20/06/2011
NEWS STORY
Pitpass' business editor Chris Sylt was surprised to read the news in the Sunday Times claiming that the BBC may not bid for F1 when its contract to broadcast the sport expires at the end of 2013.
Sylt wasn't surprised by the idea of the BBC making a saving by dropping F1 so that it doesn't have to close its BBC4 channel; in fact that sounds perfectly logical. The surprise was that the Sunday Times claims "senior sources said the corporation can spare BBC4 if it saves the annual £60m that it spends on F1." This figure seems to be utterly unrealistic.
The article in question was written by the newspaper's arts editor and not an F1 correspondent but still, the figure of £60m seems to be so far off the mark that it is verging on the ridiculous. To see why this is the case, let's first look at some background.
The BBC got the rights to broadcast F1 in 2008 with its coverage beginning the following year. The reason that the rights were available in the first place was because ITV had broken its contract which, as is shown on page 78 of this document from the UK's communications regulator Ofcom, was due to run until the end of last year.
According to the Telegraph, and other media sources at the time, ITV dropped F1 in order to "save money which can be used to expand coverage of football." Not coincidentally, at the same time as BBC announced it had picked up F1, ITV announced that it had retained the rights to broadcast Champions League football matches as part of a deal from 2009 to 2012.
With ITV, the BBC's main competition, out of the picture, there was no chance of a bidding war inflating the price of the F1 rights when the deal was done in 2008. More importantly, the BBC knew F1 was a distressed seller since ITV had broken its contract leaving it high and dry. As the Ofcom document shows, it was plain for all to see that ITV should have continued broadcasting F1 until the end of 2010.
Once ITV had broken its contract, the BBC was the only channel F1 could have realistically moved to without the sport losing face or breaching agreements to remain on free to air TV. In short, the BBC had F1 in the palm of its hand and certainly didn't need to pay over the odds to get it. So what was the going rate?
According to page 78 of the Ofcom document, ITV was paying £29m annually under its contract which ran from 2006 to 2010. We would imagine that the UK's communications regulator wouldn't endorse the figure if it was inaccurate. Indeed, the footnote states that the source of the figure is a publication called TV Sports Markets which happens to be used by Formula One Management to compile its Global Broadcast Report.
In short, this is a highly credible source and it shows that ITV was paying £29m annually to broadcast F1. Given that F1 was a distressed seller and there was no bidding war when it was sold, it is as good as impossible to imagine that BBC paid double ITV's fee. It is far more realistic to imagine that the BBC paid perhaps a 5% to 10% premium on ITV's fee which would take it to around the £31m ($50m) figure stated for the deal in Sylt's F1 trade guide Formula Money.
This doesn't mean to say that the BBC will retain F1. Far from it. Even if it is spending £31m annually on it rather than £60m, it would still make a saving by not bidding again when its contract expires. The key issue here is about getting a sensible grasp of the amount being paid by the BBC since it could well become crucial in working out where F1's new UK TV home will be.