How Liberty Media became one of the world’s most valuable sports empires | Wilnesh News

When Liberty Media chairman John Malone completed the $4.4 billion acquisition of Formula One in 2017, he knew he was on to something.

“This is an opportunity to take F1 to another level,” he said tell reporters 2016. “F1 has only scratched the surface of an untapped digital market.”

No one could foresee how soon the F1 opportunity would arise. As global lockdowns began in 2020 and sports fandom proliferated online, Liberty Media had an opportunity to realize Malone’s vision.

In order for it to work, however, Liberty first has to take control of the sport’s finances.

“If you look at the situation before COVID-19 hit in 2019, it was a difficult situation, close to bankruptcy,” said Ferrari HP team principal Fred Vasseur, one of three teams in a single season. One of the teams spending more than $400 million to keep the team in contention for the championship.

This not only frustrates competitors like Honda, but also makes a huge difference on the grid. And the top three teams—— ferrariRed Bull and Mercedes-AMG – they outspend everyone else, receive a disproportionate share of TV rights and bonuses, and have to scrape the rest to raise money.

With some teams on the verge of financial collapse, Liberty has made drastic changes to F1’s structure.

“Legacy bonuses” for the oldest teams were limited and a fairer distribution of broadcasts was designed. With money under control, they outlined plans to limit spending.

“Now (we) have a cost cap,” McLaren Racing CEO Zak Brown told CNBC’s “Inside Track.”

“That’s a lot less than what was spent before, and it allows all 10 teams to actually play with the same size bats.”

The evening game created more exciting storylines, Netflix Caught. The timing was perfect. As the world enters coronavirus lockdown, Netflix has dropped the second season of Drive, introducing legions of new fans to a sport defined more by personality and drama than tinkering behind the garage door.

“I used to think it was the most important thing to happen in motorsport in 40 years, now I think it’s the most important thing to happen in 20 years. Stuart Pringle, managing director of Silverstone, told CNBC that the sport has evolved over the past 40 years.

As previously reported, the “Netflix effect” is just part of what Malone envisions as an “untapped digital market” where fans can follow F1 creators online and race on virtual tracks in the series’ official video game.

Recognizing the strategic importance of these pipelines, Liberty has made significant investments in F1’s digital ecosystem.

“We need new corporate partners in this sport,” Brown said. “Google, Coca-Cola, Dell, they’ve never historically been involved in this sport.”

To attract them, however, F1 needs more than just a digital fan base.

As the pandemic eases, Liberty begins investing heavily in the United States, adding the Miami Grand Prix to the 2022 schedule, bringing the total number of races in the United States to two (alongside Austin).

But to break into the United States, F1 needs a good race, and the 2023 Las Vegas Grand Prix will deliver. cost calculation The report states that US$600 million What’s more, the race weekend drew 315,000 visitors to the city, causing a backlog of private jets at the city’s airport.

“The reason we invested in Vegas is because we immediately understood the potential of the U.S. market,” F1 chief executive Stefano Domenicali told CNBC.

The strategy paid off. After the Vegas Grand Prix, the value of sponsorship deals doubled as major American companies rushed into the sport. Major deals with the following brands American Express bringing F1 to a lucrative new fan base, while partnerships with Hilton and Virgin Hotels have helped strengthen the sport’s global appeal.

The sport’s value since Liberty Media acquired F1 in 2017 Already doubled From $8 billion (including debt) to Approximately US$17 billion in 2023. But headwinds began to blow. Liberty’s feud with US motorsport giant Andretti Global over access to the track is turning ugly, while the sport’s global schedule threatens to put sustainability goals out of reach.

Getting through this unscathed will require the same vision and adaptability that Forbes named Liberty Media the most valuable “sports empire” in the world.

With new racing rules set to come into effect in 2026, expect more drama off the track as F1 prepares to defend its title.