Why F1 could be setting up for BATTLE with FIA

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FIA

Why F1 could be setting up for BATTLE with FIA

Some big change is coming to motorsport in 2024

Originally written by Daniel Austin. This version is a translation.

Saturday 15 June 2024 04:00

Formula 1 is about to be brought a step closer to one of its rival series, after a company under the same umbrella as F1 owners Liberty Media agreed to take on a majority stake in the electric racing series Formula E.

Announced on Thursday, the deal will see Liberty Global purchase shares in FE which previously belonged to Warner Bros. Discovery.

Liberty Global has combined those new shares with ones it already owned in the series, meaning the American conglomerate has now increased its stake to 65 per cent, giving it overall control of the business.

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Though the two companies are legally two distinct entities, both Liberty Global and Liberty Media were founded and are owned by US billionaire John Malone. While the former focuses on telecommunications, the latter predominantly operates in entertainment and television. But both clearly have a very similar interest in motorsport, too.

Liberty Media purchased F1 from CVC capital in 2017 and also agreed a deal to take over MotoGP and World Superbike’s commercial rights holder Dorna earlier this year.

The approach may be aggressive but comes as little surprise given the enormous success Liberty Media has enjoyed since purchasing F1. Having paid £3.3bn to buy F1 from CVC Capital in 2017, reports in early 2023 suggested they dismissed a bid worth around £15bn from Saudi Arabia’s Public Investment Fund – owners of Newcastle United and LIV Golf – demonstrating a huge increase in just a few years.

That huge upturn is largely thanks to Liberty Media’s immensely successful marketing of F1 to new fans, including initiatives like Netflix’s Drive to Survive series, much greater focus on social media as a tool of engagement, and focus on the personalities of its elite drivers.

Netflix's Drive to Survive series has proven immensely popular since Liberty Media's takeover

The aim, then, will no doubt be to use similar methods to drive new interest in MotoGP, World Superbikes and Formula E. Though none of those three series is likely to match the popularity, sponsorship revenue, or social media engagement numbers of F1 anytime soon, Malone and his colleagues clearly believe they have developed a blueprint for success in motorsport and are confident and they can dramatically increase the value of other series by implementing the same plan.

What the deals mean, however, is that Malone and his companies will have combined control of a selection of the very biggest series in motorsport. That kind of control could have significant wider consequences.

The relationship between Formula 1 and motorsport governing body the FIA has become strained in recent years. As F1 has drawn in new audiences, strengthened its commercial partnerships and signed lucrative details to race in even more glamourous locales, the FIA has drawn its ire in a number of ways.

The debacle at the 2021 Abu Dhabi Grand Prix, when the FIA race director’s incorrect handling of the safety car procedure seriously compromised the outcome of the most important race in recent F1 history, was particularly frustrating as F1 was made to look farcical when the eyes of millions of potential new fans were on it.

Furthermore, FIA president Mohamed ben Sulayem’s series of mishaps – from threatening Mercedes team principal Toto Wolff and F1 Academy chief Susie Wolff with a legal challenge, to being caught out over misogynistic comments – led to such friction between the two that the Emirati had to agree to step back from managing day-to-day relations with F1 bosses.

That friction has led some to suggest that the possibility of F1 breaking away from the FIA’s governance cannot be ruled out.

Mohamed ben Sulayem's leadership of the FIA has proven controversial

The FIA also oversees Formula E, which it declared an official world championship in 2020, meaning Liberty Global and the governing body are now going to have to work closely together on that championship.

If the rapport between the two remains as frosty as it has been in recent years, perhaps there is a chance that Malone could use his businesses’ position of strength in motorsport to step away from the traditional dual management structure of governing body and commercial rights partner working together.

That idea of outside interference could cause a problem for the Liberty companies in a second sense. Whether it be in media, the financial sector, or sport, monopolies on major businesses in a particular industry can lead to accusations of anti-competitiveness from governments and other political bodies.

Earlier this year, for example, the European Union launched probes into Apple, Google and Meta over concerns of anti-competitive behaviour, and has taken major companies to court over the same issue in the past.

The fact that the Formula E takeover is technically being conducted by Liberty Global rather than subsidiary Liberty Media may well be an attempt to work around this issue. But there remains a chance that idea that the EU may take an interest.

Whether it be with the FIA or potentially politicians, then, Malone and his Liberty companies could well be heading for the kind of ferocious battle that racings fans long to see on track. But if he can succeed with both of his planned major takeovers, the future of elite level motorsport will rest largely in his hands.

Liberty Media Formula E