Liberty: No renegotiation with Silverstone

F1 Fanatic Round-up

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In the round-up: Liberty Media chief Chase Carey says it will not change the terms of Silverstone’s contract despite the circuit considering whether it should activate a break clause.

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@Hutch won this weekend’s Caption Competition with this effort:

“The time has come, execute Order 66.”
@Hutch

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Keith Collantine
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35 comments on “Liberty: No renegotiation with Silverstone”

  1. Manor’s collapse was inevitable when Sauber crossed the finish line in Brazil. At that point I had a very bad, and sad feeling about it.

    That prize money probably meant survival for both of them, especially Manor. And in a sport where sponsorship is nearly impossible (remember that the team who has dominated for three years is struggling), there was only one possibility for them. Prize money.

    1. @strontium That may well have been the final straw but the real ‘end’ for Manor (And the other 2010 teams) was when the goal post’s were changed shortly after there entry’s were accepted.

      1. Very true sir, very true

    2. To add: If they want to think about having a sustainable sport for 26 cars, they need to seriously reconsider how the bottom three are going to survive and grow if they aren’t entitled to a slice of the cake.

      Liberty can’t have their cake and eat it.

    3. ironically, with his points’ finish in Brazil, Nasr killed off his last lifeline in F1…

    4. I think Manor’s problem was apparent some years ago when it seemed F1 had a policy of not showing their cars on TV.

    5. @strontium, it might seem like that was the final blow, but some journalists have stated that Manor could well have collapsed even if Sauber hadn’t beaten them – even before that race, Manor already knew it had a major budget deficit for 2017 (hence why Fitzpatrick had been trying to sell the team off before then).

  2. What if F1 allows single car teams? it seems to work at Indycar or MotoGP… maybe instead of folding, a team can afford to race a season or two with 1 car, and then step up and compete with a second… or chose selected races to run 2 cars.

    1. @fer-no65

      There is a pretty big difference in the preparations needed for F1 compared to IndyCar and MotoGP for small teams. For the latter two, they are basically handed a spec car or old factory bike and they only have to prepare it to run races. In F1 they have to design a car from scratch and can only buy some of the components of the car. Because of the huge R&D costs involved in F1, it probably isn’t worth it to do a 1 car team anymore. Once you have a design for a car, producing twice as many parts is not that difficult (relative to the scope of the whole project) so I don’t think it is the limiting factor to survival. A second car is almost always self-sustaining in terms of finances just because the team can bring in a driver with good financial backing to drive it. So I don’t think that any teams would actually want to run single car entries.

      1. Well yes and no because although the big expense is indeed R&D and aerodynamic development etc there is also some cost that can be saved with one car for a team like Manor. Usually this could be non issue if you can sell the second seat to a river bringing some good number of sponsorship millions in the team as you said but now in our days not every driver with a decent packages jumps to get a seat at a team like Manor.
        They see such teams as hard to make any impression and therefore a bad career move.
        Also lets take the Merc driver thing they had(they couldn’t find any other with big millions as you see).
        According to what was reporter Merc took 5millions of on engine cost for their driver running.
        BUT a Merc engine supply seems to be between 14-17 million from what we hear so even if we take the lower amount they save more on engines by running half the engines and having half the engine cost than having another Merc driver.
        If you include in that the less spare parts they have to built, the less fuel and crew and computer analysis etc they will need then you have quite a significant reduction.
        I assumer a good 10-15 million at the least can be saved. Running an F1 car is not cheap just be the fuel it burns alone.

        From racing perspective it can end up good and bad. If in a weekend they have issues with the car then they get little running and they have a hard time with set-up but on the other hand having only one car can make them focus more on that car and make better strategy and give that car the best chance possible in all debarments.

  3. So theoretically, Manor can be saved.

    As Kate Walker says in the ESPN article, if anybody wants to get into F1 at a rock bottom price, this is it.

    If there is a serious backer, with cash to go around, and providing they adopt a Haas-esque approach, it could bode pretty well for them in the long run. Anybody looking to take over the team will pretty much need to write off the first half of the season.

    They’re a good team with clever personnel who’ve made operating on a shoestring an art form.

    Perhaps a willing buyer is still lurking in the background? I certainly hope so.

    1. Anybody looking to take over the team will pretty much need to write off the first half of the season.

      The first two seasons just to get into the midfield and tons of money to offset the p11 championship position which doesn’t pay out any money. Manor has super bad readyness to compete in 2017. Manor has no engineering team to build on becoming a mid field team. Their facilities are poor and their tools are probably old and few. Their engineering team is reduced to as small as it can be just to patch up the old cars for the next seasons. For manor to be sustainable it needs a strong p10 finish in the championship because p10 pays money. P11 nets you nothing. But manor needs massive luck in order to finish ahead of sauber. Sauber is strapped for cash but at least it has a history of building strong mid field cars. Manor’s reputation is being the last finisher pretty much every year.

