F1 gets £1.15 billion bailout to save it from ruin
Formula One has been given a £1.15billion cash injection to save it from ruin.
The money comes from Liberty Media, the American conglomerate who own the sport, after they transferred another of their businesses away from the Formula One Group into a different stock.
It means Formula One should be able to meet loan obligations as well as fund teams and race promoters whose cashflow has dried up while the season is suspended, until the summer at least.
This massive boost came as the governing body, the FIA, gave themselves the power to make regulatory changes without the unanimous agreement of the teams. This would allow them to impose a budget cap, even if Ferrari object in the ongoing row over the future level of expenditure.
While the FIA’s steely intervention is a welcome sign of leadership in troubled times, Liberty’s shot of cash liquidity is a landmark statement of faith while hundreds of staff are furloughed as a result of the pandemic.
Liberty chief executive Greg Maffei said: ‘The new Formula One Group now has a strengthened balance sheet that positions us to support and enhance the F1 business.
‘We have advanced money to certain teams already. There are cases where we may do more of that to bridge teams that need help.
‘We’re certainly not viewing this is as an open chequebook. But these are teams we want to make sure are solvent because they are part of what we need to race successfully in 2020, 2021 and beyond.’
Maffei promised the money — raised by Live Nation Entertainment being reattributed — would support the sport’s ‘ecosystem’ in the event of no competition all year. He added Liberty had planned both for zero races and between 15 and 18 — the most optimistic figure F1 chief executive Chase Carey is working towards.
Should racing go ahead, it seems clear Liberty would have to reduce or waive their usual hosting fees for some tracks, such as Silverstone, especially if the action took place behind closed doors.
A revised schedule is being drawn up, with Austria and Britain pencilled in for early rounds.
Meanwhile, the FIA and Liberty have given the teams until Friday to agree a budget cap for next season. A figure of £140million was agreed prior to the virus outbreak. A reduction to £120m in 2021 and £105m in 2022 is on the table. The figures exclude salaries of drivers and top executives.
McLaren are pushing for £80m, believing the sport might otherwise prove unsustainable, but Ferrari are unwilling to budge.
The FIA may need to take a firm line. Announcing their new authority to enact swift decisions in emergencies, the governing body said: ‘This will overcome the requirement to obtain the unanimous agreement of all competitors to amend regulations (where) essential for the safeguarding of the championship.’Daily Mail