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Heywards in the Race

Jan 17, 2005  •  Post A Comment

Bernard “Bernie” Ecclestone, the richest man in the United Kingdom, with a fortune Forbes estimates at more than $3.5 billion, called Los Angeles nearly three years ago to discuss an intriguing business proposal. It involved some U.S. broadcast television rights to Formula One Racing, which he oversees. Formula One is the biggest sport in the world outside the United States.

When the phone call was answered, Mr. Ecclestone said he was looking for Michael Heyward, who had sent him a business plan.

“Oh sir,” replied the young man. “I’m in a meeting right now. Can I call you right back?”

“Of course,” said Mr. Ecclestone, who did not yet know the real age of his potential business partner, who in fact was in his 10th-grade geometry class at an upscale private school at the time. Michael Heyward was then 15 years old. He is now 17, and last week his discussions with Bernie Ecclestone led to an announcement that Formula One Racing would return to a major U.S. broadcast network for the first time in more than four years, kicking off with the San Marino Grand Prix from Italy on April 24 on CBS.

Michael is the son of Andrew “Andy” Heyward, chairman and CEO of DIC Entertainment, which is among the largest distributors of children’s animation (and character licensing) in the world. While the Formula One press release last week mentioned DIC as a partner, it is actually only marginally involved. Michael and his father have formed a 50-50 joint venture called Grand Prix Entertainment, for the F1 deal.

Michael, Andy’s middle son, showed an early interest in business. When he was 14 he got a summer internship at a prominent Hollywood management, music and production company. While working there Michael had an idea, his father recalled last week: “‘Dad, let’s do Formula One live races. … If we can solve the problems, we’re going to have the next NFL franchise. This is the biggest sport in the world.’ I said, ‘Look, I’ve got a job. Maybe you can figure out what to do with this.’ So he put together a business plan, a marketing plan … and sent it off to Bernie Ecclestone. They started corresponding.”

“Basically, our whole premise was that when Formula One had been launched [in the United States] in the past, they were really going after the wrong audience,” Michael said last week. “Although they were targeting a motor sports audience, motor sports in the U.S. and Europe have nothing to do with each other. Formula One is about glamour, exotic locations, a high-end lifestyle. We wanted to cater to a younger, hipper, more progressive American audience and not the traditional NASCAR … audience.”

After months of calls and faxes, Michael and Andy went to England to meet Mr. Ecclestone.

“Michael did the presentation,” recalled his proud father. “Michael was wearing a suit. He pitched for about 40 minutes. He explained how we wanted to present this. He keyed on the glamour, luxury and aspirational elements of it for the U.S. … He had a plan for everything. Bernie didn’t say a word. Finally, he looked over at him and said, ‘How old are you?’ ‘I’m 15, sir,’ Michael replied, and then he went right on talking. After a while, Bernie said, ‘Look, I couldn’t do anything with it in the U.S. We’re going to let you guys see what you can do.'”

Shortly after, the Heywards ran into Casey Wasserman, CEO of the Wasserman Media Group, who has quickly established a reputation for marketing nonmainstream sports like skateboarding. He also owns the Arena Football team in L.A.

“He is brilliant,” Andy Heyward said of Mr. Wasserman, the grandson of the late, legendary Lew Wasserman, who ran MCA and Universal Studios.

“Michael said, ‘Dad, we have to get involved with Casey,'” recalled Andy Heyward. “‘They’re so smart, so knowledgeable about this business. Let’s see if they will do the sponsorship and advertising sales.’

“This is a challenge, and it’s exciting,” Mr. Wasserman said. “We are taking a long-term view. The mistake people made in the past is that they saw it was popular on a global basis and assumed if they just threw some money against it and put it on a network it would be successful. That’s not the case.”

After several meetings, they made a licensing and revenue-sharing agreement with CBS to air four races. If it takes off, CBS will share the upside.

“We think it’s pretty much risk-free on our part,” said Rob Correa of CBS Sports. “We think we can make some noise with it. It’s got time-buy and revenue-sharing elements to it.”

One unhappy observer is Speed Channel, which is owned by Fox. A spokesman noted it has run F1 races for 10 years and is currently in the second year of a three-year contract. It will show 15 races live this year and four tape-delayed. The season kicks off March 5 with the Australian Grand Prix. Ratings typically run from four-tenths to seven-tenths of a ratings point.

Speed Channel gets its big ratings with NASCAR but likes having F1 as well. Mr. Arneson said when the current deal is up, they will be aggressive bidders for the next contract.

Michael Heyward said they expect to be in a position to bid for the full contract by then as well. He said they think Fox just wants F1 so that they can control exposure and make sure it doesn’t hurt NASCAR ratings.

In the meanwhile, Wasserman Media and the Heywards are busy lining up new sponsors, partners and music companies to join their venture. They plan to use hip-hop and other music artists to promote F1 in the United States and make it, well, hip.

Michael plans to continue his involvement but also wants to go to college. For now he goes to school in the morning and works out of the Wasserman offices the rest of the day.

“I’m having an amazing time,” Michael said. “The long-term goal here is to broaden Formula One’s audience and to bring it up to the level of other world-class sports in the U.S. like the NBA, NFL and NASCAR. Some day we think we can hit the same financial numbers they are hitting.”