      Buying manor is a bad bad proposition. It is an ongoing cost with no hope to ever produce any money or results. If it did then it would have been sold already.

      For rock bottom price you are getting rock bottom quality. It is not that the people at manor who are clueless but the team has been sucked dry of anything that makes it a true f1 competitor. Only thing it has of value is its f1 entry slot. If all teams in f1 were guaranteed prize money instead of top10 manor might have a chance to sell the slot. But as long as that is not the case it is a very bad deal.

      I think getting rid of manor is good for f1. It finally gives some sustainability to the teams at the back end of the grid when they don’t need to worry if they finish 10th or 11th and get some money or nothing. Now all the teams are guaranteed prize money which allows them to plan for the future. This should allow sauber to get more competitive when they can think ahead more than just one season. And unlike manor the sauber can become a competitive mid field team. In the right circumstances sauber can do what force india did. Manor could never achieve anything like that. It is good for f1 that manor is finally gone.

    2. The issue is not what you pay for the assets out of administration, the issue is the amount of capital you’d need to pump-in, up-front, to run the team in last place this season; $40 million. And that’s just to run last place, perpetually. If you want a chance at moving forward in 2018 then bump that up to $100 million. What you pay for three old CNC mills, ten boxes of tools and miscellaneous pit rigging is irrelevant in the big picture.

    3. I read somewhere that their entry is still valid until the second or third round

  4. Liberty Media’s first two, opportunities to exhibit a different mindset, Manor and Silverstone, yet we see more of the same.
    Talking of attracting more teams to the sport yet unwilling to do anything for a team that is about to go out.
    Dave Richards has proved himself right. He sniffed at the offer and decided to pass. Self immolation for the gods of F1 brings no glory to the fallen.

    1. @OOliver I disagree. Manor has not shown themselves to be a viable enough business entity. If they were, then perhaps the likes of David Richards might be more interested. Since they’re not, how much money should F1 keep throwing their way? When is it good money after bad? Why should a team be in F1 if it is not sustainable and is completely dependent on handouts at some point? There would potentially be many many entities willing to enter F1 if they were guaranteed survival. At some point a team has to do their bit too. Teams need to find sponsors who want to pay for and gleen the massive marketing potential of being in F1. I’m not suggesting that’s easy. Just the way it is.

      As to Silverstone, Liberty has said they will work with them, and help them enhance the event. BE would just say too bad so sad.

    2. As the new boss they have opportunities to set precedents for going forward, this is true. But, if the precedent is that they will bail out struggling teams or that they will renegotiate contracts with a dissatisfied promoter/circuit, then they will be setting themselves up for failure. As much as I love the Manor team and want to see Silverstone on the calendar every year, if they bail out one they set precedent for potentially bailing out all. And that is not a sustainable business model.

      Just because they are not performing bailouts to start their tenure in F1 does not equate them with Bernie and what has gone on before. Their job is to create a sustainable business model for all participants in F1 and make it attractive enough for others to join. This won’t happen overnight. As fans we have to give them a chance to make this work and time will be the judge of their success.

  5. We want to do that sort of thing with the British Grand Prix and also make the event broader, with the race at the centre of a full weekend show

    This sounds promising, maybe he’s no longer chasing the week long festival junk. I’d agree with more supporting acts and supporting events on the weekend itself.

  6. I have never understood the pay structure of F1. How can you perform for a year with all the expenses that creates, only for the organizers not to give you 1p? You must be insane to want to race in F1. That is why I cannot feel sorry for anyone who gets burned. You know the terms stink yet you race anyway. You don’t need a crystal ball to know the outcome. F1 is not a sport but a badly run entertainment company. At Least the WWE pays its talent, even the guy who sweeps up gets money.

    1. Well, that’s not the case for those who got in in 2010. The terms were different when they signed, so they would have needed a crystal ball to know the outcome in this case. People saying Manor out is their own fault (or good for the sport) should do some more reading before they do any more writing.

      1. I am not talking about 2010, I’m talking about now. Why would anyone join F1 for £0.00 no money? What business runs for zero profit and 100% expenditure? People who want to flush money down a toilet or budding F1 teams. Both make no sense. @FLIG I’ve got a job offer for you. The pay is nothing but I expect you you turn up week after week to watch me spend the money you provide to me and my mates for ’employing’ you. Hurry the queue starts at the asylum and ends at me becoming a billionaire.

