F1 Is at an Inflection Point
Just as my obsession with relevance and economic security have often crowded out what’s really important — relationships — I’ve let my preoccupation with the election results crowd out the blessings in my life. God, I’m so fucking sick of politics. So … let’s talk about cars. Fast cars.
I’m in Vegas for Formula 1. Actually, the truth is, I’m not here for the race — It’s more a desperate attempt to avoid the inevitable melt into irrelevance, which I believe can be arrested by extending my adolescence. Also, I love Vegas. The last race I went to was the inaugural Miami Grand Prix in 2022. It was a great time, despite F1 races being boring: here he comes, there he goes. And so on … and so on … and so on.
The real fun is found far from the track. The vibe is money, tech, and glamour, a Super Bowl for the super rich. If Nascar is Android, F1 is iOS.
In Miami I went to a dinner party on the beach hosted by Carbone, a fabulous restaurant, right in the middle of a Covid flare up. Fab. U. Lous. Wyclef Jean played to 700 people crowded into a hot tent with no ventilation. I had two thoughts: “I’m getting COVID tonight” and “It’s worth it.” I was right on both counts.
Drive to Survive Rebrand
F1 has long had large and rabid fan bases in Europe and South America, but that enthusiasm didn’t land on U.S. shores until 2017, when Liberty Media bought a controlling interest in the league. Under new boss Greg Maffei, F1 took a big swing at America. Targeting young people, Maffei and the F1 Team built an iconic brand, in the most competitive market, in less than a decade. There were races with celebrities in attendance — Tom Cruise, LeBron James, Rihanna — new sponsorships, and an aggressive social media presence.
However, Liberty’s gangster move was the Netflix docuseries Drive to Survive. Now in its sixth season, the show is rewriting the playbook re how sports leagues market themselves. It’s a behind-the-scenes look at “a lot of young, good-looking guys,” as Maffei once told CNBC, hard-charging billionaire team owners, and high-tech pit crews competing in a series of überluxe international locations. (F1 wasn’t the first to try this; the NFL’s Hard Knocks premiered on HBO back in 2001.)
By focusing on individuals and harnessing the power of storytelling, Drive to Survive used streaming to introduce U.S. viewers to drivers who were superstars overseas, among them Lewis Hamilton and Max Verstappen. It gave newbie (read: American) fans a compelling point of entry and became a fount of bingeable video that was easily shared, particularly on Instagram. There are accounts devoted to what Hamilton wears as he walks on red carpets.
Tribal
Tribal rivalries, betrayal, greed, revenge — all the stuff humans are hardwired to love in a lustrous package every week. Champions muse about “having a target on my back.” Young guns talk about “being hungry.” Everybody obsesses about forces beyond their control. Shakespeare knew this turf pretty well — Marcus Aurelius would have felt at home. The song remains the same; the actual game being played is unimportant.
The results: Liberty paid $4.6 billion for F1; it now has a market cap of about $22 billion. In 2023, F1 generated about $3.2 billion in revenue, up from $2.6 the year before, most of it from promotional deals with host cities, media rights, and team sponsorships.
TV viewership has doubled since Liberty took over (though the U.S. audience pales beside those of the NFL and other big team sports, and it’s only a third of Nascar’s). In 2022, F1 signed a three-year deal with ESPN (up for renewal next year) worth $270 million. American TV viewership of this year’s Miami Grand Prix was 3.1 million, the largest ever for a U.S. race. Meanwhile, between 2017 and 2021 the average age of an F1 fan dropped from 36 to 32. About 40% of fans are now female. Earlier this year, Liberty announced it had bought a majority interest in MotoGP, which is to motorcycle racing what F1 is to autos.
Owning a team (F1 has 10) used to be a money pit for a brand or a billionaire in the throes of a midlife crisis. Now teams are a legitimate asset class. Oracle is paying Red Bull $100 million to put its name on their car. Mercedes paid $176 million for its team in 2010; it’s now worth $1.5 billion. The Phoenix Suns and Chelsea FC were recently purchased for $4B and $5.3B, respectively.
