I Wanna Go Fast! The Business Of Formula 1 Racing Grit Capital Newsletter Recap

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Last weekend was one of the wildest finishes in F1 history with Max Verstappen coming from behind to catch and defeat the great Lewis Hamilton. In this week’s newsletter we will take a look at the business and revenue model of F1 racing. 

1. The History of Formula 1 An Origin Story
2. Recipe for Success Characteristics of the Sport Allowing for Rapid Adoption
3. Structure of the League  Formula One Group, Teams, Promoters

The History of Formula 1  - 

F1 is the pinnacle of motorsport, and the history is a long and winding one. Since its inception, Formula One has gone through transformation after transformation, both with the cars getting faster and races and events evolving. 

All this has led to where they are today - with over 400M unique fans globally, and (thanks to Netflix), the fastest-growing major sports media property.

Recipe for Success - 

To optimize a sporting property, you need to find a balance between easy to follow and difficult to master. The connection for F1 is that nearly everyone has been in a motorized vehicle and the excitement is the sense of crossing the line first - being the best and fastest.

Hero Based - 

The hero for F1 has been Lewis Hamilton. Hamilton is from humble beginnings with a dad that once held four jobs at one time to support his racing career. With a father of Grenadian descent, Lewis battled racism to overcome the odds and rightfully dominate the racing scene.

Structure of the League - 

Formula One is quite a fantastic business model. They do not pay to host the races, the promoters pay all these costs. They pay out the teams based on a percentage of revenue generated, so the cost structure there is variable instead of fixed.

In Formula One racing, promoters take on a burden of the cost to put races on. Additionally, teams are paid out based on a percentage of the revenue those teams bring to the table. This combination makes for a hefty bottom line for Formula One, with the league doing nearly $2B in revenue last year. 

Wrapping Up - 

Formula One racing is quickly growing in popularity, with a strong international presence. This growth is aided by the Netflix original series ‘Drive To Survive.” 

The inclusion of the casual fan opens up a massive market for increased fan engagement across plenty of new digital channels which can be optimized far more effectively than they are now.