F1 has rejected Andretti's entry bid

[thegreenhell]

Forester1965 said:

Much of the commercial value of F1 is built on intangibles and mystique.

TV viewing figures have been dropping since Liberty took over but online 'engagement' is massively up, the gender split more equal and fan average age is reducing. The commercial language of F1 is all about the wider marketing value to the brands.

It's easy to increase online engagement when the previous owner was a dinosaur who went out of his way to block online engagement in an effort to boost TV numbers.

Forester1965 said:

The concept of adding teams to F1 conflicts with the business model, which relies on limiting the number of franchises to uphold their on-paper valuations. In other words, team owners don't want to dilute the asset value of their franchise. A buy-in figure of $200m for a new franchise creates valuation difficulties for an existing one believing it's worth 4x that despite languishing toward the bottom of the timesheets every week.

From Liberty's perspective adding another franchise won't increase the valuation or revenue of F1 but will increase costs and reduce margin.

Nobody who matters in F1 wants another team because it doesn't make them any money. That's the bottom line.

That's a conflict they've created themselves. Their own rules state they can have twelve teams, with a buy-in of $200m for new teams. They wrote that themselves and all signed up to it, but now they don't want to play along.

[skwdenyer]

Forester1965 said:

Much of the commercial value of F1 is built on intangibles and mystique.

TV viewing figures have been dropping since Liberty took over but online 'engagement' is massively up, the gender split more equal and fan average age is reducing. The commercial language of F1 is all about the wider marketing value to the brands.

Where in the past there was a sport with which brands could pay to associate, the real game is now the brands themselves as focus and the sport is secondary.

The valuation of the teams and F1 as a whole is measured in comments and likes on social media and, yes, Drive to Survive. It's literally a popularity contest. Much of the growth is aimed at the US because it's a large and affluent market traditionally under exploited by F1. It's increasing engagement there already without the help of another US based team.

The concept of adding teams to F1 conflicts with the business model, which relies on limiting the number of franchises to uphold their on-paper valuations. In other words, team owners don't want to dilute the asset value of their franchise. A buy-in figure of $200m for a new franchise creates valuation difficulties for an existing one believing it's worth 4x that despite languishing toward the bottom of the timesheets every week.

From Liberty's perspective adding another franchise won't increase the valuation or revenue of F1 but will increase costs and reduce margin.

Nobody who matters in F1 wants another team because it doesn't make them any money. That's the bottom line.

I disagree with your assessment of valuation. $200m buy-in plus the full costs of infrastructure, development, etc to get to the minimum performance level is a very large number, and may easily reach the cost of buying an incumbent. Since incumbents benefit from some historic revenue-sharing agreements (IIRC), their valuations seem secure to me.

[Sandpit Steve]

thegreenhell said:

That's a conflict they've created themselves. Their own rules state they can have twelve teams, with a buy-in of $200m for new teams. They wrote that themselves and all signed up to it, but now they don't want to play along.

Exactly, that’s the crux of the US politicans’ letter to Liberty.

skwdenyer said:

I disagree with your assessment of valuation. $200m buy-in plus the full costs of infrastructure, development, etc to get to the minimum performance level is a very large number, and may easily reach the cost of buying an incumbent. Since incumbents benefit from some historic revenue-sharing agreements (IIRC), their valuations seem secure to me.

Indeed, but the teams don’t think so. They want to stall Andretti until next year when they can turn the $200m into $500m, or even to ban new teams entirely and exist as a “franchise” model of 10 teams, which instantly revalues their own business significantly upwards from current values.

[tele_lover]

Are FOM subject to EU competition rules?

I would think the EU are hotter than the US on anti competition.

[732NM]

tele_lover said:

Are FOM subject to EU competition rules?

I would think the EU are hotter than the US on anti competition.

That depends on who you ps off.

[Leithen]

732NM said:

tele_lover said:

Are FOM subject to EU competition rules?

I would think the EU are hotter than the US on anti competition.

That depends on who you ps off.

Worst case scenario for Liberty is both US and EU regulators getting into a pissing match about who’s tougher.

Saward seems to think Liberty’s size will protect it in the US. They’ve gone after far larger with far better lobbying machines.

[richhead]

this is why F1 is a failing model, manufacturers have all moved or are looking at sportscars, and trust me the tech is not a mile from f1 levels, in some places ahead.The idea that you can build what you like aslong as it conforms fo a few points is attractive, F1 is way to restrictive.
Blocking the andretti bid will shoot them in the foot.
I for one wont miss it, its no longer about the best car/driver, its about instagram likes now. racing it aint.

[thegreenhell]

tele_lover said:

Are FOM subject to EU competition rules?

I would think the EU are hotter than the US on anti competition.

It wouldn't be the first time if they do decide to get involved. It was the EU that legislated against the FIA and enforced the separation of sporting and commercial activities that led to the 100 year lease of commercial rights to FOM.