No Joy in Sin City
So: Media, tech, increasing value, and Wyclef Jean. Everybody’s happy, right? Sort of. The mood in Vegas this year is subdued, a bit chastened even. For starters, the business face of all this success, Maffei, is out. His contract expires at the end of this year, and Liberty announced he’ll be leaving, to be replaced temporarily by Chairman John Malone. Malone is brighter than me, but that won’t stop me from making the following assertion: He retired/fired the wrong guy.
Maffei has doubled Liberty’s shareholder value in the past 12 months and received comp averaging $25M per annum. David Zaslav has been paid an average of $115M for the last three years to destroy two-thirds of Warner Bros. Discovery’s shareholder value.
Maffei says he’s ready for something new; Liberty thanked him and said 2024 made a fitting capstone to his brilliant tenure. Who knows what really happened? Liberty is also restructuring assets with spinoffs to tell a cleaner story. Maybe Maffei didn’t want to drive a smaller car, or didn’t want to deal with the Department of Justice’s antitrust investigation — it’s looking into F1’s rejection of a proposed new team from retired driver Michael Andretti. Maybe a sale of F1 is looming. (Liberty says it’s not.) Or none/all of the above. Whatever the reason, Maffei leaves a sport that, while still thriving, is at an inflection point.
Pain Points
Last year’s much-hyped Vegas Grand Prix was something of a shit show: Race fans complained that prices were crazy and getting around the event was difficult; drivers complained about the track; casinos, bars, and restaurants complained about disruption. U.S. Grand Prix sites, with a few exceptions, don’t have the infrastructure that European and South American sites do. Courses, grandstands, and other structures tend to be ad hoc affairs. Fans watching at home have complained about glitchy streams on ESPN+ and other services.
Meanwhile, F1 still hasn’t completely shaken the funk of last season’s uncompetitive races, which wafted into 2024. Max Verstappen won so many — 7 of the first 10 this year — that a lot of bored fans tapped out, and TV viewership and social media engagement have sagged. It all feels very 1990, when Pete Sampras was so dominant, and boring, that people felt he’d ruined tennis.
Seasoned race fans point out that periods of dominance by a hot driver have always been part of the sport (think Michael Schumacher), and it was just a matter of time until the other teams figured out how to take him on. Which seems to have happened recently: While Verstappen is a lock to win Driver of the Year for a fourth time, competition for the team championship has gotten much livelier.
Getting the Easy Stuff Wrong
The downturn, though, highlights two weaknesses. While F1’s marketing has been brilliant, it has had trouble providing: 1) a consistently great product (i.e., high excitement, competitive races) and; 2) a consistently great experience at an affordable price for fans who aren’t wealthy. F1 must balance its luxe, aspirational vibe with a simple fact: Most auto racing fans are not rich.
A fan on a budget would have to spend at least $2,200 for a bare-bones Vegas Grand Prix weekend. Given last year’s fiasco, it’s not surprising that hotel prices are way off this year.
The hardest things in business are pricing and compensation. F1 blew the pricing. Wimbledon’s Center Court has a capacity of 15,000, and seats there average $200. The seating capacity at F1 Vegas last year was 100,000, and grandstand tickets were $2,500. It may have set a record for the worst demand/elasticity forecasting of any event its size in history.
I’m not, as I said, into racing, so I don’t know what kind of rule or organizational changes F1 needs to make it harder for another Verstappen to dominate and kill viewership. A secret to the NFL’s success is a draft system that helps keep all teams somewhat competitive. In the last five years, 94% of NFL teams have appeared in the playoffs. Similarly, in an attempt to maintain some level of parity, F1 has implemented spending caps.
Also, F1 would be well served to do more to foster young U.S. talent and produce a homegrown superstar. At this year’s Brazil Grand Prix, half of Argentina showed up to watch Argentine driver Franco Colapinto. American fans need someone they can get that excited about.
