Formula One is the pinnacle of motorsport. $2 billion in revenue, 10 teams, 20 drivers, 24 tracks, and 400 million unique fans. However, over the 72-year history of the sport, it has mostly been a European-focused sport; The one thing missing is America. So how did Formula One go from relative obscurity in the United States to having three of the twenty-four races in America?

Step in Liberty Media; an American private equity firm known best for owning part of the Atlanta Braves. In 2017, Liberty Media bought the rights to Formula One from the longtime owner, Bernie Ecclestone, and quickly wanted to make several changes to both maintain the existing fanbase and increase the fanbase in burgeoning markets.

However, before getting into the changes that were made, let's understand the three main monetization streams of Formula One: race and promoter fees, broadcast rights, and sponsorship and advertising.

1. Race and promoter fees:  

   1. A bit more than 33% of the total revenue of F1, which are essentially fees that racetrack owners or governments pay to F1 to put on a race in a specific location. This fee can vary from almost zero money, for a place like Monaco, to 30+ million for less historical, “flyaway” races such as the final race of every year, Abu Dhabi. 

1. Broadcast rights:

   1. A bit more than 33% of the total revenues. Formula 1 bears all the cost for this, including the filming and production of the content, then sells it to various partners around the world, including Sky Sports for the UK and ESPN for the US, along with their own subscription-based content, F1 TV. 

1. Sponsorship and advertising:

   1. About 15% of total revenue, although could grow exponentially in the coming few years. This money is mostly from various sponsors of the team in exchange for advertising for those brands. The last 15-17% of the revenue comes from paddock club (essentially VIP ticketing), Formula 2 revenue, Formula 3 revenue, logistics, and transport, among other ancillary funds. These generally have a higher cost associated with them, so are not as big of a driver as the other sections.

Now that we understand how F1 makes money, we should look at how expanding into America would be the ideal next step for F1 and Liberty Media. For starters, America is currently a whale market for sports as it generates $71.06B of revenue across all the various sports. If Liberty can expand into America successfully and become a major sport, it could have limitless access to advertising and sponsorship revenue. As the sport gains more and more brand recognition around the world, it will generate more money and more leverage that Liberty Media would have to work with.

So, what's the strategy? Interestingly: Netflix. But first, some background: before Liberty, F1 was a very elitist sport in which drivers and teams had very limited social media and news coverage other than the races. This is best summarized by a quote in 2014 from the former F1 owner Bernie Ecclestone when asked about the impact of marketing to the younger 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” (Baldwin 2014). However, this led to stagnation as it was hard for potential new fans to gain as much access to the sport as they might need. In an effort to increase coverage, awareness, and advertising, Sean Bratches, Formula One's former Managing Director of Commercial Operations, proposed a show that focused on the personalities and drama within Formula 1, specifically covering a single team, but that quickly turned into wanting to get as many teams in on it as possible.

The show, “Drive to Survive”, eventually experienced so much success that, slowly, all ten teams and all twenty drivers decided to become a part of it. But how did this approach work to boost viewership in the US? 

Simple answer: chase the drama.

While I would not call Drive to Survive a reality TV show, it is as close to one as a documentary of the sport could be. Since the players in Formula One are all extremely competitive, rich, talented, the drama between racers become hot topics that engage the audience. Later, people realized that this was not the true story, but we will cover this later. After Box to Box Films (the company that produced Drive to Survive) shot and edited the 2018 World Championship and submitted the season of the show to Netflix, it turned into a waiting game. 

(Note from the author: there might be spoilers ahead.)

Season 1 forced the producers to be creative since the top two teams at the time, Ferrari and Mercedes, refused to be a part of the show. The season chose to highlight many of the teammate rivalries, which is a uniquely F1 trait because of how the sport works. Within Formula One, your teammate is the only one that has the same car as you, so if they beat you in the same car, then it is proven from the numbers that you are categorically slower. The producers of the show knew this, so they chose to highlight this within the paddock (where the drivers and teams operate at the race track), on the track, and even at their own homes and estates. The season mostly covered four of the ten teams, Haas, Red Bull, Renault, and McLaren. 

