The Formula 1 world has been recently affected by the clash between Mohammed Ben Sulayem and Liberty Media. To better understand the nature of the “conflict” it is necessary to retrace the stages of the proposal made by the PIF fund for the purchase of Formula One.
The Public Investment Fund (PIF, nda) is Saudi Arabia’s investment fund with assets of $360 billion. It is in fact the financial engine for the implementation of the Saudi Vision 2030 development strategy which aims to transform the Arab state into a regional financial power, drastically reducing its dependence on oil revenues.
The declared objective is to concentrate, in a single sovereign fund, a capital of approximately 2.5 trillion dollars to be used in the acquisition of 3% of the stakes of the main international investment funds.
In the context of this business plan, an asset such as that of Formula 1 is attractive in many respects. From a strategic point of view, the sport has also defined its commitment to the Net Zero Carbon project, a scenario that provides for the complete elimination of fossil fuels in favor of 100% sustainable fuels by 2030 (similar to the Saudi Vision strategy).
Secondly, the business model relating to the world of football could be replicated which has allowed the sovereign wealth funds of the Gulf countries to acquire the most prestigious clubs in the Premier League and Ligue 1.
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Over the past few months, the PIF fund has submitted an expression of interest to buy Formula 1 on a $20 billion basis. Liberty Media, as the holder of the commercial rights of the highest category, “kindly” declined the offer. It is undeniable that Formula One has created the conditions for offering an increasingly attractive product, trying to extend its popularity pool globally.
It is therefore probable, therefore, that in the short term the value of the Formula 1 product is destined to increase exponentially. According to Bloomberg, a giant in the financial analysis sector, the current value of the sport is close to 15 million dollars. On the sidelines of this figure, therefore, the offer set in motion by the Arab fund seems entirely in line with the value estimated by analysts.
Through his personal Twitter account, the former UAE rally driver expressed his opinion on the Arab fund’s proposal. He did it in a harsh way in relation to the office of president of the International Federation. It is necessary to remember that Liberty Media holds the commercial rights of F1 for the next 90 years. In the controversial posts, Mohammed Ahmad Sultan Ben Sulayem, calling himself the guardian of motorsport as president of a non-profit organization (FIA, ed), warns potential buyers asking for transparent and sustainable plans, giving less importance to the generosity of the monetary offer.
A situation that led to the wrath of Liberty Media. To make a comparison with Italian football, it is as if the president of CONI interfered in a negotiation for the sale of television rights by the FIGC. The response of the governance was as swift as it was harsh: “Such reflections go beyond the limits of the mandate of the FIA as well as any contractual law. The federation will be held liable for any damages suffered by Liberty Media.”
Unlike the 80s, the teams can only consolidate on the positions of the property, through work that has increased the revenues year after year. The intolerance of the teams towards Sulayem’s managerial style seems clear. The decision to support the plan of other teams entering the sport, the management of the rather approximate spending review (“Budget Cap Gate”), but above all the feeling of wanting to undermine pre-established positions of power, is creating a lot of discontent within the teams.
The modalities of the intervention of the sixty-one-year-old Arab suggest that these are personal opinions that do not necessarily represent the ambitions of the members of the International Federation. If the future of F1 is actually handed over to a new buyer from the same geopolitical area as the PIF fund, Sulayem could be the most authoritative figure in redefining the economic balance most favorable to the governing body.