Formula 1's High Stakes Warning

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Most Valuable Formula 1 Teams

To derive the enterprise value of the ten teams in Formula 1, Sportico calculated each team's revenue, relying on publicly available financial statements from annual reports; Companies House, the U.K.'s registrar of companies; and the Italian Business Register. Sportico used their calculations where information wasn't readily available. Additionally, they interviewed those knowledgeable about team finances, including sports bankers, attorneys, and investors who have looked at F1 teams. Multiple teams and industry experts vetted this information.

Total team revenues are displayed net of value-added and other sales taxes. Revenue streams consist of two main buckets: sponsorships and prize money distributions from Formula 1. All revenue and profit figures are displayed in U.S. dollars using the average daily exchange rate during the 2022 fiscal year: £1 = $1.23 for U.K. teams and €1 = $1.05 for European teams.

Formula 1’s High Stakes Warning

Formula One could require venues along the November Las Vegas Grand Prix circuit to pay for licensing rights. These potential charges, amounting to $1,500 per head, could reach up to $2.25 million for larger establishments - a fee applied regardless of the number of spectators utilizing the space.

It is common for racing organizations to limit unauthorized free viewing of their events and generate revenue from licensed venues. Non-compliant venues risk obstructing their views with structural elements such as barricades or light stands.

While this decision may appear burdensome to some establishments, it aligns with F1's usual operations in places like Monaco. Moreover, authorized sponsors like the Venetian and Wynn won't be asked for additional payments for rooms facing the course.

Participants left disgruntled by these fees should be reminded that Liberty Media's F1, thanks to series like Netflix's "Drive to Survive," has grown immensely from its 8.8 billion valuation in 2016 to a worth of 17.1 billion today. This growth signifies the immense brand equity F1 brings to host cities and sponsors, justifying the licensing fees.

It's worth noting; however, there's fear the charges could lead to exorbitant cover charges for customers - potentially affecting local businesses negatively.

Average hotel rooms for the weekend are charging $1,000 a night. Add in the $6,651 average race tickets for three days — or the inflated cover to go to a restaurant with good views — and flights; you could easily be looking at a $15,000 weekend for a couple before gambling.

Beer Park is officially partnered with Formula 1 and is charging $5,500 for full, three-day access to the venue’s indoor space, including food and beverages, with over 75 HDTVs and the 9,000-square-foot outdoor terrace with trackside views.

Formula 1 is paying MSG Sphere nearly $10 million for its empty parking lot to put up its own stands.

The upcoming Grand Prix event, expected to draw up to 300,000 F1 fans, will occur from November 16 to November 18. Despite the controversy, ticket packages for the public have yet to sell out, according to the Formula One website.

My take: While the optics may rub some the wrong way, including the Las Vegas brass, Formula 1 is well within its right to protect its trademark.

Power Unit Equalization Considered

The introduction of a mechanism to equalize power units among Formula One manufacturers is under consideration by the FIA, following concerns about the performance of the Renault engine used by Alpine. Alpine acknowledges it is behind its competitors, adversely impacting its race competitiveness. The situation is particularly challenging for teams due to the homologation of the current engines, which restricts any performance improvements.

Red Bull boss Horner advocates evaluating engine disparities and adjustments to ensure a level playing field. Such equalization measures have been supported by Horner in the past when Renault engines fell behind Mercedes and Ferrari.

Alpine team principal Szafnauer welcomes Horner's stance. The engines were frozen from 2022 to 2025, allowing Red Bull to continue using Honda engines following the latter's F1 withdrawal. Szafnauer further explains that though power units have been frozen since 2022, rivals might have benefitted from reliability upgrades which could have inadvertently enhanced their power outputs.

Wide World of the Internet

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• Stefano Domenicali thinks new Brad Pitt F1 film will have DTS effect

What I’m Reading

American Prometheus, by Kai Bird and Martin J. Sherwin

I saw Oppenheimer this past weekend and wanted more. I just needed to dive in deeper.

This book is what the film is based on, and I‘m already a few chapters in. The life of one of the world’s most important figures in the 20th century was so complicated and compelling. Highly recommend.

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