How Competitive Imbalance Could Impact F1’s Investment Potential

How competitive imbalance could impact F1’s investment potential is the headline this week as Max Verstappen looks to be continuing his winning ways. How will this affect both how the series is perceived as well as its ultimate financial potential? That is just one of the topics covered in this week’s Business of Motorsport.

I also have news on IndyCar’s bullish future, Supercar’s new investor and how a DAO could work in a Formula 1 team. In Motorsport Legal News I have updates on the Christian Horner situation, the FIA president being investigating for interference in the running of F1 on track and how a number sticker allowed Porsche to win their first WEC race.

All this and much more in this week’s edition of the Business of Motorsport Roundup on Motorsport Prospects. It’s business news racers can use.

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Motorsport Industry News

Formula 1

United States Grand Prix

One of the big topics of debate in the last week after Max Verstappen’s win in Bahrain is the impact of his dominance on the investment potential of Formula 1, especially in the United States. As Vincenzo Landino in The Qualifier states:

“Financially, F1 is on an upward trajectory, with Liberty Media reporting a jump in Formula 1 Group’s quarterly revenue from $754 million to $1.23 billion. This financial health indicates the sport’s growing popularity and the success of its initiatives to engage a wider audience. However, this economic success also highlights the need for strategic decisions that balance profit with the essence of racing competition and the sport’s traditional values.”

Here is some excellent analysis that looks at the issue of sporting competition versus financial potential.

AutoWeek explains how the FIA and Formula One Management plan to address the process of admission of an 11th team into the F1 series in light of the failed Andretti-Cadillac bid.

“Domenicali added that the current Concorde Agreement—the bylaws by which F1 is governed—addresses the process for the addition of an 11th team. But when it came to actual implementation, that process seemed flawed at best, as the Andretti group said that they felt the goalpost or criteria for acceptance kept changing throughout the process.”

If you have been reading this column over the last few weeks, you are aware of the various reports about Audi and their reputed wavering on their commitment to Formula 1. Well Autosport is reporting that Audi is poised to complete its takeover of the Sauber Formula 1 operation, underlining its commitment to a 2026 entry despite recent managerial changes and board-level hesitation.

“Having taken over 25% of Sauber in early 2023, it is now believed that Audi will complete its transaction with Sauber owner Finn Rausing. While a 75% stake was initially circulated, Bild and Bloomberg report that Audi will realise a 100% takeover.”

FIA president Mohammed Ben Sulayem has confirmed he is not 100% in line with the sport’s commercial rights holder in a fundamental way. “I have always said that I am convinced that we should have more teams rather than more races,” Ben Sulayem said.

Despite the statement above, the FIA president has discussed a potential return of Formula 1’s Turkish Grand Prix with the country’s president during talks last weekend.

Speaking about the talks, Ben Sulayem said: “It was a pleasure to meet with President Erdogan. Our talks centred on a range of topics. We discussed the possibility of a return of Formula 1 and WRC to Turkey. Istanbul Park is a modern circuit which is popular with drivers while the city of Istanbul is a thriving metropolis which would welcome a return of Formula 1 with open arms. President Erdogan also recognises the importance of the economic and cultural impact which world class motorsport – Formula 1 and WRC – brings to the country.”

With all these request for an F1 race, Formula 1 CEO Stefano Domenicali has given the clearest indication yet that some European events will be rotated from 2026 onwards.

“It is clear that if you see the development of our regionalisation of the calendar, we have moved out from being European-centric to a very worldwide development, that needs to be kept into the future,” he said. “I just want to confirm the fact that we believe 24 races is the right number. I think that we are going to play in the right way, in the way I was mentioning just briefly before, on the fact that we have certain opportunities that we want to bring to the market in the next couple of years, starting from 2026 onwards.”

Qiddiya racetrack

The developers of a new Saudi Arabia motorsport venue have promised it will “push the boundaries of motorsports to the extreme” with a list of world-first features. “The first corner climbs 20 stories high, the main straight races alongside a roller-coaster and the layout combines street and circuit sections that can be extended into one of the world’s longest racetracks.”

While Zak Brown continues to beat the drum against the Red Bull-VCARB team relationship, Toto Wolff has supported a “reset to the rules” allowing these kinds of team alliances.

“Wolff said that ending customer relationships between teams would be bad news financially to an outfit like his that sells components, but he reckoned that having more robust rules would be better overall than worrying about profits for Mercedes.”

Finally, Sporting Crypto has the details on a reputed Bored Apes DAO proposal for F1 team partnership. “Should it pass, ApeCoin DAO will be designated as a non-exclusive ‘Team Partner’, and exclusively as a ‘community coin partner’. This makes me think that this is a team that already has a blockchain partner and that this new sponsorship category is crafted specifically for ApeCoin DAO.”