Harmonic Convergence
Netflix could keep applying the Drive to Survive formula to new sports, going to teams and saying, “Pay us $100 million and we’ll do two seasons of what it means to play for the Boston Red Sox.” Or take a league in a second- or third-tier pro sport, say pickleball or lacrosse, to the next level at a lower price point. Magazine publishers do this — their most profitable businesses are custom jobs (e.g., that Four Seasons magazine in your hotel room).
What is definitely going to happen, though, is that sports teams are going to keep increasing in value, even though they’re shitty businesses in terms of cash flow. As long as the fastest-growing demographic group is billionaires, who tend to be at the age where the fear of death erupts, and leagues maintain monopoly power, we’re going to see a continued increase in the terminal value of teams. Most of them will lose money every year. Then, in a few years, they’ll sell at extraordinary multiples to the next generation of men in their sixties still trying to impress their dads.
However well or badly F1 handles the bumps it’s hitting now, what it has done with Netflix may become the default sports media model. You’re going to start to see media businesses, celebrities, and streaming companies come together to build sports-entertainment enterprises. Imagine Tom Cruise and Disney not buying the Anaheim Ducks, but an entire league.
Something More
There’s something more here. One in 7 men can’t name a single friend, and 1 in 4 can’t name a best friend. The Premier League, the NFL, and F1 give men license to bond and express emotions in a safe place. In addition, these events happen in the most wonderful venues ever constructed: not on a fucking screen. We are a social and emotional species, and being part of a collective watching people with speed, strength and alien-like instincts compete … puts us in the moment.
I’ll be at F1 this weekend, and, for a few moments, I’ll be in that moment. Pardoned from the past, where my anger/depression won’t let me forgive myself, and distracted from the future, where I’m focused on garnering more relevance and money. I’ll be there, watching the collision of men, machines, technology, and culture. But, more than anything, I’ll just be there.
Life is so rich,
P.S. Pod Save America’s Jon Favreau joined Jessica Tarlov and me on Raging Moderates this week to discuss the road ahead for Democrats. Listen and follow here on Apple or here on Spotify. (If you are still listening to Raging Moderates via the Prof G Pod, move on over to the dedicated Raging Moderates feed so you don’t miss this episode.)
P.P.S. Section’s CEO & COO also write a great weekly newsletter called Personal Math. This week’s post, about AI’s effects on our self-worth at work, is worth a read — and a subscription.
Sorry I forgot. Top racing is in Francorchamps, Silverstone, Monza and many more. It is not really in the US …
Oh well. F1. I’m into it since Jack Brabham, McLaren, Andretti, etc. What Liberty did with F1 may have been/is good for shareholders. However, it definitely is NOT good for F1. F1 is about racing of the best cars, the best engines and the best drivers. It is not about an oligopoly of 10 teams. Actually the FIA allows 13 teams in F1 in it statutes. But the teams and Liberty don’t want any more than 10. Why Andretti and Cadillac can not enter is something FIA (who would love them in) and Liberty (who does not) and the 10 present teams should work out. They should be allowed to enter. And rules should be less, not more. F1 should get back to FIA and away from Liberty, who actually only owns FoM. FIA owns the rights to Formula 1, they also manage the rules and regulations for F1 and are also the authority that decides if a team is compliant with the regulations. FoM leased the commercial rights for Formula 1 for 110 years, as the EU demanded a split of the commercial and regulatory activities in the 1990s. So by definition, Formula 1 cannot happen without FIA, as they are the legal owners of the championship name and the 70+ year identity we call Formula 1.
I flew to Wales to watch Wrexham play football in person. Set Jetting. it’s a real thing.
F1 has a chance of being as popular as soccer in America, meaning not very popular. Like horseracing, it’s a sport for the rich.
