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F1 on Apple TV a smart move? 'Formula 1 has to ask itself that...'
- Ludo van Denderen
Watching Formula 1 Grands Prix live in the future may soon require a subscription to Apple TV, it was revealed on Thursday following reports in Business F1 Magazine. No less than two billion dollars would be paid by the US company for the exclusive, global rights for the most important series in motorsport. An understandable ambition from Apple, according to Chris Woerts, one of the Netherlands' leading sports marketers.
According to the magazine, Apple would consider a bid that the Formula 1 Group "cannot refuse." It would amount to US$2 billion a year, roughly double what currently comes in for global TV rights for the sport. The level of exclusivity on offer would increase over the years. Initially, F1 could offer 25 per cent exclusivity, but this could rise to 100 per cent after five years when the existing contracts expire. The deal offered by Apple would involve a fixed amount of money for the duration of seven years.
"For F1 you have to wonder if it is wise, for Apple it would be an excellent choice," Chris Woerts, former commercial director of Feyenoord and England's Sunderland, and owner of CWO Consultancy, told GPblog. "Apple has already had some practice with the worldwide rights - except America - of the MLS. For a few euros a month, Apple lets you watch all the matches in the MLS. That has been boosted by Messi's presence, and that in turn has boosted Apple TV."
'Apple business model under pressure'
Something similar could happen to Apple with bringing in Formula 1, Woerts believes: "Their business model (of Apple, ed.) is a bit under pressure. So third-party services, such as Apple Music and Apple TV, are becoming increasingly important. You need to entice consumers to that. Then you need different content that has global coverage. That's F1 or football. But football is very expensive. If you want to have the Champions League worldwide, it costs five, to six billion. If two billion for F1 is the amount and they want to raise that, that's actually peanuts."
Woerts puts it in perspective: "If you peel it down to the number of households, it's nothing. If you look at Apple's cash flow, and the availability of capital, it's actually rounding off their budget."
Good thing for Formula 1?
Whether Formula 1 would be wise to go into business with Apple TV, Woerts is not immediately convinced. "For Formula 1, it seems like a very good deal, but you take all competition out of the market, also for the long term. So if such a deal is done, it should be for at least five to 10 years," said the sports marketer, who wonders whether Formula One Management (FOM) could not bring in more by selling the rights on a country-by-country basis.
"That's down to market forces. With sports rights, you always have uncertain factors: What is the state of the economy? Is there enough competition in a country? Why, for example, did FOM temporarily postpone the tender in the Netherlands? They want to know about Viaplay, and what other suppliers there are. Or maybe they want to do the deal with Apple, then put all negotiations on hold and be done. But: the FOM could also use Apple TV to drive up prices in other countries. They use it as a kind of leverage: 'If you don't sign with us for a lot more money, we'll go to Apple.'"