Will Ferrari lose its $100m F1 bonus?

With the questions lingering on what changes Liberty Media will make to Formula 1 once it’s controlling interest has been officially acquired later this month, perhaps two lingering big rocks are the hottest topics for the Colorado company—Bernie Ecclestone and Ferrari.

Reports suggest that long-time F1 boss Ecclestone could be show the door as early as late January and with that decision comes serious organizational changes—namely, who’s running things and how challenging will it be to dislodge the venerable ring leader of F1 who still owns significant shares in the business?

The other rock is the question of Ferrari who have enjoyed a $100 million off-the-top payment as the longest-running team in F1. Having competed since 1950, Ferrari were given a historic or heritage payment for the trouble but with teams such as Manor, who have slid into receivership, dying on the vine, Liberty reckons a re-structuring of the prize money payout might help balance the series. Forbes has an article that suggest Liberty will be looking to make changes.

“If you’re Ferrari, you have enormous sponsorship revenue that goes directly to you. That’s going to be impacted more positively by great races. So thinking about balancing the team payments, so they’re a little more balanced and creates more fairness, has to be weighed, in Ferrari’s mind, I would expect, by the fact that creating a great platform helps our sponsorship revenue, too, so there’s give-and-take,” says Liberty’s chief executive Greg Maffei.

This is going to be a difficult sale for Liberty as a bird in the hand is normally better than two in the bush and explaining to Ferrari CEO Sergio Marchionne that making healthy teams will provide better racing which will increase viewership of the series and therefore offer more brand exposure to Ferrari is not an easily quantifiable option and Ferrari are one of the largest brands in the world already so is more F1 TV exposure really going to help?

Ferrari might argue that their participation and brand are the very things that keep viewers coming back to F1 even in a decade of dominance in the sport by Mercedes and Red Bull.

As Chris points out in the article, there is an interesting element to the switch from free-to-air TV versus pay TV and the shift of sponsor dollars is tangible as teams lack main title sponsors on their cars in return for a bigger portion of the prize money. The fact is, and Chris offers a graphic so follow the link, that the teams are more reliant on prize money now than perhaps they have been in the past. As that could be the case, then Ferrari’s $100 million is a huge chunk to take out of potential prize money for smaller teams.

No matter what Liberty does, there will be noses pushed out of joint and you can never please anyone but critical to the process is to find common harmony in the goal of creating a racing series that is entertaining, competitive and one in which fans can’t miss every other Sunday. There is a lot of detail and room to fill in the crack of this grand plan but perhaps Liberty can bring the right mortar and start building an F1 series for the new era…whatever that may be.

Hat Tip: Forbes