Many might not be aware of the gradual decline of Formula One. That’s because more and more people are apparently losing interest in the sport altogether. Back in 2008, the world was much more captivated with the spectacle. Just seven years ago, Formula One boasted more than 600 million viewers worldwide. Since then, the number of people choosing to tune in has waned. So much so that when CEO of Formula One Management, Bernie Ecclestone, published the organisation’s annual global media report, it showed that viewer numbers had fallen by 5.6 percent from the previous season to 425 million.

It is important to note that, despite so many millions of people choosing to change the channel, the Formula One Grand Prix still holds the title of the world’s most-watched sports series. What is more, the loss has not necessarily been a bad thing for the sport – at least in regards to its bottom line. That’s because, over the last three years, the organisation made the decision to sell off live broadcasting rights to pay TV networks. Doing so has helped bring in some extra revenue; however, it is likely to have contributed to the sport’s decline in overall viewership; as such networks often attract a smaller audience than public broadcasters, with monthly subscription fees tending to deter less hard-core supporters.

At first glance, accusations that the pinnacle of motorsport is struggling may appear unfounded. Yet, management’s readiness to sell rights to the highest bidder, regardless of how it will impact the sport’s presence worldwide, along with poor ticket sales and a difficulty for teams to secure long-term sponsorship deals are all strong indicators that all is not well in the world of Formula One. Not only that, but the sport is showing signs of internal struggles, with drivers yearning for races to be more competitive, teams eager for greater control, and investors worried about the sport’s growth. There is a clear consensus within Formula One and among its supporters that reform is necessary in order to stop the sport slipping further, but identifying and agreeing on the correct course of action to put the organisation back on track is proving difficult.

Consumer habits
One of the ways that Ecclestone was able to cultivate such an impressive following for the sport back in the late 1970s was through free-to-air broadcasting, allowing race lovers the world over unfettered access to the sport.

But according to Alex Duff, a sports reporter for Bloomberg News, this strategy is no longer viable because people are watching less live TV, with many preferring to stream content instead. A recent survey from Deloitte showed that 72 percent of trailing millennials (aged 14 to 25) see streaming as one of the most valuable services, with 25 percent claiming to have cancelled their pay TV subscription in the last year.

“After years of ignoring the internet [Ecclestone] is realising that he is actually having to address these young people who aren’t watching TV”, explained Duff during a conversation with Bloomberg. “To keep the revenue coming in, he is also selling some rights exclusively to pay TV, which is something he has never done before, and that is helping to give [Formula One] a bit of a revenue boost.”

Extra cash is always a bonus and helps keep investors happy. Though the high price of a subscription could be contributing to the sport’s poor viewing figures, as well as harming its ability to attract new fans and causing existing ones to grow despondent with the sport. So far, Ecclestone has brokered deals with Sky in the UK, Fox Sports/FoxTel in Australia and Telefonica in Spain, splitting coverage between these pay TV companies and free-to-air broadcasters.

The cost of these various subscriptions vary, but all add up over time. In the UK, if fans want the opportunity to watch the entire season they must pay Sky £562 ($865) for the privilege. In Australia, as of this year, the TV rights have been split between the networks Channel 10 (free-to-air), FoxSports and Foxtel (pay TV) in a five-year deal.

This means that in order to watch all the races the Aussie motorsport fans must sign up to a 12-month subscription with Foxtel, which costs AUD 50 a month or AUD 600 for the year.

Sponsorship woes
The new pay TV strategy has certainly helped the business magnate generate more income for shareholders. The downside however, is that if audiences continue to decline, the 84-year-old CEO could make it harder for Formula One teams to secure mass-market sponsorship deals in the future. Some teams are already feeling the impact. McLaren’s boss Ron Dennis has been unable to secure a title sponsor since its deal with Vodafone ended back in 2013.

“Title sponsorship doesn’t exist any more as a concept”, Dennis told autosport.com. “If you look at what title sponsorship would normally be, it would be somewhere between 40 to 50 percent of your budget. Where the budgets are for a competitive team, no company will come in and give you that kind of money [see side bar]. We haven’t given up on the idea of attracting larger sums of money to our car, but what we don’t want to do is put big brand names on at low levels of money”, he added.

Sky’s dedicated Formula One channel has also struggled to hold onto a number of big names. Over the last three years, the channel has seen Santander, Rolex and Shell opt out of renewing their sponsorship. This year, the channel announced that FairFX, a prepaid currency card service, and relative unknown stepped in as its main sponsor.

