There is a company called Formula One Group, which is the governing body of F1 racing, responsible for the promotion, organisation, and management of the Formula One World Championship. The Formula One Group oversees the rules and regulations of Formula One racing; manages the commercial aspects, including broadcasting rights and sponsorships; works to increase the number of races and engage new audiences worldwide; and invests in advancements to improve the sport’s technological landscape.
In 2QFY2024 ended June, Formula One Group’s net profit contributions collapsed to just US$24 million ($31.3 million) from US$116 million in 2QFY2023 due to higher costs.
Formula One Group’s operating cash flow in 2Q2024 was US$401 million with free cash flow of US$93 million, while similar figures a year ago were US$308 million and US$4 million.
On a positive note, Formula One Group’s gearing fell to 1.7 times as at end-June compared with 1.9 times as at end-December 2023. Formula One Group was acquired by Liberty Media Corp in 2017, a company that owns several networks and production companies, including the popular QVC home shopping network; it also has lesser-known investments in media and telecommunications entities.
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Among the ways of driving F1 revenue include the limited number of weekends in a 24-race calendar. This raises the bar on the quality of experience required to maintain a slot. “Accordingly, nearly all of F1’s recently announced race renewals include elements of promoter-funded capital improvements into track infrastructure and fan experience,” said Geoffrey Maffei, Liberty Media’s president and CEO; and John Malone, chairman of the board, in a letter dated April 1 to shareholders.
In 2018, the average race weekend viewership on cable sports channel ESPN was 1.6 million. This nearly doubled to 3.1 million for the 2023 season, according to Formula One Group’s FY2023 annual report. F1 estimates that capturing digital audiences in the US would add 50% to “traditional linear measurement”.
“There is continued demand from new geographies wanting to join the limited calendar, including the recently announced Madrid race starting in 2026. Our self-promotion of the Las Vegas Grand Prix significantly increased our knowledge of the promoter experience and allows us to be better partners with shared best practices going forward,” the letter to shareholders said.
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The duo believe that Formula One Group’s growth in the US is in its infancy. “There is a significant upside in F1’s US media rights given the attractive demographic of the fan base and relatively modest monetisation today. US-based sponsorship interest continues to build, buoyed by the success of new inventory like the Las Vegas Grand Prix and the F1 Academy women’s racing series,” said Maffei and Malone.
Glamorous, yes. Profitable? Not that much.
