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Sports Media: F1 goes to market expecting big increase in rights next year as U.S. interest continues growth – Sports Business Journal

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Formula One has been out in the market seeking upward of $75 million per year for its U.S. media rights, according to several sources.
 
Currently, sources say that ESPN is paying in the neighborhood of $5 million per year for the rights. ESPN signed a three-year deal worth $15 million in 2019 and holds F1’s U.S. media rights through this current season.
F1 has told executives that it wants its U.S. media rights to be more in line with international soccer rights. By comparison, ESPN pays the Spanish soccer league La Liga around $175 million for rights and the German soccer league Bundesliga around $40 million per year for its rights.
More than many other sports, soccer rights have benefited from the rollout of direct-to-consumer platforms. TV executives at several networks have identified international soccer as a significant driver for streaming subscribers.
For months, it looked likely that ESPN would renew its F1 deal. Both ESPN and F1 executives are happy with the increased viewership for its races last year, which was up more than 50%.
ESPN is the front-runner to renew, but last week, Liberty Media chief Greg Maffei took to CNBC to say that he was taking the rights out to the open market. Liberty owns F1. “Next year, we’re looking for a broadcast partner,” he said. “We have a lot of interest.”
That interest includes NBC, which carried F1 for five years before the racing series moved to ESPN in 2017.
NBC enters these negotiations with less bandwidth than it had five years ago, as it shuttered its all-sports channel NBCSN at the beginning of the year.
NBC can carry races on broadcast or USA Network and can carry F1 with its international programming (Premier League) or other racing programming (NASCAR and IndyCar).
F1 views Fox Sports as an option. In 2017, it hired former Fox Sports boss David Hill to advise the races’ productions. Hill has deep relationships at the network from his time there.
F1 has had contact with Amazon, but sources said those talks failed to progress. F1’s interest in Amazon would be predicated on finding a broadcast outlet for its higher profile races.
When Amazon bid for Premier League rights, it partnered with Fox. Amazon’s plan was to buy time on Fox and handle the production.
Most sports business executives contacted for this story believe F1 will get a substantial increase, but view the $75 million figure — 15 times higher than they currently get — as fantasy.
The racing series is banking on taking advantage of a significant rise in its popularity in the U.S. market, both on television and at the track.
Last year’s races on ESPN were up 54% over the previous year, averaging 934,000 viewers. Netflix renewed the popular F1-focused docuseries “Drive to Survive.”
Not to mention the fact that F1 added several races in the U.S., and now counts six races that occur in U.S. time zones: Austin, Brazil, Las Vegas, Mexico City, Miami and Montreal.
F1 also is looking to take advantage of a red-hot market for media rights that has started to see digital companies such as Amazon and Apple compete with traditional media companies for sports rights.
A higher rights fee will result in some trade-offs, of course. U.S. TV networks would have to start inserting commercials into races for a bigger rights fee. ESPN has carried F1 races ad-free since 2018. During its coverage of the Australian Grand Prix that year, ESPN was criticized heavily for trying to put commercials into its telecast of the Sky Sports feed, which resulted in abrupt commercial breaks, sometimes interrupting commentators.
F1 is willing to allow for commercials if it gets a high enough rights fee, sources said, adding that there is a precedent for ads since several global markets carry F1 races with advertising.
Another issue for U.S.-based broadcasters is the F1-produced app TV Pro, which allows access to commercial-free races for $80 per year or replays and highlights for $27 per year.
As the rights fee goes higher, the presence of such an app is likely to irritate U.S. networks, which want to drive as many people to their linear channel or their own streaming service as possible.
John Ourand can be reached at jourand@sportsbusinessjournal.com. Follow him on Twitter @Ourand_SBJ and read his weekly newsletter.
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