FIA & F1 Innovation

[Richard]

F1 is a subset of the FIA. While F1 is largely about entertainment, the FIA role is much broader. The formation of Euro-NCAP is one example.

[Pup]

F1 is a subset of the FIA. While F1 is largely about entertainment, the FIA role is much broader. The formation of Euro-NCAP is one example.

Kinda sorta. From a financial standpoint, Todt has made F1 essential to the FIA like never before. Under the new concorde, the FIA will be getting around $60M a year from F1, if you figure up all the increased fees below. In other words, their F1 revenue next year will likely surpass their total revenue from everything else they do.

So you can make a pretty solid argument that all the public service stuff they do is but a subset of their entertainment business.

http://www.theguardian.com/sport/2013/n ... -agreement

Delta Topco owns the rights to F1 until 2110, having paid $313m for them in 2001. The FIA's annual fee for the rights comes to just $10m, yet they generate revenues of over $1.5bn for Delta Topco. The FIA's agreement with Ecclestone will increase its total take from F1 to $40m annually in addition to the 1% equity stake, estimated to be worth $120m. That would be a significant sum for the governing body which had just over €50m in revenue in 2011, according to the latest approved accounts. In that year it made a €2.5m loss, and is forecast to lose €2.1m for 2012 – a figures to be confirmed at its annual meeting in December.

This year it increased the entry fees paid by each F1 team from $326,000 to $500,000, plus $5,000 per point or $6,000 for the championship-winning team. Red Bull Racing, which won the F1 title, has to pay $3.3m, a tenfold increase on its fee for 2012. The cost of F1 drivers' licences has also accelerated from a base fee of $1,830 plus $230 per point in 2012 to $10,000 plus $1,000 per point.

[Richard]

So perhaps it's better to say F1 is largely about being an entertainment cash cow to support their other benevolent activities?

[Pup]

Or you could say that their benevolent activities exist to address criticism of their entertainment business.

[autogyro]

Or you could say the FIA is now simply a cash cow supplying money to a privileged few from entertainment that no longer has anything at all to do with technological innovation or real sportsmanship.
The rest of the FIA's activities are simply continued to hide the truth and weave the illusion.
Bottom line is the FIA is just a small part of FOM and that is just another aspect of corrupt banking.

All bow to Bernie. [-o< for that way lies madness and F1s future.

[Richard]

@autogyro - Your words may be emotively loaded but you're right when it comes to the facts. I normally dislike point by point replies but there are some points of yours that I want to support and elaborate:

• FIA is now simply a cash cow supplying money to a privileged few - Indeed, the vast majority of money goes straight to FOM and from there to CVC
• Entertainment - I agree, the underlying motive is all about the TV audience in order to boost the cash.
• no longer has anything at all to do with technological innovation - I'd not go so far as nothing at all, but agree the tight specs limit innovation. How can we think the sport is truly innovative when the powertrain was frozen for so many years?
• FOM ... is just another aspect of corrupt banking. - Well we can't deny that now that courts have confirmed Bernie bribed people during the sale to CVC

[autogyro]

The question is how and who can change things before Todt reduces F1 down to the Balestre days?
Bernie's days are numbered and so is F1's if major changes are not made.

[Pup]

• FIA is now simply a cash cow supplying money to a privileged few - Indeed, the vast majority of money goes straight to FOM and from there to CVC

It seems as if it's becoming my mission to correct this:

The teams get ⅔ of the income from the sport. So the vast majority of the money goes straight to them.

Also - irrelevant to most, but perhaps interesting to a few - I know we typically use CVC as shorthand for the ownership group as a whole, Delta Topco*, but it's worth reminding ourselves every now and then that CVC only owns 35.5% of that group.

As best as I can tell, the current ownership is this:

35.5% - CVC
21.1% - BlackRock/Norges Bank (no idea of the breakdown)
12.3% - LBI
8.5% - Bambino Trust
7.0% - Waddel & Reed
5.3% - Bernie Ecclestone
3.0% - Texas Teachers Retirement
3.0% - JP Morgan
1.0% - Patrick McNally
0.8% - Duncan Llowarch
0.8% - Sacha Woodward
0.7% - Churchill Capital
0.5% - Judith Griggs
0.25% - Peter Brabeck-Letmathe
0.25% - Sir Martin Sorrell

Anyway, that's getting into the weeds - the point is that if F1 earns $1.5 billion, the teams should get about a billion, while CVC itself, after expenses, would get a bit over $100 million (probably less than Ferrari's take), with another $200m getting split up among the other owners. (Math = approx. $200m historically in operating and interest expenses, payments to the FIA, etc.)

I do suspect that the teams don't see anything from Allsport, so that would go directly to Delta (or Beta or whatever entity it goes to). And surely they see nothing from GP2/GP3, which are also part of the group.

Most Importantly
Most fans think of CVC as a handful of fat cats, drinking cognac and smoking cigars which they light with the cash from ticket sales. But CVC is a fund (group of funds). Surely the guys who run it are indeed fat cats and have their share of cigars and cognac, and I don't have any particular sympathy for them; but the fund itself is in turn owned primarily by pension funds & endowments. So the money F1 earns is earning money for lots and lots of people, not just a few, most of whom are average Joe's just like you and me, and who probably don't even know where their pensions are invested.

...facts...

No! Bad moderator!


* So it is said. There are Deltas and Alphas and Betas and Prefcos and SLEC of course and FOWC and surely more - and in the past, Bernie has done a good job of hiding exactly which company owns what and through which ones flow the money; and he's been accused of using that to his advantage in making promises that, as a result, didn't need to be fulfilled and also in keeping control of the sport. He seems to be quite a bit of work, that guy - no surprise there, I guess.