Is Dorna’s extension with the FIM a perfect shot in the arm for Liberty?

As is the nature of new motorsport deals that bind multiple parties together, it is the length of the contract which often generates the headlines.

So when Dorna and the FIM announced that they had signed a new long-term extension until 2060, all the attention was on the duration of the deal.

There was no mention of the money paid by Dorna to the FIM for the extension, or indeed that the previous deal ran until 2043 in the first case.

Nonetheless, the announcement is of great significance as Liberty Media edges closer to completing its acquisition of Dorna.

Liberty Media is already the commercial rights holder of Formula 1 and earlier this year announced plans for a $4.2 billion purchase of 86% of Dorna Sports, the business holding MotoGP’s commercial rights.

In preparation, Liberty Media has raised funds to complete the deal by selling a $825 million chunk of its F1 shares. The total purchase is expected to be completed by the end of the year.

The new structure would see Dorna, who will remain the exclusive commercial and television rights holder of MotoGP, remain an independently-run company but is attributed to Liberty Media’s Formula One Group.

Carmelo Ezpeleta, CEO of Dorna since 1994, is to remain in his position and will continue to run the business with his management team on a day-to-day basis, with its headquarters remaining in Madrid.

By extending the licence agreement with the FIM, Dorna has secured its own future and boosted the profitability of the existing company, which is significant given Liberty Media’s takeover. In essence, it has made itself a stronger business.

For Liberty Media too, the acquisition of the rights by Dorna matches its own vision for the MotoGP.

In its F1 operation, Liberty Media has been keen to strengthen its valuation through long-term deals with circuits and promoters. Its equivalent commercial rights deal with the FIA however, was already in place and runs until 2110.

So while the MotoGP deal now looks small in comparison, it is an important step and again emphasises the seriousness with which Liberty Media is approaching its new acquisition.

We are already seeing some crossover with its F1 business, with some targeted focus directed at F1 drivers to answer specific MotoGP questions to build traction.

Liberty Media has big aspirations and the $4.2 billion purchase price shows how highly it values the…