At a show event in Las Vegas last month, lip readers claimed that FOM’s CEO Stefano Domenicali jokingly told a guest on the grid that Formula 1 is ‘now printing its own money’. The sport appears more ostentatious than ever as it breaks into the American market.
Astronomical bonuses, a rights holder earning billions, start fees for organizers now starting at €60 million, racing teams worth billions, and drivers (Cian Shields) who apparently shell out over two million for an hour of training in Abu Dhabi: ‘Cash is King’ in Formula 1, as Lewis Hamilton concluded years ago. More than ever, in fact.
Liberty Media was almost considered insane when it purchased the commercial rights to Formula 1 for over four billion euros in 2016. The sport had an outdated, predominantly male, viewing audience, viewership was declining, and before a race, it was almost certain that a Mercedes would win. The American market, premium territory for Formula 1, still showed little interest in this ‘European sport’.
With Chase Carey at the helm and Sean Bratches as the commercial brain at his side, Liberty’s CEO John Malone entrusted two confidants with the task of making Formula 1 trendy and profitable. The American duo, partly due to million-dollar investments in social media activities and the Netflix documentary Drive to Survive, succeeded with flying colors. The duo stepped down in 2020, after laying the foundation for the future. Stefano Domenicali, Carey’s successor as CEO, stepped into a well-prepared situation.
Liberty’s revenue from Formula 1 now amounts to a billion per quarter. With long-term contracts for the GPs in Melbourne, Bahrain, Saudi Arabia, Miami, Austin, their own event in Las Vegas, and the exploitation of the American market, money is flowing in abundance. Teams are worth billions: Red Bull casually set aside an offer of over a billion for the takeover of sister team Racing Bulls, while Mercedes’ team boss and shareholder Toto Wolff recently sold a small part of his package for 300 million. Fashion house Luis Vuitton, part of LVMH, stepped in as a partner, paying a billion for ten years.
With tech giant Apple on board, which released a successful and profitable F1 film this year featuring Brad Pitt and owns the American broadcasting rights for five years from 2026 for €700 million, the sky is the limit. The sport has a premium image, is healthy, global, and profitable, although revenue growth is beginning to stagnate somewhat. It’s time, therefore, for a sale of the commercial rights. Liberty’s CEO Malone recently hinted that he does not rule out such a move in the (short) term. The rights are already being prepared for a multi-billion dollar deal, with long-term contracts, unprecedented popularity of the sport, full stands, and sponsors and circuits lining up. Apple and Saudi ruler Mohammed bin Salman’s investment vehicle are in pole position for this deal.
In comparison, the over two million euros that Cian Shields reportedly laid down at Aston Martin for an hour of free training on Friday in Abu Dhabi pales into insignificance.
