Saudi Arabia is trying to diversify their source of income and, as a part of it, is actively investing in sports. It was recently reported that the Saudi Public Investment Fund wanted to acquire Formula 1 from Liberty Media for a figure of $20 billion. However, Liberty Media’s CEO Greg Maffei said that they would need much more than just $20 Billion if someone wants to buy F1. BusinessF1 Editor-in-Chief Tom Rubython, however, believes that selling the whole brand of F1 won’t be that easy. Rubython has claimed that if Liberty Media wants to sell F1, both the FIA and the ten F1 teams would also demand a share of the pie.
Ever since Liberty Media took over the sport, F1 has seen a huge boost in popularity. The sport has established a huge social media presence, and all the teams have contributed equally to it. Teams like Red Bull, Mercedes, and McLaren have gathered a huge following on social media, which only goes on to help F1. Netflix’s Drive to Survive has reached out to untouched audiences and brought in hordes of new fans to the sport.
F1 has also managed to break into the US market, with three races set to happen in the States this year. And Rubython believes, in a hypothetical scenario, if F1 is sold for $20 billion at least, the ten teams and the FIA would demand a part of $2 billion each, which is greater than the valuation of some of the teams.
Paying off Red Bull and Co. would still be profitable for Liberty Media
Top teams like Red Bull, Ferrari, and Mercedes have a huge influence on the paddock. Liberty Media bosses Greg Maffei and John Malone could not sell off Formula 1 without getting approval from the teams. If they go ahead and do so, the teams will just simply refuse to sign the next Concorde agreement that ensures their participation in the sport.
Rubython believes that if F1 teams manage to fetch their pie from Liberty Media, then it could guarantee every team at least $200,000,000. Then there is the FIA, who would also chip in and demand their share of the money.
Even if Liberty Media decides to sell off the brand at $20 Billion and pay the teams and the FIA $2 Billion each, it would still end up being a good deal for them. Liberty bought F1 back in 2017 at a price of $4.4 Billion. Profiting $16 Billion off its sale would mean a 350% profit for seven years of their work. Add to it the $2.5 Billion that the company has already made regarding cash flow and profits.
A win-win situation for everyone
Rubython believes that the aforementioned deal would be a win-win for everyone. A whopping $200 Million each will be a huge win for the teams at the bottom of the grid.
Even under the budget cap era, small teams like Haas have always found it difficult to reach up to the $135 Million mark. If these teams get $200 Million each, that would secure them financially for two-three years to come. Therefore, selling off Formula 1 could, in a way, help the teams and increase competition among the grid.
As for the FIA, Rubython believes that the governing body would use all the money to develop grassroots sports in an attempt to boost the presidential candidature of the current FIA president. Mohamed Ben Sulayem. When he came to power in 2022, Ben Sulayem had promised to do the same in his election manifesto, and actually doing it will boost his chances of being re-elected. Therefore, it is a win-win situation for everyone involved in the deal.