[Some Gump]

richhead said:

this is why F1 is a failing model, manufacturers have all moved or are looking at sportscars, and trust me the tech is not a mile from f1 levels, in some places ahead.The idea that you can build what you like aslong as it conforms fo a few points is attractive, F1 is way to restrictive.
.

What class is that?
Hyoercar?
Dpi en francais?

Neither allow you to build what you like, or anything remotely close..

Lmp1 is what f1 could have been, but that party is over. Pity, it was awesome for a few years.

[coppice]

F1 tech might be high , but it has become virtually a spec formula with an absurdly prescriptive set of rules . The obscene amounts of cash are still spent, but not on something interesting like a supercharged V5 two stroke but on wasting the talents of clever people by doing minute analyses of tiny and very dull bits of bodywork to gain .0001 secs .

It wazzes on about sustainability and then demands tyres that wear out in 10 minutes and are throw away (I assume ?)

[Blib]

What happens to F1 tyres after a race.

[Sandpit Steve]

coppice said:

F1 tech might be high , but it has become virtually a spec formula with an absurdly prescriptive set of rules . The obscene amounts of cash are still spent, but not on something interesting like a supercharged V5 two stroke but on wasting the talents of clever people by doing minute analyses of tiny and very dull bits of bodywork to gain .0001 secs .

It wazzes on about sustainability and then demands tyres that wear out in 10 minutes and are throw away (I assume ?)

I think “sustainably recycled” was the phrase you were looking for there

https://www.pirelli.com/tyres/en-ww/motorsport/f1/...

Yes, they end up as ‘rubber’ marbles in a kids’ playground after every event, even the unused ones and the wets, because they can only be mounted once and the wheels belong to the teams.

[realjv]

732NM said:

tele_lover said:

Are FOM subject to EU competition rules?

I would think the EU are hotter than the US on anti competition.

That depends on who you ps off.

I would imagine the domestic US sports leagues like the NFL will not be too keen on congress and co taking too closer look at F1's "anti competitive" practices given that they themselves operate as a literal cartel. F1 is big, Liberty are big but the NFL is where the serious lobbying power rests.

[Sandpit Steve]

realjv said:

I would imagine the domestic US sports leagues like the NFL will not be too keen on congress and co taking too closer look at F1's "anti competitive" practices given that they themselves operate as a literal cartel. F1 is big, Liberty are big but the NFL is where the serious lobbying power rests.

The difference is that the other sports leagues play by their own written rules - and F1 don’t. They say they will allow up to 12 teams, but then act as a cartel of 10 when #11 wants to join in the party on the agreed terms.

[Forester1965]

The thing with NFL is it's all North American. F1 isn't and it's keeping out Americans.

[coppice]

Sandpit Steve said:

I think “sustainably recycled” was the phrase you were looking for there

https://www.pirelli.com/tyres/en-ww/motorsport/f1/...

Yes, they end up as ‘rubber’ marbles in a kids’ playground after every event, even the unused ones and the wets, because they can only be mounted once and the wheels belong to the teams.

And how much more impressive it'd be if Pirelli made tyres that could last for a race, as doubtless they could .Hard compound with much lower grip you say ? Result . A better advert than drivers moaning about ...err...deg after ten minutes' use.

[realjv]

Sandpit Steve said:

realjv said:

I would imagine the domestic US sports leagues like the NFL will not be too keen on congress and co taking too closer look at F1's "anti competitive" practices given that they themselves operate as a literal cartel. F1 is big, Liberty are big but the NFL is where the serious lobbying power rests.

The difference is that the other sports leagues play by their own written rules - and F1 don’t. They say they will allow up to 12 teams, but then act as a cartel of 10 when #11 wants to join in the party on the agreed terms.

I don't think F1 has broken their own rules, the assessment criteria for entry are very subjective and can basically be manipulated by F1 to give any answer they choose. "Add value" is such a wide open term it can mean anything plus how much is enough value to add?

Whilst I disagree with the conclusion they came to I'm pretty sure they are on fairly solid ground as it will be difficult to prove otherwise.

[asfault]

Fans want more teams and cars though. Viewing figures are down due to maxs dominance but a new team coming in would inject fresh interest.

[Blib]

coppice said:

And how much more impressive it'd be if Pirelli made tyres that could last for a race, as doubtless they could .Hard compound with much lower grip you say ? Result . A better advert than drivers moaning about ...err...deg after ten minutes' use.

Aren't they specifically instructed to produce exactly what they provide?

[MustangGT]

Blib said:

coppice said:

And how much more impressive it'd be if Pirelli made tyres that could last for a race, as doubtless they could .Hard compound with much lower grip you say ? Result . A better advert than drivers moaning about ...err...deg after ten minutes' use.

Aren't they specifically instructed to produce exactly what they provide?

Indeed you are correct. Tyres have always had to be managed, it is just more public now with access to the team radio channels.