“We are delighted to have agreed this partnership with Sky Media to sponsor Formula One, on Sky Sports”, explained Ian Strafford-Taylor, CEO of FairFX in a statement. “As channel sponsor we will be able to reach a much wider audience for our products more quickly.” FairFX may be ‘delighted’ with the partnership, but the fact that big brands seem reluctant to get on-board must be a massive concern for not only the networks broadcasting Formula One, but everyone involved in the sport.

Ecclestone’s apparent obsession with revenue at the expense of the sport’s popularity is the result of increased pressure from shareholders who are eager to see a return on their investment. But such short-term thinking is likely to get worse, as according to Duff, its largest shareholder, CVC Capital Partners (CVC) is looking for an out.

“I think CVC is not going to be around for [much longer] in Formula One”, he said. “They bought the business almost 10 years ago now and they’re looking for an exit strategy, so they’re not so concerned about what happens in five or 10 years. Their main interest is the revenue, as with the other shareholders, which include a lot of asset management companies [and] their main concern is that the revenue keeps coming in.”

Despite the rumours, CVC has denied that they’re looking to sell their majority stake in the sport, with co-chairman Donald Mackenzie telling Reuters that they “like owning [Formula One]”. The private equity firm may well claim to have no interest in selling, but one thing is for sure, CVC would love to see it launched on the stock market, but so far it has been unsuccessful.

When asked if Ecclestone was preventing Formula One from being sold, Duff replied: “I think he is certainly preventing an IPO. CVC have tried to look at doing an IPO a couple of times in the last three years, and really, they don’t have a succession plan to take to the market. They don’t have a plan for what happens after Ecclestone is no longer there.”

Going solo
A contingency plan for life after Ecclestone has been made all the more difficult because the man himself has resisted offers to hire a deputy to work alongside him. That might be a blessing in disguise though, as many in and outside of the sport would like to see an end to the Ecclestone era once and for all and have been critical of the direction he has taken the sport in recent years, especially his snubbing of social media.

In fact, in June 2014 he raised a number of eyebrows during an interview with Campaign Asia-Pacific where he explained why he was not interested in social media, and young people in general. “I’m not interested in tweeting, Facebook and whatever this nonsense is”, he said. “I tried to find out but in any case I’m too old-fashioned. I couldn’t see any value in it. And I don’t know what the so-called ‘young generation’ of today really wants.

“I don’t know why people want to get to the so-called ‘young generation’. Why do they want to do that? Is it to sell them something? Most of these kids haven’t got any money. I’d rather get to the 70-year-old guy who’s got plenty of cash”, he added. However, to place all the blame on Bernie is a little unfair.

Formula One Stakeholders are aware that TV viewing figures and overall ticket sales are down, and while that has something to do with the poor way in which management markets the sport, the area where supporters, racers and manufacturers are most critical is how bland the races have become.

In Formula One’s defence, the 2014 season had a sprinkling of excitement. In Bahrain Lewis Hamilton narrowly beat his Mercedes teammate Nico Rosberg in one of the more thrilling races the sport has seen in a while. Sadly, 2015 has not shown the same promise and fans have complained that the sport has become boring.

In a recent Grand Prix Drivers Association (GPDA) survey, 77 percent of the 217,756 fans that answered it admitted that they were concerned that business interests were taking priority over the sport itself. And a whopping 89 percent felt more needs to be done to ensure that Formula One is more competitive on the track.

“The fans are clear: they don’t want a radical overhaul of grand prix racing that takes it away from its historic roots”, said the GPDA Chairman, Alex Wurz in a statement. “It may sound simple, but the best drivers and teams fighting on track in the most exciting cars is their priority. And we, the drivers, passionately share that view. They want competitive sport, not just a show, and they think that Formula One business has become too important, jeopardising our sport.”

For years now, Formula One has suffered from races being a foregone conclusion. Over a 305km race, the only way to keep fans on the edge of their seat and glued to their television screens, is to keep the possibility alive that anyone on the track could win. People want to see drivers jostling for position; they want to see real racing. But thanks to the introduction of the drag reduction system (DRS), which is nothing more than a gimmick that, while increasing the number of overtaking manoeuvres, does so in a wholly artificial manner, the sport lacks real grit. Meaning that wheel-to-wheel battles like the one between Nigel Mansell and Ayrton Senna in the 1991 Spanish Grand Prix are yet to be replaced by anything quite as compelling in the modern era.

Many argue, as they have done for years, that if management were really serious about making the sport more competitive they would try and sort out the distribution of money – something the sport has long struggled to rectify. As it stands, Formula One race teams are forced to share an $800m in prize money, with the lion share going to the top teams like Ferrari and Red Bull, while lesser teams such as Marussia are given the scraps.

Inequality has always existed in the sport, but when a team must spend $300m to compete at the front of the grid, and with sponsorships threatened by poor viewing figures, it puts teams and the future of the sport in jeopardy.