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One of Formula 1's thorniest and most perennial topics is being visited with renewed vigour, with a budget cap now firmly on the agenda.
To Liberty Media, owner of the Formula One Group, the share price of its Formula 1 asset FWONK is king: the better F1's prospects of raking in money, the higher the price. As in any 'shopkeeper' model, Liberty's profit (read: share price) is dependent upon minimising cost of sales and maximising revenues: cut costs and/or boost income, and profits are optimised, with commensurate impact on share prices.
Liberty's two-pronged plan is to grow revenues while reducing outgoings. By far its largest cost driver is the teams' collective slice of F1's revenues, which constitute a sliver over 50% of income, or around two-thirds of retained revenues. Put differently, of F1's £1365m annual income, around £750m will this year (inequitably) flow to teams, while F1's owners will trouser about half that. The rest goes to cover expenses.
