Possible F1 sale exposes rift between FIA and category owners

The 2023 Formula 1 season cars were not even presented and the climate has already heated up in the category, with public threats involving the governing body, the International Automobile Federation (FIA), and its commercial rights holder, Liberty Media. All because of the disclosure of an alleged proposal by the sovereign wealth fund of Saudi Arabia to purchase the category.

The article about the Saudis’ interest was published by the Bloomberg website, focused on the business world, and talks about a US$ 20 billion proposal (more than R$ 100 billion) that would have been rejected by Liberty Media. The American company bought the commercial rights to Formula 1 in 2016 in a deal that involved US$ 6 billion.

FIA President Mohammed Ben Sulayem soon went public to question the value of the transaction on behalf of the entity. “It is advised that any potential buyer applies common sense and considers the greater good for the sport and comes across as a clean and sustainable plan, not just a truckload of money. It is our duty to consider the future impact for promoters, in relation to to the fees charged to receive the evidence and commercial costs, or any impact this would have on fans.”

Liberty Media’s lawyers then sent a letter, which eventually became public knowledge, to the FIA ​​World Council saying that any unacceptable interference with F1’s right to market could result in legal liability. That is, if the FIA ​​president’s statements devalue the sport, the entity will be prosecuted.

It is not new that there is tension between the FIA ​​and Liberty Media, which has controlled F1’s commercial rights for six years. They are the ones who close the contracts with GP promoters, with sponsors, with TV stations, they are responsible for the entire presence on social media and the F1TV app. They are also the ones who transfer part of the profits to the teams, which are tied to Liberty through a contract called the Pact of Concord, which lasts until the end of 2025.

The FIA ​​is also a signatory to the pact and receives from Liberty to be the regulatory body. It is up to them to manage the technical, financial and sporting rules and also to provide security services during the GPs (medical center and track inspectors, etc). Thus, F1 has the seal of the FIA.

At the same time, the FIA ​​had serious shortcomings. From the handling of the 2021 drivers’ championship decision to the poorly written rule that confused even the teams in Max Verstappen’s second championship at the Japanese GP, the examples are many and glaring. At the same time, the entity saw a shortfall – there is talk of US$ 60 million – in its post-pandemic accounts.

Over the past year, Liberty has laid off a large part of its staff in England and has been finding ways to minimize travel as much as possible, also to cut costs. And since the beginning of the season, information had been circulating in the paddock that they would have offered the product to the Saudis and heard a resounding no.

But why would Americans be interested in getting rid of a product that has been breaking profit records? The answer would be linked to the reduction of the operation. Liberty’s investment to make the pie grow, especially in the internet part, which was incipient in the Ecclestone era, was quite high and the return did not follow. In the long run, this would not be sustainable, so it’s better to sell your product on the rise than wait for a decline. And, at the high, those who want to buy will end up paying more than they should.