  7. Let’s get real (analytical) on Silverstone.
    The track is full; every seat in the house. Most fans who attend do so despite the fact they feel it is very expensive, particularly inclusive of travel and lodging. There are many fans who don’t attend as they characterize it as prohibitively expensive.
    And despite a “full house” paying extremely high prices for tickets, the race is a financial loser for the promoter.
    Chase Carey’s “solution” is to increase the revenue for the promoter, not lower the costs (sanctioning fee).
    So, Mr Carey has “ideas” that are apparently going to increase revenue from two groups of fans:
    1. Increase revenue-per-head from the existing full-house of fans, who already feel, for the most part, that they are spending at the limit to attend.
    2. Bring in those fans who don’t attend now because it is prohibitively expensive.
    His ideas for increased revenue are to turn the race weekend into a “week-long Super Bowl”, which is his “festival” plus the race weekend.
    So, for group-one it’s more revenue from people that already are paying at the limit, because now they receive a “festival” in addition to the race weekend and they’ll be happy to spend even more in total.
    Group-two can’t afford the race weekend. However, Mr Carey believes they’ll either:
    A. Change their mind and “be willing/able to afford it” with the added attractions of a “festival”, or
    B. Attend only the lower-cost “festival” portions of the Super Bowl and skip the race weekend
    You can’t make this stuff up.
    And as an aside, when Lewis retires from F1 the British Grand Prix is history as revenue will implode.

    1. Business as usual… When Chase Carey first appeared back at the Italian GP he was interviewed by sky. He said he wanted to make F1 more affordable for families. If I remember correctly the topic was Silverstone
      If there is a willingness to address the ticket price issue then this is not a good sign

  8. So Liberty won’t renegotiate Silverstone’s contract but want to build it to be bigger and better.
    Sounds just like something Bernie would have said.
    I may be missing something but “Bigger & Better” normally means more cost – for a venue that is already attracting huge numbers and unable to break even, I can’t see how that’s going to happen.

    1. That’s because you aren’t “thinking out of the box” at the significant “revenue opportunities” available to Silverstone by “targeting key demographics” with the right “selling proposition”, a more tailored “go to market strategy” for promotion, and a “stronger brand” that “fits the F1 experience”.
      (American corporate-speak)

    2. Maybe they’ll let Silverstone have a bigger slice of the profits for the extra events, for instance. Then Silverstone makes more profit, but also LIberty don’t be seen to cave in to the first request to change contracts.

    3. @dbradock I’m sure Silverstone would have been happy to renegotiate their contract and potentially get a better-value deal. But did they ever really think that was realistic when they started talking about this break clause?

      In any negotiation you first figure out what you want and then you may start out by asking for more so you have a worthwhile position to retreat to. Perhaps getting a contract renegotiation was Silverstone’s best case scenario and winning other concessions was their realistic aim.

      1. Good point Keith and of course you’re correct.
        I was just a little amused by Carey’s response and how “Bernie” it sounded, although to be fair I suppose he didn’t say “F1 doesn’t need a British Grand Prix” so there’s hope of a realistic outcome.

  9. Although I generally believe the historic races should be supported better but, playing devil’s advocate for a minute about Silverstone, but the whole fee escalator thing was known about when they signed the contract in 2009.

    http://news.bbc.co.uk/sport1/hi/motorsport/formula_one/8397777.stm

    So for the BRDC to turn round and say that the contract is “potentially ruinous” rather begs the question about the due diligence done in getting into the contract in the first place. Are we to believe that the BRDC didn’t get their numbers right at the time, or did they just sign the contract and hope for the best?

    1. The BRDC was given a choice; sign a contract they knew wasn’t sustainable in the long term, or lose the GP.
      They took the only choice that meant they wouldn’t lose the GP in the short term.
      There weren’t any other choices available.

  10. So Newey describes Verstappen as Mansell. I can’t help reading that and thinking that it is a back handed compliment. I know all the media friendly guys are saying Verstappen is the next Schumacher/god, but I can’t help thinking part of that is marketing. Newey is an engineer and his commentary is engineering like and based on facts, not politics. He has worked with almost all of the top drivers in the last 20 years and he compares Verstappen to Mansell! Ouch.

    Well at least he didn’t compare him with Damon Hill I guess. Hey, I rate, both Nigel and Damon, but they are Rosberg level drivers. Nige is a bit higher, but not by a huge amount.

    1. I think the Mansell comparison is mostly because Newey was very familiar with him — Mansell drove his car to the 1992 championship. As far as I can remember, Newey never worked with Schumacher, and his time with Senna was all too brief. I think we can forgive Adrian for saying that Max reminds him of someone he achieved a lot with.

    2. @mickharrold Newey rated Mansell pretty highly. I recall him saying Williams would have won the 1995 title had they hired him instead of Coulthard.

  11. Good old Daffy’s Gin. No car to sponsor now.

  12. What happened to the lawsuit asking the EU about its competitive / noncompetitive clause involving the way Bernie distributed money based on the manufacturers points? Thanks, Racer Norriski

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