Mr. Galloway, 1) F1 is a series. It is NOT a league. Those wankers at CNBC called it a league. Stop it. 2) A team dominating F1, such as the run Red Bull is on, is part of the sport. And that is a good thing. Because unlike NASCAR where the rule book is so tight and innovation went to die, F1 is all about innovation and always pushing the envelope .This results in teams like McLaren and Ferrari making enormous progress during the 2024 season and winning races. So if you want made-for-TV auto racing, NASCAR is ready when you are. Please enjoy the “Trump 2028” and AR-15 tattoos on the most rabid fans and their husbands. Also, Liberty doesn’t control the regulations. The FIA does. One is American, the other French. Do the math. 3) Maffei leaving is too bad. It could very well be he is tired of the politics and all of the travel. Also you might have noticed the DOJ stuff has gone very quiet. Why? Well, what do you think the reaction was at General Motors (Cadillac is the engine for the Andretti F1 effort) when Michael and Mario Andretti and company show up in DC and demand an investigation? Do you think GM wants Congress or the Justice Dept. anywhere near anything they do? Hell no. Which might help explain Andretti being bought out of his team. 4) Yes, an American driver would help ratings. 5) Enjoy Vegas. The race will probably suck. But remember Monaco, Montreal, Mexico City, Sao Paulo, and a dozen better venues are beckoning you in 2025.
Scott, I got the next sport for Netflix. Pro Rugby. I have been a huge rugby fan for quite awhile. I got married and my wife sat down on the couch while I was watching the game. After 2 minutes she said “wow who are these guys?” and “look at that guys legs” and “holy shit that guy is hot”
You get the point
A sport with a ton of action, a ton of good looking men in short shorts who are tough as hell. My wife who won’t glance at the NFL was hooked. We spent two weeks in Paris last year at the Rugby World Cup
Cheers
Never replace football.
“Netflix could keep applying the Drive to Survive formula to new sports” … They have btw… “Break Point” (Tennis), “Full Swing” (Golf), “Sprint” (Track), “Receiver” & “Quarterback” (NFL), “Starting Five” (NBA), “100 Days to Indy” (IndyCar), among others and not to mention all of the team specific ones. All other streamers have followed suit. The space is already incredibly saturated and it isn’t clear that any have had even a fraction of the success that “Drive to Survive” has had for F1, if the measure of that success is turning doc viewers into full on fans of the sport. *raises hand* count me as one of them
Ah, finally found something I did before you. I have been an F1 fan since 95, soon after I graduated from Haas in 93. My husband (boyfriend at the time) did a stint in Germany and came home gaga over Michael Schumacher.
I agree, 100% they need an American driver and a little bit more excitement.
I like mountaineering for rich people. I’m in wine and the amount of unqualified uber wealthy folks getting short-roped to the top like Sandy Hill Pittman is kinda disgusting. If your winery passion project (ie. tax dodge) fails you’re out some prestige with your rich pals and maybe you stiffed some of your workers who can’t afford to retaliate anyway. If anyone is thinking about it, drinking wine makes you a winemaker about as much as eating at Michelin starred restaurants makes you Eric Ripert.
I like mountaineering because parvenu ineptitude, unwarranted confidence, and hubris doesn’t cost you a few zeros on your net worth, it might cost you fingers or toes or maybe your life.
Modern F1 is bumper bowling, you couldn’t chuck a Lance Stroll in the ’82 Ferrari V6. Those two massive KKK turbos don’t care who your daddy is or what’s in his bank account, and they’d happily have sent him into a tire wall upside down, ass backwards with his hair on fire. I stopped tuning into F1 at the end of the Raikkonnen years but would happily tune back into it if it was a league of Dunning-Kruger rich kids with more confidence than experience. Like a reverse Squid Game where the arriviste elites are the fodder. I’d pay $2,200 to go see it.
F1 is about entertainment AND exclusivity /glamour. Sure, there’s some car racing involved, but it’s almost incidental. I used to go to F1 races in Montreal. The first year we had general admission tickets and the track promoters had erected signage to prevent you from seeing the track unless you ponied up for the grandstand seats. We had a lot of fun, but didn’t see much of the race, even though we were only 20-30 yards away from the track. So next year we spent $500/ticket (back in the early 2000’s!) to get good seats. Hardly the stuff of the common man.
