty’s chief executive Greg Maffei.

This is going to be a difficult sale for Liberty as a bird in the hand is normally better than two in the bush and explaining to Ferrari CEO Sergio Marchionne that making healthy teams will provide better racing which will increase viewership of the series and therefore offer more brand exposure to Ferrari is not an easily quantifiable option and Ferrari are one of the largest brands in the world already so is more F1 TV exposure really going to help?

Ferrari might argue that their participation and brand are the very things that keep viewers coming back to F1 even in a decade of dominance in the sport by Mercedes and Red Bull.

As Chris points out in the article, there is an interesting element to the switch from free-to-air TV versus pay TV and the shift of sponsor dollars is tangible as teams lack main title sponsors on their cars in return for a bigger portion of the prize money. The fact is, and Chris offers a graphic so follow the link, that the teams are more reliant on prize money now than perhaps they have been in the past. As that could be the case, then Ferrari’s $100 million is a huge chunk to take out of potential prize money for smaller teams.

No matter what Liberty does, there will be noses pushed out of joint and you can never please anyone but critical to the process is to find common harmony in the goal of creating a racing series that is entertaining, competitive and one in which fans can’t miss every other Sunday. There is a lot of detail and room to fill in the crack of this grand plan but perhaps Liberty can bring the right mortar and start building an F1 series for the new era…whatever that may be.

Hat Tip: Forbes

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13 Comments on "Will Ferrari lose its $100m F1 bonus?"

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Rapierman
Member
Rapierman

Alright, Ferrari, you keep saying that F1 would die without you. You’ve been flapping your gums about that for 67 years. Nothing personal, but I do tire of people who are all talk and no action.

So….go. Get out of town before sundown. Let’s see how things progress without you.

Otherwise, shut up.

abrobeer
Guest
abrobeer

What we need to do is bring in Porsche as an engine supplier and chassi maker and race it’s balls out!
and have an a team and b team more chance to see Classic manufacters race in F1

T-Batwoman
Guest
T-Batwoman

I agree, I think Ferrari and F1 benefit each other, if Ferrari leaves both will be harmed. Their synonymity with F1 should be enough to keep them in the sport without shakedown money on top of it.

J Cotter
Guest

I only knew vaguely about this historical payment.. now it’s out in the open, I’m amazed and disgusted. No, Ferrari should have this payment stopped immediately.. for goodness sake.. they’re not even a winning team nowadays! Ok, they’ve done their bit in the past to “help” the profile of F1, and so they got some reward. We need to start with a clean sheet now and spread the money more fairly. I’m red… with rage – certainly not from supporting Ferrari.. even less of an F1 fan now! FIA ? Ferrari International Assistance – definitely!!!

abrobeer
Guest
abrobeer

What we need to do is bring in Porsche as an engine supplier and chassi maker and race it’s balls out!

Tickled Pink
Guest
Tickled Pink

John Malone has a better track record of growing companies than Warren Buffett. He took a Denver cable shop, turned it into TCI and sold it to AT&T for $45 billion. He’s done the same thing with Direct TV, Starz, Discovery and now Liberty. He makes Bernie look like a pipsqueak. Like Kimi says, just leave him alone, he knows what he’s doing!

geeyore
Guest
geeyore

Good points. Anyone who’s followed or read about John Malone would know that “the professionals are now running the show.”

CVC did what CVC does best: extract cash from a property. LM isn’t CVC.

Salvu Borg
Guest
Salvu Borg

LM will do what CVC has been doing all along, that is EXTRACT as much money as they could out of F1.

jakobusvdl
Guest
jakobusvdl
The Forbes article by Christian Sylt is quite a long read, but an interesting one. Certainly Ferrari are the main beneficiaries of the current financial agreement. But, the agreement is structured around the longevity, heritage, standing and results a team has achieved, so McLaren, RBR, and now Mercedes, are also doing very well out of the agreement. So Liberty will have more than just Ferrari to negotiate with. The current agreement runs to 2020, and if I remember correctly, was only arrived at after the teams were threatening to set up a breakaway series. I guess the ‘top teams’ might… Read more »
Salvu Borg
Guest
Salvu Borg

That was exactly why I said on the other thread/page that everybody and his dog seems to be talking/pushing forward what Liberty intends to do/change, BUT NOBODY and certainly no dog is mentioning “BUT WHAT IF TEAMS SAY NO?”.

geeyore
Guest
geeyore
LM needs to make as many radical changes as are possible from the outset. This is one of them, and the others include the formula itself (deemphasizing hybrid to whatever degree possible); reducing promoter fees (which reduces ticket prices); restoration of traditional circuits (and rejecting kleptocracies and dictatorships); reducing broadcast fees (kinda built in as they are a Euro broadcaster); migrating to livestream; and generally redirecting F1 to a competitive racing series. Since they are not running a quarterly cash-extraction operation like CVC, and have a broad and horizontal range of interests and business expertise, it’s pretty certain that (a)… Read more »
Graeme Fuller
Guest
Graeme Fuller
Perhaps the only for Ferrari to keep its bonus would be to fund and run a team like Manor, which could also be used like the Red Bull/STR sort of deal. I know STR ran Ferrari engines last year and have returned to Renault so the door is open for Ferrari to buy itself a team and develop young drivers and test their engines and equipment. Time will tell. Not F1 but I just watched the first round of WRC, big aero, great sounding engines, wide cars with more aero stuff on, it was brilliant. I know they don’t overtake,… Read more »
JoeFlorida
Guest
JoeFlorida
I’m amazed at the amount of people who feel the 100mil is “money for nothing”. Ferrari is the 1st team that comes to mind when thinking F1(generally speaking). Prior to becoming an F1 fan, one thing I knew was that Ferrari was a top tier member of the sport. Ferrari is like an original 6 team in the NHL. I don’t think F1 would die without them, but I’m not sure that it would be even close to what it is now. The amount they receive is minute compared to the amount of money they’ve pumped in since becoming part… Read more »