Formula 1 owners Liberty Media have been keen to stress their commitment towards growing the sport, despite posting alarming losses of $110million for the year 2018, as they struggle to properly grow revenue since its acquisition from Bernie Ecclestone at the end of 2016.
CEO Chase Carey appeared relaxed about the figures in a conference call to investors, stating that the losses were expected and due to a number of factors, including growing digital operations, development costs for F2 and F3, and increased logistics and travel costs.
But Liberty's continued growing pains since taking over have wider ramifications for the future of F1 - and fans should be concerned as to what comes next.
1. THE RACE/REVENUE BALANCING ACT
Liberty have made no secret of the fact that they want to increase the number of races on the calendar, and have held protracted negotiations with a number of venues. However, other than the confirmation of Vietnam from 2020, other proposals have fallen through, none more publicly than the Miami debacle. There, the race was announced as a near cert to be on this year's calendar, only to result in a retraction.
Not only are Liberty struggling to get deals over the line and secure the additional revenue a race could bring (current hosts pay, on average, $30m to bring the F1 bandwagon to town), but the plans are at odds with what the teams, and potentially fans, want.
Mercedes, Ferrari and Red Bull have regularly cited the additional costs they would incur from having to travel to extra races and how, at the moment, revenue reaching the teams has actually decreased from $966m in 2016 to $919m last year. The numbers need to be managed efficiently to keep everyone happy - just throwing other races into the mix isn't going to appease the teams.
2. DILUTING THE ACTION
At the moment, an F1 weekend and race is an event worth waiting for. Simply throwing more races onto the calendar does nothing but dilute the experience and sometimes there can be too much of a good thing. This, combined with Liberty's desire to introduce a budget cap, means teams and their cars are having to work harder for less. What this will mean for the spectacle remains to be seen.
And - crucially - under the current points system, adding more races disincentivises the desire - and need - to win a race. Teams may be content to get around in the final laps to preserve their position, take the points on offer and live another day. It could destroy the idea of battling for places and make even more races a procession to the finish.
3. THE TV REVENUE BALANCING ACT
Unlike football, for example,F1 is hardly aparticipation sport, therefore it relies more than most on eyeballs and exposure to enrapture a whole new generation of fans.
But placing races behind paywalls, as has happened with alarming regularity in the past decade, simply decreases the reach and resonance of the sport. By selling the rights to the highest bidder you secure short-term success but at what cost to the long-term prosperity of the discipline?
Liberty need to be acutely aware of this and ensure that the correct balance is struck. Squeezing additional revenue from TV deals - far from straightforward anyway - would shrink the audience further.
4. SPONSORSHIP HUBRIS
As Carey himself noted (via Formula Money): “The perception was just there are sponsors waiting. They were lined up out there and as soon as we had somebody to go call on them, they were just going to sign up. The world’s not that simple.”
There was, unquestionably, the thinking from the American owners that the sport wasn't being sold well enough and they could swoop in and throw up that revenue stream considerably. Instead, sponsorship revenue has increased by a virtually inconsequential $11m in two years. They bet on themselves to succeed quite easily in that sector, and it hasn't paid off so far.
5. LIBERTY TO CUT AND RUN?
On the conference call for shareholders, chief executive Greg Maffei said: “We are very pleased with the progress that Formula 1 has made over the last two years. We are confident the tremendous potential still exists. We are committed to the F1 business.”
But there are rumours that Liberty may be seeking a way out, with the myriad problems they are facing not worth the long-term investment. If they are quietly looking to bow out, the problem would be - how much would they want for a sport they spent $4.8bn on just over two years ago? Have they increased the value of the business? Debateable. Will they wish to incur a loss? Almost certainly not.
This leaves an impasse and means, to protect their investment, Liberty must address and answer all of these problems soon. The agreement for all the teams expires in 2020 and Ferrari in particular are in no hurry to rush into agreement with an organisation they have been critical of for some time.
2019 is a big year for Liberty and, as such, massive for the future of Formula 1.