It’s a situation that may seriously affect the live streaming of the events that the best online brands have incorporated in their sites. Therefore, it may even take out Live Betting which is solely based on the ability to interpret what is going on during the coverage. Apple TV’s proposal, if accepted, may change all of the above. Drastically.
The particulars of Apple TV's offer
Up to now, the contracts for TV coverage brought Formula 1 a revenue in the vicinity of 2 billion Euros over a period of 5 years (specifically 2019 – 2024). Some of the contracts already signed, and extend up to 2029, produce over 250 million Euros per season. While the amounts are staggering, they represent only a fraction of what the teams need in order to fund the development of their cars. Especially since, it’s already in the works to transform the engines to completely electric instead of the hybrids that are now being used. Just think that the cost of the steering wheel alone comes up to more than 10 million Euros.
Apple TV submitted a proposal that multiplies the above revenue by a factor of 7. On an incremental step that takes into account that the existing contracts need to be maintained, they offer an average of 1.85 billion Euros per season in exchange for the exclusive rights for the televization of the races. However, it is exactly this exclusivity that creates the controversy.
Money versus audience
As of 2021, the maximum amount that each team is allowed to spend during a season is 126 million Euros. There are 12 teams, hence, they need 1.5 billion in total. Which translates to the Apple proposal covering their entire budget and then some. Consequently, they can use the surplus for further development. And here comes the first obstacle to overcome. The teams will not need sponsors to cover their expenditures any more. Which translates to no commercials. And then to a drop in the revenues of the existing sponsors. Under this chain of events, that proposal will probably be taken to court.
Then, we will need to discuss about the common people. Those who turn on their TVs and expect to watch a race. By default, exclusive rights means that they have to tune in to Apple TV. However, except the USA, this is a service available only through the internet. So, what are they supposed to do? Sell their TVs and buy laptops? Or would it be that either the governments or some local sponsors, would undertake the responsibility of securing the rights for their own country so that the grand prix can still be shown on open air TV? And how much would those rights cost? Not to mention the question on what would the subscription fees be for those who will want to watch through the internet. Unfortunately, there has been no disclosure on what will happen for these people.
Apple TV's offer creates even more issues
Let’s assume that either a government, or a set of sponsors, covers the cost that Apple TV will ask to release the rights. Does it stop to that amount? The answer is no. There will be a need for equipment that will convert the internet stream to open TV waves. Who will then cover an amount that keeps getting bigger and bigger? Naturally, governments will impose taxes, while the sponsors will increase the prices of their products. Hence, a more expensive society.
Furthermore, Apple TV intends to do the same with other lucrative sporting activities like the Premier League, the NBA and the NFL. Already, they have secured the Season Pass of the MLS and the Friday Night Baseball of the MLB. While these actions will create a state of monopoly which is forbidden in the USA, it’s not the same with other countries. They do have the money to make the investments but what will be the cost to the other parts of the economy? If every popular sporting activity gets gathered in a single place, what could prevent Apple TV from actually forbidding access to those who do not have the money to pay for it? While punters can even use cryptocurrencies to fund a betting account, the amounts they can invest are limited. Will they not be allowed to view a live stream of what they are betting on?
An offer that could easily backfire
If the deal was to be considered strictly from a business point, then it would be obvious that the two parties signing it would enjoy all the benefits. The sport will have adequate and independent funds to develop, and Apple TV would become a serious player in the industry. However, if a good response to all of the questions above is not provided, then it could just as easily bring both of them down. The reason being that if the adjacent industries get harmed by this deal, it would only be natural to find an alternative means to maintain their interests.
Consequently, those that at this time support Formula 1 and provide the revenues that Apple TV wants, would turn away and provide those same revenues to another part of the sporting industry. Of course, the millions of viewers would do the same, leaving the races without audience, except perhaps only with the on-the-spot spectators if the ticket price is not too high. Which is rather unlikely, since the money that the deal stipulates will have to come out of some sort of income. If there are no spectators and no one is watching the TV stream then there will be no revenues. Hence, both parties will lose probably everything they are trying to accomplish. It’s all within the law of supply and demand.
Apple TV's offer will lead to what exactly?
The economy is a foundation that can rise or fall like a series of dominoes. While the proposal may fully cover the needs of the sport, it is more than probable that the ramifications to other industries connected with formula 1 will suffer. However, the immutable law of commerce is that business is business. Why would the teams of the epitome of motorsports consider anything other than their own interests? For the betting industry, one way or the other, a solution will be found so that those who open a single online betting account can continue doing so. There’s only one thing that is certain here. Answers must be given to all questions before any such deal is signed. Otherwise, it might be the sport itself that will suffer.
