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Liberty Media's Formula 1 Plan Is Working

November 29, 2021

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Hey Friends,

Former Formula 1 CEO Bernie Ecclestone built up quite the reputation.

The British business magnate was born in 1930 and has been involved with motorsports his entire life. He raced early in his career, owned teams, and eventually became CEO of the entire F1 organization, lifting himself up by the bootstraps to turn a career as a secondhand car salesman into a $3 billion personal fortune.

But despite building Formula 1 into the world’s most popular motorsport, Ecclestone developed a reputation for being out-of-touch with the next generation of fans.

For example, before his removal as F1 CEO in 2017 at the age of 86, this is what Bernie Ecclestone told Campaign Asia-Pacific Magazine about younger fans:

“Young kids will see the Rolex (watch) brand but are they going to go and buy one? They can’t afford it. Or our other sponsor UBS -- these kids don’t care about banking. They haven’t got enough money to put in the bloody banks anyway. That’s what I think.

I don’t know why people want to get to the so-called ‘young generation…Why do they want to do that? Is it to sell them something? Most of these kids haven’t got any money. I’d rather get to the 70-year-old guy who’s got plenty of cash.

So, there’s no point trying to reach these kids because they won’t buy any of the products here and if marketers are aiming at this audience, they maybe they should advertise with Disney.

I’m not interested in tweeting, facebook and whatever this nonsense is…I tried to find out but in any case I’m too old-fashioned. I couldn’t see any value in it.”

So, as soaring costs continued to widen the gap between the sport’s most prominent teams and its smaller independent ones, Formula 1 started to develop another problem — an aging fanbase.

Despite Formula 1 being one of the world’s only truly global sports leagues, the impact of an aging fanbase kept the average revenue per fan much lower than its US counterparts.

For example, US sports leagues like the NFL, NBA, and MLB all had significantly fewer fans but ended up bringing in much more money due to better monetization.

2017 Revenue By League

  • NFL: $13.6 billion

  • MLB: $10 billion

  • NBA: $8 billion

  • Formula 1: $1.8 billion

So when Liberty Media acquired the series back in 2017 for $4.4 billion, legendary CEO John Malone and his team emphasized fixing the problem.

They launched an over-the-top (OTT) streaming platform called F1TV and set up an esports series that saw 80% of its audience come in at less than 35-years-old.

They relaxed league-wide social media rules, enabling teams and drivers greater freedom to engage with fans online, and, perhaps most importantly, they launched the F1: Drive To Survive partnership with Netflix.

So far, the results have been fantastic. According to a recent study conducted by F1 & Nielsen that received 167,000 responses from fans in 187 countries, the aggressive marketing campaign to engage the next generation of fans is working.

During its annual investor day presentation last week, Liberty Media announced that the average age of a Formula 1 fan has dropped from 36 years old in 2017 to just 32 years old today.

Even crazier, using data from a SportsBusiness Journal study in 2017, the F1 numbers look fantastic compared to US sports leagues like the NFL, MLB, NBA, and NHL.

Now, to be fair, not only are the SBJ numbers below a few years old, but they are also based on TV viewership, which would inherently bring higher results than a traditional broad-based survey due to cable cutting and other things.

Still, when looked at on a directional basis, they provide fascinating context.

Image

If you still need more evidence, just look at the turnout for this year’s United States Grand Prix in Austin, which ended up being the largest single weekend attendance in the 70-year history of Formula 1.

The decline in the average age of an F1 fan is certainly noteworthy, but I believe the world’s largest motorsports series is just getting started.

They attract Super Bowl viewership numbers for 20+ events each year and have a global fanbase that has an opportunity to get even bigger with continued expansion throughout new markets like the United States.

The revenue from host cities and broadcast partners will continue to grow over time, but the historically under-monetized sponsorship base should expand quickly.

We’ll see what happens over the next few years, but don’t be surprised if Liberty Media ends up turning Formula 1 into one of the world’s most profitable sports leagues. I hope everyone has a great day. I’ll talk to you tomorrow.

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Huddle Up is a daily letter that breaks down the business and money behind sports.

Join more than 50,000 professional athletes, business executives, and casual sports fans that receive it directly in their inbox each morning — it’s free.