Reports of new Formula 1 races planned in Vietnam and The Netherlands point to good news for Liberty Media ahead of an important call with investors.

But in a move which spells trouble for F1’s owners, a growing group of F1 venues seeking cut-price deals have re-formed their alliance.

Expect a slew of feel-good messages from Formula One’s commercial rights holder Liberty Media over the next week given that two key dates loom: as stated here at 11:00 EST, 8 November the company will reveal its Q3 2018 results, with its Investor Meeting, during which a number of backward- and forward-looking statements about the financial health of F1 will be made, slated for 09:00, 14 November.

The latter is obviously the biggie given that stakeholders and analysts will assemble in the same room as Liberty executives, and thus be able to question on them on reasons for share prices that have bounced and bounded between $30 and $39 over the past 180 days, while no significant announcements or advances have (yet) been made on key performance areas such as new venues, OTT streaming or new corporate sponsors.

Even the most detached investors (forget not that investors view Liberty’s FWONA and FWONK trackers purely as investment vehicles, not as sport properties) cannot fail to have noticed that F1’s current covenants and regulations expire on 31 December 2020, and that little or no tangible progress has made on crucial issues such as sporting/technical regulations, budget caps, revenue distribution and governance.

Indeed, one hears the shadow of Bernie Ecclestone looms large over such talks, for after his ousting he likely has more than a few scores to settle. He can call on loyalty amongst race promoters, team bosses, sponsors and tech partners, plus staff members who formerly worked under him and remain on the Formula One Group’s payroll. He, after all, created many millionaires among them during his reign, and they owe him.

It is a given that ‘resetting’ F1 always was going to be a difficult task, even without opposition. Particularly for a group of folk with no in-depth knowledge of the business of F1. Liberty’s roots are in entertainment, yet in F1 the company is not the entertainer but a (secondary) entertainment facilitator. The teams and circuits could collectively stage a grand prix championship, but Liberty could not do so without them.

Spot the difference?

Liberty had the sagacity to sign up Ross Brawn, who guided Ferrari, Benetton and his eponymous team to multiple titles, as motorsport chief. He in turn employed a large group of professionals to unravel F1’s multi-layered complexities, but there is still only so much any group can achieve when ranged against ten teams and/or 21 race promoters – with their strength in depth and breadth to protect entrenched positions.

Hence slow (visible) progress over the past two years, and thus the significance of investor activity scheduled for this Thursday and Wednesday next. Time for good news: Today FOM duly announced the Vietnamese Grand Prix will join the calendar in 2020.

Intriguingly Channel News Asia previously reported that inviations for today’s gala where the circuit will be unveiled stated: “The city of Hanoi managed to conclude the cooperation to be entitled as the official host of a race of the FIA Formula 1 World Championship (from) April 2020.”

However, the channel added authorities earlier said that while the city of Hanoi supported the idea of hosting a race, they would not dip into government coffers. “The prime minister said if Hanoi hosts (a race), the budget should be from the private sector,” Mai Tien Dung, head of the government office, was quoted saying in August.

Advert | Become a RaceFans supporter and go ad-free

Although Hanoi is the first new event Liberty has added to the F1 calendar it is not Liberty’s first signing per se. Spa-Francorchamps, Suzuka and Hockenheim renewed contracts during the past 12 months (the latter, however, only for a single year), although Wallonia’s Economy Minister Pierre-Yves Jeholet described Spa’s renewal as “a good deal” while urging the promoter “to further trim costs”.

This suggests there was considerable pressure on Liberty to reduce hosting fees. Equally, the other two venues renewed only after pledges of commercial support from Honda and Mercedes respectively. But still the good news is that Liberty managed to strike deals with three venues – two of which iconic – this year, which should go down well in Englewood, Colorado next Thursday.

Now, though, consider a forward-facing facing question from a sharp investor: “What contracts are due to expire next year?”

According to our information the contracts of Catalunya, Silverstone, Hockenheim (see above), Monza and Mexico all run out next year, with Abu Dhabi’s current contractual situation unclear. That makes for minimum five, possibly six, looming renewals – or around double 2018’s renewal tally.

Add in that Hockenheim cut a one-deal after receiving commercial support from its local motor manufacturer. What about the future; will the Three Pointed Star come back for more, particularly given that the renewal window coincides with a changing of the guard, with current CEO Dieter Zetsche stepping aside to be replaced by Olla Källenius, a hybrid vehicle-loving Swede.

Does it sound as though a German Grand Prix will be a priority? Will F1 even be a priority for Källenius? Parent company Daimler’s share price lost a quarter of its value this year and investors are pushing for radical changes, while in the US the Mercedes C Class is currently outsold by Tesla’s Model 3 despite the latter’s well-documented quality and production shortcomings.

Monza: Will Ferrari or cousin company FCA, owner of Fiat/Chrysler, step into to underwrite Monza? In June a circuit director told RaceFans they were seeking a $9m reduction in hosting fees ($24m down to $15m), or no dice. That’s an awful lot of Fiat Pandas just as FCA regroups after the death of its corporate architect Sergio Marchionne, particularly given the arms-length relationship between Fiat and Ferrari.

Would Ferrari underwrite a race it has just got itself beaten on? Well, the Rampant Stallion recently missed its 2018 Q3 targets and it too is getting to grips with life post-Marchionne: replacement Louis C Camilleri, a former Marlboro Man, is still finding his way about Maranello. And the company’s planned 2022 move into the lucrative luxury SUV market with the Purosangue will surely vacuum up Ferrari’s petty cash.