IndyCar

Business of Motorsport

As IndyCar kicks off their new season in St Pete’s this week, there has been a lot of news about their bullish attitude on the future of the series. A couple of things that they are hoping to do are:

They have also begun to issue partial refunds to fans who purchased tickets to their Thermal Club event while slashing the price of new tickets being made available. The Race has a great roundup of all the IndyCar news you need in The answers to IndyCar’s problems and a roadmap for its future?

General Motorsport Industry News

Supercars Transporter

The Rogers family have sold their stake in Supercars’ parent company RACE to an overseas investor, Walcot LLC. According to SpeedCafe, “Walcot LLC has links to Liberty Media, the owners of the Formula One Group.” SpeedCafe also has an analysis on whether or not the new Supercars’ owner is just what the championship needs.

I have mentioned this before but the rumors are growing that Liberty Media is eyeing a ‘€4bn’ acquisition of the commercial rights for MotoGP. Liberty Media is reportedly one of several bidders including Amazon, Netflix and Disney.

While NASCAR President Steve Phelps has teased new immersive tech allowing fans to get even closer to the NASCAR action, Honda’s entry into the NASCAR ranks is a rumor that just won’t go away.

In other NASCAR news, the organizers if the Chicago street race are positive of a better experience this year compared to last year’s rain affected race.

“We didn’t get to do so many things that we had planned and even despite 9.1 inches of rain, it was a tremendous success,” Julie Giese told RACER. “So, if we can get some sunny skies and be able to get all the concerts in and get the race in and really be able to realize the vision that NASCAR has, and honestly Chicago has, for this event, I think it’s going to be absolutely tremendous.”

Business of Motorsport

Ali Donnelly, the CEO of More Than Equal sets out the five things that she has learned since taking the position one year ago.

“While I’ve observed some well-intended ideas, especially from ASNs (the national bodies recognised by the FIA as the sole holder of sporting power in a country— the equivalent to a national governing body in the parlance of others sports) to welcome more women and girls into the sport, there is often limited understanding about how to specifically target that demographic and make them feel truly welcome when they get there.”

After the release of the FIA’s radical vision of World Rally Championship’s future, the teams react and Autosport’s Gravel Notes Podcast breaks down the plan. “We may not be able to deliver everything that they want but I don’t think that is the goal. The goal of the working group was to stimulate some ideas and that has happened. We can’t continue to be negative now, we have to be proactive.”

Due to the current geopolitical situation in the Red Sea, FIA World Endurance Championship teams will have their cars and equipment air freighted back from Qatar for next month’s second round of the season at Imola.

Quick Takes on the Business of Motorsport This Week

Business of Motorsport
How Competitive Imbalance Could Impact F1's Investment Potential
Super Formula

Motorsport Law Roundup

A look at some of the legal and regulatory issues and analysis in Motorsport this week

Christian Horner

Last week I mentioned the Christian Horner probe that Red Bull had conducted with his vindication being received skeptically by many in the paddock. Now Horner’s conduct is turning into a soap opera with claims and counterclaims being tossed about. Meanwhile, the Red Bull employee in question has been suspended but does have the right to appeal within 5 days of. According to Racing News365, “there is a timeframe of five days extending from when official legal letters have been served to both parties. It is believed that was done at the start of this week.” According to the same source, it is understood the basis for the suspension was dishonesty relating to “inaccuracies in her evidence.”

As argued by so many (see below), transparency is key but at the same time, confidentiality in any investigation like this is necessary for both parties, something that has clearly been breached in this case. The FIA has indicated that they are conducting their own investigation into the matter over the possibility of Horner and Red Bull bringing the reputation of the sport into disrepute. They have also indicated that they will not rush to judgement.

How Competitive Imbalance Could Impact F1's Investment Potential

Speaking of the FIA, I think I can safely call FIA president Mohammed Ben Sulayem “embattled” as he is facing not one but two and possibly three alleged ethical charges. The first is of attempting to interfere in an F1 result. The second is from failing to certify the Las Vegas Grand Prix track. The FIA has responding by launching an investigation but decrying “inaccurate reports in the media.” The teams have responded by cautioning against “prejudging” the FIA president until the investigation concludes.

Veteran F1 reporter Joe Saward also mentions questions over potential financial irregularities within the FIA that are being investigated.

