Commentary: The race for a new owner for Formula 1 is heating up
The quest to own the most popular racing event is heating up, with Qatar, Netflix and US billionaire Stephen Ross all in the mix, says a UK lecturer.
BOURNEMOUTH, England: The Formula One duel between Lewis Hamilton and Max Verstappen was resolved in sensational – and controversial – style on the final lap of the last race of 2021.
The Dutch driver snatched victory and the world title from his British rival at the end of what was widely considered one of the best seasons in the sport’s history.
It seems clear from the close finish that Formula One is in rude health on the track. It is also attracting large viewing figures – which could in turn attract fresh financial interest in owning the sport.
Currently at the wheel is the US media giant Liberty Media, which also has interests in baseball, broadcasting, film production and sport management.
It bought Formula One for US$4.6 billion (£3.4 billion) in 2017 from the previous owners, CVC Capital Partners.
But just two years later, in 2019, there were rumours that Liberty was already considering selling up.
The rumours, denied by Liberty, came amid concerns about falling fan numbers and the challenge of increasing the appeal of Formula One to a younger audience.
But things have changed – very fast.
After a recent decline in TV audience figures (they dropped from 1.9 billion to 1.5 billion from 2019 to 2020), Formula One’s profile has been significantly enhanced.
During the 2021 season, the global TV audience for the first nine races increased by 36 per cent compared to 2019.
And in 2020 there was a 99 per cent increase in social media engagements recorded across Twitter, Facebook, Instagram, and YouTube – the largest increase for any professional sport, and a clear indication that younger fans were showing interest.
This marked increase in popularity – especially in the US – is likely to be at least in part down to the success of the Netflix documentary series Drive to Survive, which has become one of the streaming giant’s most-watched shows.
Netflix CEO Reed Hastings also counts himself a fan of Formula One, suggesting that if Liberty were considering selling, he would be willing to make an offer.
He explained in an interview in September: “A few years back, the Formula 1 rights were sold. At that time we were not among the bidders, but today we would definitely consider that now.”
There may be other jostling for position too, not least the bidders who lost out to Liberty five years ago.
That bid was submitted by Qatar (through the Qatari Sports Investment fund, a part of the country’s sovereign wealth fund) in partnership with the American billionaire Stephen Ross, who owns the Miami Dolphins American football team.
Far from losing their appetite for Formula One after they lost out to Liberty, both parties are now firmly embedded in the sport. Qatar staged its first race in November 2021, and has signed up for nine more (with a break in 2022 while it hosts the Fifa World Cup).
Next season will also see the first Miami Grand Prix in May, which will be held at the Miami International Autodrome. The Floridian track weaves around the Hard Rock Stadium’s real estate, which just happens to be the home of the Miami Dolphins.
So could Qatar, Ross or Netflix be tempted to pounce? Certainly the numbers look enticing too.
Earlier this year Liberty’s shares were reported to be up 113 per cent since they acquired the sport, and revenue was up at US$180 million for the first quarter of 2021, from just US$39 million in 2020.
Confidence in the financial value of the sport is high with McLaren Racing’s CEO Zak Brown recently pointing out: “Liberty are sports investors in amongst investing in lots of businesses … they could really uncork the potential value of the sport.”
Back in 2020, Bernie Ecclestone, former chief executive of CVC’s Formula One Group, had cautioned that a business that gives the impression that it is doing well might be creating the right climate for a profitable sale. He said: “I would do the same if I wanted to sell.”
Whether they do intend to sell after one of Formula One’s most exciting seasons in recent years remains to be seen. Interest is up, viewing figures are up, and the start of the 2022 season is already an enticing prospect.
For Liberty, that will surely already be classed as a big win – for the business and the sport itself.
Bruce Grant-Braham is a Senior Lecturer at Bournemouth University. This commentary first appeared on The Conversation.