Love your content and I found this one quite relevant. I’ve been watching F1 for a couple of years and my partner has been a fan since his childhood when his dad will take him to watch Nigel Mansell performing donuts on track.
Sadly, F1 are continually out pricing the average fan with prices going up every season and what once was a family bonding experience is now becoming an unattainable. We see this US prices in particular.
US price tickets have always been extremely high and for the European fan and I haven’t seen much evidence that they will pay them. In Europe, we are used to different types of pricing and tracks that are more about racing, engineering and the love of the sport than the glamour of Las Vegas. The contract for Las Vegans runs out in 2025, would it be renewed? We also must remember that, F1 was in Las Vegas before, in 1982 but was cancelled shortly after due to low popularity.
More and more compressed into more and more not less and less. The dormant parts of our brains and vagus nerve highway trying to “keep up”. Great posts Dr. Galloway.
I live in Las Vegas and am an F1 fan. The other story here is the lack of transparency among all parties in regards the true cost of this event to the citizens of Clark County/Las Vegas. Turning public roads into a private event that benefitted mainly the largest resort operators last year, that cost the county $500K in admin personel time along with the massive loss of economic value to businesses on the perimeter of the track, the unfathomable loss of time/money to 20K+ employeers who had to plan to get to work turning 20 min commutes into hours. Also the massive loss of tourist dollars to those who had their experience with Vegas degraded in the months of disruption on the Strip all has to be balanced against whatever the net positive of global exposure and future visitation from international audiences over the next few years (a market that certainly should be courted.) So it’s a classic sports economy story that deserves to have better transparency so the community can fullly understand what they are giving up for this event. As of now, the community is divided on its merits and this year F1 has done a lot better with community outreach but they are a long way from turning regular folks into evangelists in the same way the Golden Knights did with hockey. Fascinating all around . . . now if I can just catch a sighting of dreamboat Carlos Sainz . . .
Great article!
Hi
Love listening to Pivot from Nairobi, every week (except in August)
F1 should be fine if the prices of Vegas and Miami stabilize. The sport had a US resurgence in the early 2000s, drawing 100,000 – 200,000 to Indianapolis for a few years.
It would be nice to have a US driver but one with a competitive seat (Logan Sergeant was cut from Williams this year) and an American team (though Andretti going legal is the wrong approach)
Scott, I love this (and all of your advice in our other posts) – especially since it covers motorsport and some of the business aspects. Just a quip for you to add to the post in an edit (if possible) – USA’s Logan Sargeant was a driver for Williams Racing for much of this year but was fired for poor performance and replaced by Colapinto.
As a seasoned motorsport fanatic I recommend that you go to the U.S. Grand Prix in Austin, TX next October (or go check out motorsport’s best kept secret for quality racing and at-track fan experience – IndyCar, and the Indianapolis 500 in May). The at track experience at Austin is significantly better than what you get at both Miami and Las Vegas (you can also see significantly more of the race depending on where you sit because of the track layout). And, (if you haven’t already) try to get in on a ride along opportunity in a two seater F1 car this weekend – you’ll be blown away by it.
Austin opened in 2012 and they did a great job on it. Nobody had any idea how big Formula One was and now they do.
It is totally disruptive to the city like SXSW.
JLM
Whoremula 1
Racertainment is NOT what F1 has been about; having a hard time thinking it should be now.
Nice ‘pivot from the real world to the frivolous. Just say you misunderstood the pre Nov 5 America and get it over with like the rest of us
Your take on Vegas F1 isn’t wrong (I’m also here right now), but you can’t extrapolate it to F1 as a whole like your title suggests, especially if Miami is your other measuring stick. Even within North America — CDMX, Montreal, and COTA are complete different animals. You’ve been to the two races that appeal the least to real racing fans.
Recently, I’ve been a little annoyed that every week, you go on you different blogs to tell the same story, exactly the same way, every place. It’s usually very interesting the first time. The third time it feels canned and a poor use of my time? You are more interesting than this, you can do better 🙂