“We will see if the investigations into alleged manipulation of the race stewards in Jeddah in 2022 (which was brought to the attention of the federation by a whistle-blower) and questions about expenses channeled through the French FIA (there is a parallel Swiss FIA as well, which has different regulatory constraints), which go beyond what is allowed in the FIA’s governing rules. It is classified as a non-profit organization under the French “Association Loi” of 1901, which allows for certain levels of expenses, but it is claimed that Ben Sulayem may have exceeded these limits through his use of a private jet and other forms of transportation. This could potentially expose the FIA to taxation or other legal consequences from the French authorities.”

Legally I am sure the appropriate guidelines and standards are being followed but the optics of this are not good. As I mentioned in the Horner post, transparency is key (within appropriate limits) and here is some analysis as to why.

In driver contract news, IndyCar’s Pato O’Ward has signed a contract extension with Arrow McLaren. “Although the team did not release financial terms of the contract, court documents in the ongoing lawsuit between McLaren Racing against Alex Palou and his Alpha Racing USA LLC entity in UK Commercial Court revealed O’Ward will get $10.2 million.”

LawinSport has published Top Tips for Protecting Confidential Information and Trade Secrets in Motorsport. “For businesses, protecting confidential information is of the utmost importance. This is even more so for businesses in the motorsports industry, where marginal gains are the difference between winning and losing.”

Drive Sports Marketing has an thought-provoking article on something that is becoming more of an issue, and that is when the image of a sponsor and their sponsorship program is damaged by unethical activities of the sponsored brand through things like match-fixing, doping or other forms of cheating. They also look at the legal implications.

“Legal and regulatory compliance is an additional dimension in the importance of ethical values in sports sponsorship. Sponsors operate within a framework of obligations, and supporting sports entities adhering to ethical standards ensures compliance, preventing legal issues.”

Porsche WEC

The Drive explains how a regulation about a car’s illuminated number almost cost Porsche its first WEC Hypercar race.

Following the retirement of the No. 98 Peugeot 9X8 in the early stages of the 10-hour endurance race (1,812 km), the No. 6 Porsche 963 of Porsche Penske Motorsport driven by Laurens Vanthoor, Kevin Estre, and Andre Lotterer held a commanding lead over its Hypercar rivals. With less than two hours to go, however, the Porsche was involved in a light collision with a Lexus GT3 car while slicing its way through traffic.

While the contact didn’t mechanically hurt the Porsche, it managed to knock off its illuminated number place—which identifies the car to other competitors, fans, TV cameras, etc. This, it turns out, was a major problem, because per the rules, the car’s number plate “must remain visible on both sides under all circumstances.”

How a Silly Sticker Won Porsche Its First WEC Hypercar Race

Three Formula E teams are awaiting an FIA ruling on a complicated regulatory flashpoint that will decide who drives for them in the second part of the Berlin double-header in May. The first race of the weekend will clash directly with the third round of the World Endurance Championship at Spa. This season eight drivers – over a third of the Formula E field – are competing in both the WEC and FE.

As it stands, the regulations state that double-headers are treated as one event meaning that a change of drivers from one race to the next is not possible after administrative checks, bar a force majeure situation.

Motorsport Sponsorship & Partnership News

Here are the latest motorsport sponsorship deals, partnerships and related analysis that were announced this week.

How Competitive Imbalance Could Impact F1's Investment Potential
Supercars Race Control Vehicles
How Competitive Imbalance Could Impact F1's Investment Potential
Business of Motorsport
Business of Motorsport

Team & Manufacturer News

Here is a roundup of the latest team news from around the world of motorsport.

How Competitive Imbalance Could Impact F1's Investment Potential
Business of Motorsport
Business of Motorsport

Motorsport Movers & Shakers

How Competitive Imbalance Could Impact F1's Investment Potential

Catch a glimpse into Laura’s world. As Sports Car Racing Manager at General Motors, she has the thrill of building networks with extraordinary teams.

Giovanni Sgro

PRI Magazine interviewed Giovanni Sgro, the man responsible for managing the historic Maserati Corse racing brand while preparing for an all-electric future. 

“The fact is our business objectives tied in very well with the Formula E program. It’s the highest performing electric racing car in the world. Formula E also has a very diverse audience. It’s not just motorsports fans, it’s also individuals who are really interested in technology innovation. Formula E fans want to understand what they’re going to be driving in the future. Really, those two things interest us very much. Another reason is that our racing programs also allow us to showcase the full range of our automobiles, specifically the GT cars, as we’ve done this past year. That’s an immediate connection.”

Mark Boudreau
Author: Mark Boudreau

Mark is the publisher of Motorsport Prospects. As a former lawyer, he applies his legal background and research skills to assist race drivers by showcasing the resources they need to make their motorsport careers happen.