What does the new Formula 1 TV deal mean for the sport in the US?

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Last Friday, John Ourand and Adam Stern from Sports Business Journal reported that Formula 1 and ESPN have agreed to a new TV rights deal that will run through the 2025 season and will cost ESPN between $75 million and $90 million a year. This week, Ourand joined The Ringer F1 Show to discuss the details of the deal, why F1 chose to re-sign with ESPN over some of the other outlets that have bid, and how it will affect the sport in the long run.

This transcript has been edited and condensed for clarity.

Kevin Clark: The news last week is that F1 has re-signed with ESPN for three years, between $75m and $90m a year. It’s a huge increase. There are two deals, ESPN didn’t pay anything for it. They didn’t pay a duty fee, and then that was adjusted. ESPN paid F1 a bit more, but there was a massive raise for this one.

Let’s start at the top, John. Explain to me this negotiation process, which took place in the context of Netflix creating superstars from F1 drivers. I was on Bryan Curtis[’s podcast] a few weeks ago, and he said, “Explain this. Explain all of this. And I said, ‘Well, basically, Americans love superstars, and Netflix has delivered F1 the greatest superstar generator, perhaps, in modern sports’ until it goes from zero to 100 with some of these guys like Daniel Ricciardo.

Obviously Lewis Hamilton was already famous and all that, but it’s a gift to the TV world that Netflix did this. But it all came down to American television rights. Kind of explain to me the ticking of what’s been going on for the past two years, John.

John Ourand: First of all, the deal is not yet done. They have a handshake agreement. Nothing has actually been announced. Everything could blow up based on this interview here. [Laughs.] But they have a handshake deal, and F1 has told Amazon and NBC they won’t get it. So, it’s definitely happening, but there’s still a few days or a week to go before it’s official.

Like you said ESPN went from not paying anything, and that was a way for F1 to just get into the US market and get… they were with NBC earlier, but come in with ESPN on the market. And then ESPN paid, I think it was $5 million a year.

They started to negotiate again. ESPN was expecting a pretty big increase in rights, probably to $30 million, $40 million per year versus $5 million per year. And it looked like it was going to happen for sure. I actually do a prediction column every December, and this was one of my easiest predictions: They’re going to renew. There’s going to be a big increase in duty fees.

F1, they saw that the live sports market in the United States was going crazy. They really compared to European football leagues. And they saw the rights that the European football leagues got mostly from ESPN+ and Paramount+ and all those streaming services. And they were like, “$40 [million] not going to cut it. We seek over $75 million per year. And when they said that, ESPN blanked.

[F1] went to market, and they got Comcast. NBC, I originally thought when they left NBC, there were hurt feelings there. They said some things publicly about NBC. And they didn’t seem to like each other. But Comcast owns Sky Sports, and they own NBC and all the cable channels, USA Network. They got engaged in a big way. Amazon came along, they got engaged in a big way.

ESPN saw it. And that’s more than actually you mentioned the superstars – I think of course it has something to do with it. But F1 has really been strategic in getting into the US market in terms of racing in Austin, Vegas, Miami. They also have time zone races that work very well in Brazil, Montreal. And so, all of a sudden, it’s not just that little weekend morning lineup anymore. It’s going to come at times that will also be very helpful to ABC and ESPN, or anyone else out there. It also helped push things along as much as all the work F1 has done to try to create superstars.

Clark: One of the things you pointed out was that Amazon’s bid was higher. I guess there are two ways to look at this. Does F1 want to be on ESPN and ABC when it’s the big races, when they’re in North America? Montreal received this treatment even a few weeks ago. Is that right?

Or is it ESPN? The report said ESPN was going to hire someone or take someone they currently employ and have them travel to all the races and make them hits. Is it just the exhibition thing? Does F1 get promised shoulder programming and extra traction this way? Why did they accept a lesser offer, John?

Ourand: I just had David Levy on my pod, and he was running Turner Networks, the head of Turner Broadcasting. And he pointed out that at one point he offered a lot more for one of the NFL packages, and the NFL said, “No, we don’t want it going to cable. We will keep it on air. The old BCS, the college football playoffs, that was on Fox, airing.

Clark: It was horrible. It was horrible on Fox. I like Fox. I like Fox like doing the NFL, whatever. These few years with BCS on Fox, I did not appreciate.

Ourand: I always have David Hill in my ear telling me: “I have to show the bands. You have to show the groups. In the middle of a passing game, they would almost go towards the crowd because of the flush. It was great TV there.

But to convince the BCS to pull out of Fox, ESPN had to outbid Fox by [$100 million] because they’re giving up a lot of their reach and going to cable—at the time, it was I think 2007 or 2008…and it wasn’t as important as broadcasting. The cable therefore had to pay more. That’s what we’re seeing right now with streaming.

Amazon, he knew he would have to pay more than ESPN. …In fact, on the pod, I asked Levy what he thought Amazon might have paid to get it. Amazon was making about $100 million, I was told, a year, and the winning bid was $75-90. [million]. Levy suggested it would take around $200 [million]. They should pay a lot more just because F1 is growing. They shop in the United States. Do they want to be relegated to a strictly streaming service? It’s not good for overall growth. And then you have, on top of all that, the advertising and sponsorships that they sell. It is important.

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