On the subject of money…

Two comments in the past few days have raised my eye-brows and got me thinking a bit when you think about the current UK F1 television landscape in relation to the current situation we find ourselves in. The first is a comment from Ben Anderson on the AUTOSPORT website:

“It also doesn’t seem fair to try to squeeze more money out of TV companies and race promoters at a time of falling audiences and race attendance.”

The second is a comment from David Emmett, a MotoGP journalist, in a conversation I was having with him and a few others on Twitter last night:

“Not sure there’s as much room for Bernie to try to push TV revenue.”

The UK rights were negotiated in Summer 2011 as BBC renegotiated their existing deal, to bring Sky Sports into the picture to what we have now. As discussed earlier this year, the F1 rights currently are in the region of £55 million per year. Since 2011, BT Sport have entered the picture, and the cost of some rights has frankly entered the ‘silly’ territory. BT Sport paid £299 million per season to screen the Champions League from 2015-16. That’s absolute insanity. On a smaller level, MotoGP’s value multiplied several times over when it went from the BBC to BT Sport.

My point being that, with Formula 1 rights on lockdown until at least the 2019 season, FOM are losing a ton of money at the moment. If you renegotiated the rights today, or sent them to the market, in my opinion the rights value would easily head skyward of £100 million per year, probably near £200 million. And when you consider that it costs £75 million a year (based on current conversion rates) to run an F1 team, the £100 million difference between the current rights fee and what it could be in a hypothetical situation, FOM is missing out on a huge amount of money.

Of course, with any such increase, you can kiss goodbye to any terrestrial television coverage. What we have now is the best of both worlds, even if FOM are being short-changed…

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6 thoughts on “On the subject of money…

  1. Sport Pay TV is a bit like taxing cigarettes, although there’ll always be a few die-hards, most people have their limits and will just give up.

    If there were to be any mid contract renegotiation Sky would want to pass on any cost increase to viewers, tipping many people over the edge into enough is enough territory.

    If BT were to outbid Sky, people wouldn’t take on a new ISP or extra cost for F1 and the result would be same.

    F1 is balancing on a knife edge of viewer interest Vs cost and a nudge the wrong way and F1 is another Champ Car.

  2. As f1 fan of many years there is no way would pay to sky sports to watch f1 it just to much money. My work mate as the HD pack and he would cancel that if it package went to. I think end game for F1 is approaching. Things will have to change.

    I use to watch motogp when it was bbc. I seen one highlights show this year. Any idea what are bt viewing figures like for it?

  3. “Of course, with any such increase, you can kiss goodbye to any terrestrial television coverage. What we have now is the best of both worlds, even if FOM are being short-changed…”

    I am led to believe that there is a clause in the 100 year FIA lease guaranteeing FTA coverage. Obviously Bernie has bent and twisted this to suit him, whilst clinging tentatively to the letter of the agreement. It now looks like the legendary Gordian knot.

    This is a major part of what is killing of F1 teams, the audience has fallen to a tiny fraction of what it was, so sponsors are just not getting the exposure they used to have, other sports have greater reach. So sponsors are disappearing from F1, teams are going into administration, two so far, a probable further couple in the next year.

    To say that FOM are being short changed is like saying Donald Trump is a pauper.
    Whilst the current round of agreements have guaranteed FOM’s tv income for the next 3 or 4 years the circuits are so crippled by FOM fees that most spend the rest of the year paying for the GP. Many are on the verge of bankruptcy, only sovereign wealth can afford new GPs.

    The lack of sponsors is serious, even McLaren are without a headline sponsor. Bernie having nicked Johnny Walker off them. (nice move Bernie!) This is the result of the recession and the tv fees being excessive to FTA stations.

    A move to increase tv fees such as your suggestion would almost certainly kill F1 within 2 years. It is completely unsustainable under the current financial structure where almost 50% of revenue is taken out to CVC as profit. A recent borrowing of $1Bn which was given straight out as dividend/bonus to shareholders could be said to show a true contempt for the sport.

    So this weekend I have paid a tenner to watch it on sky via NowTV but will listen to the R5Live commentary. If the BBC stop then I and many others will stop watching too.

  4. How would the sponsors feel about this? They pay large sums of money for advertising and if the audience falls so does the justification for spending so much on F1.

    I must admit that I’m getting more than a little fed up with the greed of FOM, none of the other series I follow make me buy an app to get sector times. And there was Bernie’s comment about social media, when they can find a way of “monetising it”!
    It’s not as though the teams get a fair share of all this money.

    At the monent I can’t justify paying for Sky when I’m already paying for half the races through my licence fee. If F1 were to move to totally ppv I’d look at what I could do with the money rather than give it to FOM , a high end gaming rig maybe?

    Also, like many people, I’m not interested in other sports so a Sky sports package is not for me. (Although I would expect if F1 moved totally to Sky there would probably be a cheaper F1 only option offered.)

  5. By rejigging it’s packages at the beginning of the season and making Sky F1 only available through the Sky Sports Package, Sky has totally put F1 out of reach for so many people.

    Even with the various half price offers Sky has every now and then it will simply be too much money.

    To increase the price further though would unfortunately do very little to change viewing/subscriber figures I believe as the main draw of the Sports Pack is football.

    I have mostly been using the Now TV offering for the Sky live races and this has worked out quite cost effective this year due to real life taking over, so the Sky races I’ve missed live I have just watched the BBC highlights.

    Unfortunately, trying to keep up with the story of the Hungarian GP through the highlights was nigh on impossible but you win some, you lose some.

    Luckily due to the differing start times of the USA & BRA GP’s it will be possible to watch both races with one Now TV week pass at £10.99.

  6. The AVE for sponsors is so low now (because of pay wall TV), they’re exiting at an alarming rate, or renegotiating their rates. This and the greed of the top few teams is what has caused the crisis.

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