Box to Box knew that they had to capitalize on personalities so they picked some of the best: Daniel Ricciardo (Red Bull Driver), Christian Horner (Red Bull Team Principal), Gunther Steiner (Haas Team Principal), Carlos Sainz (Renault Driver), and Zak Brown (CEO of McLaren Racing). All of the major characters, along with the side characters made the show seem very human and also gave us an inside look at their personal lives. Their show wonderfully captured the season, with coverage of the Max Verstappen and Daniel Ricciardo teammate competition that led to the eventual departure of Ricciardo from Red Bull, Haas’ struggles with competing because of inadequate funding, the financial problems within Williams leading to even more drama due to a pay driver, and the Red Bull and Renault engine dispute and subsequent ego battle.

Now, take this drama-filled show and drop it in the theatrical-loving American Netflix market. The numbers speak for themselves. Formula One viewership increased by 22.6% from 2018-2019, which cannot be completely attributed to the show, but it was definitely a huge part (Killingstad 2022).

After the success of the Netflix series in 2019, Formula One renewed for a Season Two. The second season was just as drama-filled, with major storylines involving Ricciardo again with the caveat of him being at Renault now, Pierre Gasly being promoted and then demoted from Red Bull, and a highlight on the Belgium Grand Prix where F2 driver Anthoine Hubert was involved in a horrific crash. 

While this is not a television show review, and before we continue with the story, there are some issues with the show that Netflix and Box to Box have still failed to address even through the fourth season. Within the season, much of the drama that has intrigued viewers and gotten people into the sport has unfortunately been faked. There have been misplaced radio messages, videos that were cut incorrectly, and quotes that were moved out of place to fuel more interesting storylines just for entertainment's sake. This is not uncommon in reality television shows but seems out of place for what was originally booked as a documentary about the drivers and personalities within F1. However, no one can deny the results, and undoubtedly this show has brought the formerly declining sport back to life.

Now, back to the main story. The third season was originally under threat because of the 2020 COVID-19 pandemic, but when the season was released in March 2021, there were 219 million eager Netflix subscribers in lockdown. Again, the season was jam-packed with drama. However, this season also was full of excitement involving the monetary problems that teams ran into during COVID. However, COVID was also a blessing in disguise as it led to an explosion in viewership as everyone was sitting at home with nothing to watch, Formula One was one of the sports that was on television. The numbers again, speak for themselves, as from 2018-2021 they had a 71% percent increase in viewership (Killingstad 2022). This was bolstered by the statistic that the US had the highest attended race in the whole race calendar at four hundred thousand at the Circuit of the Americas in Austin, Texas. These numbers are not just from Netflix, but also from the fact that Formula One has turned into a media, content, and advertising distribution platform that can span beyond just its original audience. 

Season Four (which was 2021 in real life) was the most exciting to date, with the two drivers Lewis Hamilton and Max Verstappen battling it out until it was tied in the final race. This meant that the driver who won the final race won the championship, and I’ll let you watch the episodes to find out who won. This of course let the show have yet another successful season, with the Netflix show now renewed for the 2022 and 2023 championships, with the subsequent Netflix seasons coming out in 2023 and 2024. This show has definitely been the combination of good marketing and great timing which has also contributed heavily to Formula One’s complete revitalization in the US market. 

Since 2017 when Liberty Media acquired Formula One to the present day, revenue is up 46%, US viewership is up 156%, and ESPN just renewed a deal with F1 for the next 3 years that will pay $90 million per year (Brittle 2022, Killiangstad 2022, FWONK 2022). If Liberty Media continues to allow their revitalized brand, brilliant personalities, and exceptional spectacle to the world, they have limitless potential to become one of the biggest sporting brands in the world.

Works Cited

Baldwin, Alan. 2014. “F1 Not Interested in Young Fans, Says Ecclestone.” Reuters. Reuters. November 14. 

https://www.reuters.com/article/us-motor-racing-ecclestone/f1-not-interested-in-young-fans-says-ecclestone-idUSKCN0IY19S20141114. 

Brittle, Cian. 2022. “F1 Renews US TV Deal with ESPN until 2025 for up to US$90m.” SportsPro. June 27. https://www.sportspromedia.com/news/f1-us-tv-rights-deal-espn-disney-comcast-nbc-amazon-netflix-2025/. 

“Formula One Group (FWONK) - Revenue.” 2022. CompaniesMarketCap.com - Companies Ranked by Market Capitalization. Accessed December 1. https://companiesmarketcap.com/formula-one-group/revenue/. 

Killingstad, Liam. 2022. “The Unstoppable Rise of Formula 1.” Edited by Peter Richman. Front Office Sports. July 10. https://frontofficesports.com/newsletter/the-unstoppable-rise-of-formula-1/.