Of course, none of these factors point to definite ‘Neins’ from Germany or ‘Nos’ from Italy, but do indicate the scale of challenges lying ahead as race contracts expire. Renewals in both Hispanic-speaking regions, Spain and Mexico, are likely to be equally complex, for both countries are currently in the midst of political upheaval – the former due to Catalan secession demands; the latter due to a landslide leftist swing.

Advert | Become a RaceFans supporter and go ad-free

The Mexican Grand Prix enjoys significant government state funding – the word in the paddock was that state coffers underwrite the hosting fee under a five-year deal expiring in 2019, with promoter costs covered by gate income – but that could change after next year’s race, the first staged under the incoming administration of president-elect Andres Manuel Lopez Obrador, who takes office next month.

While the situation in Spain the situation is less complex than a year ago – when the region fell directly under central government rule after a short-lived unilateral independence declaration – the fact remains that the Catalan administration is considering its priorities, all of which dent regional coffers. MotoGP is clearly more popular than F1, and with Fernando Alonso retiring, does Carlos Sainz offer sufficient box office appeal?

When Alonso was in his winning pomp the circuit pulled upwards of 120,000 punters on race day. As his career spiralled downwards so did crowd numbers, with this year’s attendance being around half that despite the additional presence of Sainz. Against this background – and Sainz’s 2019 move from Renault to McLaren – Liberty faces stiff negotiations. A deal can be cut, but at what price?

Which leaves Silverstone and (possibly) Abu Dhabi: Let’s deal with last-named first: Should Yas Marina’s contract be up for renewal, it is likely to present no difficulty for, if anything, regional pride enters into the equation. Already Bahrain is on the calendar, and while logic dictates that one grand prix suffices for what is hardly an over-populated region, the abundant availability of petro-dollars means business cases are easily made.

Then there is the question of Qatar: with a ready-made circuit already staging MotoGP and well-documented aspirations of hosting F1, neither Bahrain nor Abu Dhabi are likely to present a country they are currently embroiled in political stand-offs with, with a grand prix on a silver platter. So, Abu Dhabi represents an easy deal when (and if) the deal arises.

Not so Silverstone, which triggered its exit option for 2019 in 2017 rather than stick with an “unsustainable contract” through to 2026: “We’ve reached the tipping point where we can no longer let our passion for the sport rule our heads,” said the circuit-owning BRDC’s chairman John Grant at the time. “Put simply, it is no longer financially viable for us to deliver the British Grand Prix under the terms of our current contract.”

Clearly the ‘Home of British Motor Racing’ (and first venue to host a world championship round, in 1950) does not wish to drop F1, but equally has no wish to go under due to astronomical hosting fees. Thus Liberty faces tough alternatives: reduce Silverstone’s fee (by something like 30%/$10m), or risk the wrath of fans in its heartland (and home race for 70 per cent of teams, albeit shared in some instances).

Not an easy choice. But whoever said F1 was easy?

There is an argument that $10m represents a relative pittance on a turnover of $1.8bn, but multiply that by 21 races and the number rapidly spirals to $200m, or 50 per cent of Liberty’s share of F1’s retained revenues. Thus what it gives with one hand it must take with the other, but from where? New races?

Consider that only Hanoi has been (said) to have signed. Discussions with Miami were “indefinitely postponed” – Seanspeak for “off”? – and while Copenhagen is off the immediate radar for political reasons, Las Vegas remains a “possibility”. Although Kyalami has admitted to negotiations with FOG, some T&Cs are distinctly non-negotiable: there must be no risks to the family trust that owns and resurrected the venue.

Liberty has, though, two irons in the Dutch bonfire: Zandvoort and Assen. However, contrary to reports, RaceFans understands a deal with either venue is far from dusted, with FOG currently playing them off against each other. Compounding the situation is that both require a modicum of state support – up to $10m, a number that sounds increasingly familiar – and thus any Dutch Grand Prix is very much in the hands of civil servants.

Overarching all this is the Formula One Promoters Association. Originally incorporated in Switzerland in 2012 by Ecclestone as a foil against growing team influence, FOPA was re-formed under the presidency of Silverstone CEO Stuart Pringle, with Brazilian Grand Prix promoter Tamas Rohonyi Ketesz and Singapore’s Colin Syn Wai Hung as co-board members.

Think regular team boss meetings during grand prix weekends, and apply that to promoters. Like the teams, Pringle denies vehemently that FOPA is militant, but rather a body fostering good relations and providing discussion forums for common issues amongst co-promoters, who are mainly in competition with outside entertainment options, not themselves. In a phrase: They talk to ‘spice up F1’s spectacle’, as do teams bosses.

However, whenever like-minded folk meet they are sure to discuss one thing above all others: Money.

FOPA currently counts around half the promoters as members, but has shared its information and findings amongst all peers as a gesture of goodwill, with the common thread being that they all plan to extend contracts, but not at any price. Indeed, most are seeking some form of revenue-share agreement with Liberty – which makes utter sense from a promoter perspective, if not the commercial rights holder’s…

Therein lies Liberty’s primary challenge over the next two weeks: To provide sufficient backward- and forward-looking news to keep shareholders sweet. That won’t be easy, as the past two years have proven.

Follow Dieter on Twitter: @RacingLines

Go ad-free for just £1 per month >> Find out more and sign up

RacingLines