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ESPN Spends $255 Million On Formula 1
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Hey Friends,
I have previously joked that Formula 1 should be paying Netflix for the production and release of “F1: Drive to Survive,” not the other way around. Of course, this is a joke because Netflix has a $17 billion annual content budget — but there is truth in every joke.
For example, Formula 1 says 440,000 people attended the US Grand Prix in Austin, Texas, this past weekend. That’s nearly 200,000 more people than the race saw in 2018, and it makes this year’s race the most-attended three-day weekend in F1 history.
US Grand Prix Attendance (3-day)
2018: 265,000
2021: 400,000
2022: 440,000
The remarkable part of this is that Formula 1 says 70% of the 400,000 attendees at last year's US Grand Prix were attending their first F1 race ever.
But record attendance wasn’t even the biggest news for Formula 1 this weekend.
Because the world’s most popular racing series also officially announced its new deal with ESPN, which is reportedly worth $85 million annually and includes a record 24 races in 2023 — including three U.S. races in Las Vegas, Miami, and Austin.
This is especially interesting because F1 gave U.S. broadcasting rights to ESPN for free a few years ago. No, seriously, they let them broadcast the races for free — ESPN wasn’t even paying production costs; they simply rebroadcasted Sky Sports’ coverage.
That fee eventually increased to (a paltry) $5 million annually from 2019-22. And with races now averaging more than 1 million viewers in the U.S., the worldwide leader in sports has agreed to pay $85 million annually — or $255 million for three years.
ESPN’s Average F1 Viewership
2020: 607,000
2021: 949,000
2022 (through 18 races): 1.2 million (+26% increase YOY)
ESPN will continue using Sky Sports’ broadcast feed and production. However, they will also now commit more resources themselves, including weekly highlights on SportsCenter, in-person coverage during Grand Prix weekends, and more.
“The next step for us is to build around their great production of the races,” says ESPN president Blake Magnus. “Having a more consistent presence on site, having more highlights on Sports Center, having more editorial coverage.”
But the real reason this partnership works is because it is mutually beneficial.
For example, ESPN has a bigger audience than any other sports media outlet in the United States, and with F1 placing a strategic emphasis on the world’s most lucrative economic region, the power of good content and mass distribution is working well.
“They (ESPN) know how to connect with the American audience,” F1 CEO and president Stefano Domenicali said during a press conference this weekend. “They know what the American audience wants to hear.”
And for ESPN, since the deal includes the ability to broadcast select races on ESPN+ exclusively, this gives them another high-quality item to add to their existing digital offering — remember, ESPN now charges more for its digital offering ($9.99/month) than its cable offering ($8.15/month), and it contains more than 22,000 live events each year across the NFL, MLB, NHL, UFC, PGA Tour, Formula 1, La Liga, Bundesliga, Premier Lacrosse League, and more.
So don’t be surprised if this partnership lasts longer than just three years. Of course, the price can’t climb forever unless ESPN wants to stop making it commercial-free and recoup some revenue. But it’s amazing to see the power that Netflix has had on the sport's growth, and it doesn’t look to be slowing down anytime soon.
I hope everyone has a great day. We’ll talk tomorrow.
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