U.S.-based Liberty Media acquires Formula One for US$4.4B
In the world of motorsports, there is Formula One and then there is everyone else, but in the U.S. the races barely register. This acquisition is expected to boost the race's U.S. profile
CHARLOTTE, N.C.—Nothing can compete with the glitz and glamour that accompanies F1 and its $10 million machines that breathlessly power through the streets of Monaco and Montreal, race courses in Shanghai, Sepang and Sochi, make stops in Australia, Austin and Abu Dhabi.
Celebrities trot all over the globe to walk the F1 grid, to visit the Ferrari and Mercedes paddocks, to sip espresso with the superstars. The series has rabid fans who wake at all hours to watch races, to wave the flag for their countrymen, to strategize fuel mileage and tire wear.
Despite its popularity, Formula One is barely a blip on the radar in the United States, where NASCAR, IndyCar and even sports cars rule supreme.
But Formula One is getting a new owner, one based in the U.S., no less, and the change at the top should amount to new eyes giving a fresh look at the global reach of the most popular form of motorsport in the world. Liberty Media, which has stake in SiriusXM and the Atlanta Braves, announced this week it will purchase F1 from European private equity firm CVC Capital Partners for $4.4 billion.
Zak Brown, CEO of CSM Sport & Entertainment, one of the largest sports marketing groups in the world, believes the change in ownership will lead to an investment in the growth of F1. While CVC focused on maximizing short-term revenue and return for shareholders, Brown considers Liberty a strategic buyer that will have a longer view and focus on the desires of sponsors and teams.
And what is it that most sponsors and teams want?
“There’s not a single sponsor that doesn’t want Formula One to be bigger in North America,” Brown said. “It’s the most untapped, mature market for Formula One to improve its growth.”
Formula One returned to the U.S. in 2012 with a race in Austin, Texas, but has to date failed to find a second venue in America. There had been plans for a race in New Jersey that fell apart, and chief executive Bernie Ecclestone made a failed play to yank the Long Beach, California, street course away from IndyCar while also tossing around suggestions that cities such as Las Vegas or Miami could be future hosts for an F1 race.
While the North American fan base is solid, it’s a niche audience compared to other places in the world. As such, the return of F1 in Austin has been on a slow attendance decline since its debut at Circuit of Americas. This year, Taylor Swift will play at the venue after race qualifying is held on Oct. 22, while The Weeknd will perform after Sunday’s race. To see either concert, fans must have a race ticket.
The musical acts are helping ticket sales, which suffered dramatically last year because of torrential rain the entire race weekend. Bobby Epstein, president of COTA, believes the October race weekend crowd will rival the inaugural event five years ago.
But he acknowledged promoting F1 is a challenge in America and is hopeful that Liberty Media can improve that area.
“Promoting the sport (now) is largely at the cost of the local promoter and the broadcaster who carries it,” Epstein said. “The nature of the sport, where it just travels to a country for one time a year, it’s very hard to get good year-round traction.”
Two years ago, the F1 race in Austin was scheduled for the same weekend as a NASCAR Sprint Cup race in Fort Worth, prompting criticism of F1 chief Bernie Ecclestone by Texas Motor Speedway President Eddie Gossage.
Should NASCAR and IndyCar, both of which have seen declining attendance at races, worry about the potential for more F1 races in America?
“They are so very different,” Epstein said. “When people dig down, there’s a big difference between NASCAR and F1. There’s plenty of room for both. I don’t think anyone needs to look over their shoulder. One does not have to be at the expense of the other.”
Marketing has long been an issue in the F1 paddock because of the strict restrictions in place by Formula One Management, which prohibits any video or audio to be dispersed by anyone at the venue track unless they have a broadcast agreement with FOM. That means teams, drivers, sponsors and media cannot post video to social media or distribute it.
There’s also a cumbersome and difficult path to retrieve archived footage or actual race footage. Teams are forced to rent race tracks during the off-season for production days to create all of their marketing materials for the year.
Brown attributed the Draconian regulations on Formula One trying to figure out how to monetize promotion. But Brown predicts rapid changes under new ownership, which has said Chase Carey, vice chairman of 21st Century Fox, will become the new chairman.
“He’s very sophisticated in the media space, so Formula One will become more sophisticated in its deployment of its content over media,” Brown said. “The whole digital and social media space has a tremendous amount of room for growth, and this is where Liberty Media will excel.”
Since the sale of F1 was announced, many of those already involved with the series are waiting to hear what new ownership has planned.
NBC Sports Network, which acquired F1 rights before the 2013 season, has seen steady growth in its viewership and is up 6 per cent to date from last season, and 40 per cent from Speed Channel’s audience in 2012.
“We’re very proud of the role we’ve played in growing the sports’ profile here in the U.S.,” NBCSN said in a statement. “We look forward to collaborating with F1 management moving forward on how we can continue to grow the sport in America.”
Same goes for Gene Haas, who is in his rookie year as an F1 owner with the only U.S.-based team in the series. Many in the industry doubted Haas would ever see the starting grid, but his North Carolina-based team successfully launched and Haas is enjoying his participation.
Now he’ll wait to see what Liberty Media can do to help him market his brand.
“When you hear ‘F1’ you know exactly what it is _ a global racing series that showcases the latest technology and attracts the best talent in engineering and design,” Haas said. “Bernie Ecclestone has done a phenomenal job of building Formula One into the sport it is today. It has a tremendous amount of appeal, and it was obviously very appealing to Liberty Media.”
AP Sports Writer Jim Vertuno in Austin, Texas, contributed to this report.