F1 garnering interest from U.S. investors
F1, or Formula One, has become one of the most watched sporting events all around the globe. The intense motor sporting event has garnered interest from all kinds of stakeholders, and people are taking notice of the kind of profits one can earn from a sizeable investment into this business.
So it is no surprise that America, which is comfortably the largest economy in the world, wants to dip its toe into this sporting structure. A bunch of US-based businesses are intrigued by the world of F1 and are increasingly interested in investing in it. And then there are investors who have already done incredibly well by associating with the sport.
F1 already has an American presence
In 2017, Liberty Media, which is an American mass media communication company, acquired the Formula One Series for US$4.6 billion (£3.4billion) from British-based company CVC Capital Partners. Today, F1 is arguably the biggest investment by Liberty Media and they are running an incredibly profitable business around it.
Gene Haas, the president of Haas Automation, already has a major presence in the motorsport business as he founded the NASCAR team, Haas CNC Racing, and the Formula One team, Haas F1 team.
Furthermore, former professional racer and American businessman Zak Brown was also appointed as CEO of McLaren Racing in 2018, which is the second most successful F1 team. It came after he joined them as an Executive director in 2016. MSP Sports Capital, a US-based company that primarily secures sporting investments, also secured an initial 15% stake in McLaren in 2020, which could rise to 33% by the end of 2022.
U.S.-based private investment firm Dorilton Capital has acquired Williams Racing which includes the #F1 team reut.rs/31eEcaE https://t.co/futTIR52aq
In August 2020, legendary Formula One team Williams Racing was acquired by a New York-based private investment firm, Dorilton Capital, for an undisclosed fee.
There is obviously already a lot of hype around investing in F1 teams. But what has brought about the sudden increase in interest?
F1 has caught the eye of American investors for multiple reasons
In the last 10 years, there has been a surge of investment by American companies in the Premier League, which is a major nine-month football tournament in England. Big clubs like Arsenal, Manchester United, Liverpool, West Ham United and Aston Villa have seen a domination of American ownership.
A big reason for this is the viewership numbers and the kind of profits one can earn from owning a football club. Ticketing revenue, merchandising, commercial deals, broadcasting rights, and several other avenues prove to be a helpful source of income when owning a Premier League club, which competes in one of the most watched leagues in the world. The French, Spanish, and Italian domestic leagues have also seen similar investments.
Thus, there is obviously money to be made and F1 is the next sport on the block that is becoming an attractive financial proposition.
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Who's ready for the Monza episode of Drive To Survive? 😉🍿🇮🇹
We hear a certain Netflix crew was with @McLarenF1 according to @danielricciardo on @PardonMyTake 👀
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In 2021, Formula One saw a rise in its TV ratings by nearly 40%. The Netflix series 'Drive to Survive' has also caught the attention of several potential fans around the world due to the unique nature of the globe trotting series.
There have been discussions over adding a third F1 race stateside in Las Vegas in 2023 or 2024, following the decision to have a second race in Miami this year.
F1 currently has 10 teams and each team has 2 cars, thereby leading to a 20-car grid. New teams can join the sport rather than incorporating themselves into an existing organization, but there is a $200millon fee that has been instituted recently. This could become an interesting pathway to enter the motorsport industry, and American investment is also likely to encourage other U.S. Racing Series, like NASCAR.
Doc O'Connor, managing partner of Arctos Sports Partners, made it clear in December that his company is looking to invest in teams in F1 and MotoGP. The American company has already invested in over 16 sporting franchises, including the Boston Red Sox, Liverpool Football Club, Basketball's Golden State Warriors, and the Kings.
Multiple executives involved in the investment and banking side of sports are also apparently aware of a couple of companies looking to invest in certain teams.
Opinion: McLaren could see American Investment in the near future
Since there has been no concrete news on interest in a particular team, it would be pointless to speculate on potential acquisitions. However, there are some U.S. connections in one particular F1 team.
McLaren set to sell stake in F1 team to American investors | F1 News - ballsandbells.com/motorsports/mc… https://t.co/BocPYgn88B
McLaren Racing, as mentioned before, has Zak Brown as CEO and MSP Sports as a stakeholder and also has multiple U.S. sponsors. Alteryx, Arrow Electronics, Coca-Cola, Dell Technologies, Hilton, Klipsch Audio, Smartsheet, Splunk, Stanley Black & Decker and Webex by Cisco are just some of the companies affiliated with the British racing team.
Nick Martin, McLaren's group director of partnership development, has also previously stated that 2022 is going to be an awesome year for the U.S. and has talked about interest from potential partners.
All in all, Formula One is likely to see a lot of intriguing investments this year and in the coming half a decade. ESPN recorded 1.2 million viewership of the event in 2021, and things are only likely to increase from here on in. American investors have, more often than not, invested in profitable businesses, and there are few more financially successful ventures currently than Formula One teams.