The potential F1 sale, explained

Boring is rarely the case in the world of Formula 1. Between the silly season of drivers, the silly season of team managers this year, the growth of the sport globally and recent stories of potential expansion, F1 has seen a lot lately. has become the news of

But the latest news surrounding F1 deals with the sport’s future from a business perspective.

According to recent reports, Saudi Arabia’s Public Investment Fund (PIF) has made an aggressive offer to buy Formula 1 from Liberty Media. in a report from bloombergPIF approached Liberty Media last year to set a $20 billion valuation for F1.

the report from bloomberg Liberty Media, which bought F1 in 2016, rejected the offer, but said PIF was still “interested in the property”.

Liberty Media acquired F1 in 2016 and the sale was completed in early 2017. At the time, F1 was valued at his $8 billion and the acquisition price was his $4.4 billion.

according to bloombergthe offer from the PIF was $20 billion.

These reports sparked another storm of commentary, starting with FIA president Mohammed Ben Sulayem. The FIA ​​president has hit back on Twitter, referring to having “inflated” the reported F1 price tag.

He kept saying[a]Potential buyers are advised to use common sense, consider the greater good of the sport, and have clear and sustainable plans, not just large sums of money. ”

A social media post by the president of motorsport’s governing body, the FIA, came under fire from both Liberty Media and F1 itself. In a letter sent to the FIA ​​by F1 chief legal officer Sascha Woodward Hill and Liberty chief legal officer Lenny Wilm, comment The demands made by President Ben Sraem are “unacceptable” and “beyond both the FIA’s mandate and contractual rights”.

A copy of the letter was provided to both BBC news When sky sports.

The letter also referred to an agreement between F1 and the FIA, stating that F1 “…has exclusive rights to exploit commercial rights in the FIA ​​Formula One World Championship”. there is

In their view, Chairman Ben Slyem’s comments violated these commercial rights. We believe these comments from the FIA ​​President’s official social media accounts violate those rights in an unacceptable way.”

The letter concludes with a warning that the FIA ​​will be held responsible if the comments “damage the value of Liberty Media Corporation.”

All of this has some very important background. First, the continued growth and expansion of F1 globally. As has been well documented here and elsewhere, the sport has grown over the past few years and has seen expansion to the U.S. This season, Formula 1 will return to the United States, including the much-anticipated debut of the Las Vegas Grand Prix. held his three races in

Additionally, this report comes at a time when PIF is expanding into the sports world. PIF recently acquired Premier League club Newcastle United. The club have played their most successful season this season. PIF also financially supports his newly formed LIV Tour. PIF also invests heavily on the Asia Tour of Golf. The relationship between PIF and LIV Tour is Current litigation matter.

Additionally, there are reports that PIF is considering buying WWE.

Finally, the issue of sportswashing, as discussed here during rumors of a WWE sale to the PIF. As outlined in that article by our own James Dator:

This is the process by which a nation uses entertainment, primarily sports, as a means of reforming its public image. Large sums of money are often invested in teams, leagues, or entire sports well above the ‘accepted’ market rate. In return, we expect beneficiaries to support Saudi Arabia’s public relations efforts.

In recent years, Saudi Arabia has diversified beyond its dependence on oil revenues and expanded into other sectors, including the sports world. This is all part of a strategy to soften the country’s image around the world, including expanding F1 to Saudi Arabia, which will host its first Saudi Grand Prix in 2021.

And now perhaps the acquisition of the sport itself.