This week in the Business of Motorsport I take you from bidding on F1 digital rights to cost cap issues and on to the reign of manufacturers in F1. I also look at the rise of Hyundai in motorsport, what Indycar really thinks of F1 in the US, a YouTube star drawing attention to the UK’s national racing scene and more.
Motorsport Industry News
- Reports are emerging that Netflix is gearing up for a Formula 1 rights push. ESPN submitted an initial bid of $70 million per year but F1 parent Liberty Media is reportedly seeking a contract around $100 million annually. According to Blackbook Motorsport, the series’ current broadcast partner ESPN, as well as NBC and Amazon are also reportedly in talks for the rights. “According to Business Insider, ESPN’s opening bid was in the region of US$70 million, which is some way short of the US$100 million that Formula One is apparently expecting. In 2017, ESPN agreed to pay only a nominal annual fee for the Formula One rights and after extending contract in 2019 for a reported US$5 million a year fee has seen significant growth in its broadcast audiences.”
- Meanwhile in China, China Telecom is apparently in “advanced talks” for the local F1 digital rights.
- The Race looks at the 11th team F1 probably wants before Andretti. “F1 would prefer a global manufacturer because it would have far greater reach and appeal internationally. Whereas the Andretti argument has tended to be massively dependent on the theoretical benefits it would have in the United States.”
- Autosport looks at how F1 teams went from £1 rejects to billion-dollar forecasts. “Greg Maffei, the CEO of Liberty Media, made an interesting point to highlight F1’s growth over the past five years when speaking at the Business of F1 Forum held by the Financial Times and Motorsport Network in Monaco at the end of last month. “One of the measures that is a real success is the health of the teams,” Maffei said. “When we entered in 2016, we made our first investment and closed on the deal in 2017, Manor, the 11th team, had just been sold in receivership for £1. Today, I don’t think you can buy a team for less than £500m, maybe £700m? You can try, but I think it’s going to be hard. It’s an amazing increase in value.”
- But the cost cap, something that is contributing to the rising value of a Formula 1 team, is also causing a lot of hand wringing and pleas for more money. With questions about whether F1 can break the deadlock over competing cost cap desires and disingenuous lobbying, Williams has already been fined for being in breach of the regulations, demonstrating F1’s cost cap arbitration in action. “While this particular case relates to a procedural breach, the ABA is also prescribed by the regulations as a potential tool for dealing with “minor overspends” – in which case the cost cap is exceeded by no more than 5% of its total.”
- In Snubbing Andretti would show F1 hasn’t learned, The Race columnist Mark Hughes explains the history of manufacturers in Formula 1 and why F1 should be wary of them. “F1 should never allow itself to be beholden for its existence to entities which by definition cannot have the sport as a priority. Independents are the lifeblood of F1’s eco-system.”
- Finally, Apple has confirmed that they are working on a Formula One movie featuring Brad Pitt and co-produced by Lewis Hamilton. The team behind the recent Top Gun: Maverick will be developing the project. Will this be another Driven or something more significant? Time will tell.
General Motorsport Industry News
- I am glad its not just me who has been thinking about this. Grassroots Motorsports asks the question, when did Hyundai become a major motorsports player? “Bryan Herta said at Mid-Ohio that being aligned with a factory program is all he hoped it would be “and more. We’re racing at a high level, and we get to innovate. Hyundai supported us as we adapted a hand control system for Michael Johnson, who is paralyzed from the waist down, and last week we put Robert Wickens in the car for the first time since he was paralyzed in an IndyCar accident. It’s fun being part of a company that invests in motorsports and in the human aspect of racing, too. Expect Hyundai to become more involved in amateur racing, too, especially through the Veloster N program. “I didn’t have much exposure to Hyundai at first, but the more experience I have with the brand, the more impressed I am,” Herta said. “Their approach to racing is much like it is in the car business: Everything they do, they do at the highest level.” Herta drives a Palisade, his daughter drives a Tucson, and his parents drive a Genesis. “Once people drive the car,” he said, “they get it.”
- With the expansion of F1 into the United States with 3 Grands Prix, The Race recently spoke with Mark Miles, president and CEO of Penske Entertainment Corp to find out what IndyCar really thinks of F1’s US expansion. “You didn’t ask this question, but I do think that is helpful to us. More success in open-wheel racing is only going to lift us and I think frankly, our momentum over the last few years couldn’t have been anything but helpful to fulfilling their aspirations for these three races.”
- Performance Racing Magazine has a look at private equity in motorsports, specifically investment in the performance aftermarket which is on the rise. “It was only a matter of time before private equity noticed the motorsports industry,” said Daniel Ingber, PRI’s Vice President of Government and Legal Affairs. “PRI Members are some of the most innovative and entrepreneurial businesses in the world and know their products and their customers extremely well. Most of our Members are small businesses that are attractive to private equity.”
- YouTube sensation Jimmy Broadbent entering real-life competition in a Praga has sent livestream viewing figures through the roof and is exposing club racing to a whole new audience. “Two elements mark Broadbent out among the countless other simulation content creators. The first is that, yes, his audience is gargantuan, but it’s also engaged. His followers tune in, predominantly, because of his alacrity. The second is for trying to forge a motorsport career and taking his fans along with him for the ride. Combining his loyal following with the UK motorsport scene is proving to be quite the boon for national competitions.”
- AutoWeek looks at how Trackhouse Racing and owner Justin Marks are transforming NASCAR for the better. “He bought Chip Ganassi’s NASCAR operation and brought that team to full flower this season as Trackhouse Racing. In what must be considered one of the top breakout seasons in recent NASCAR history, Trackhouse has won two races with driver Ross Chastain and has pushed his teammate, Daniel Suarez, ever closer to his first Cup victory.”
- Head of Audi Sport Customer Racing Chris Reinke believes Melbourne Performance Centre is doing the German manufacturer proud. MPC operates the Australian arm of customer racing for Audi and fields competitors in Fanatec GT World Challenge Australia Powered by AWS as well as Supercheap Auto TCR Australia. “It’s a long built trust on both ends, they know what they get with us, the access, the possibilities; we know what kind of expertise we have here in the market in Australia making us the strongest GT brand down here.”
- With the intention to educate, ROKiT Venturi Racing, alongside Racing Pride, will seek to promote positive conversations and raise awareness around LGBTQ+ inclusion in motorsport. “Together with our activities away from the track, we will use our global platform to continue to forge a better, more inclusive, future and will contest the Jakarta E-Prix with a revolutionary livery, sporting the Progress Pride flag on the headrest and rear diffuser of our Season 8 challenger.” Renault and Aston Martin are also affiliated with Racing Pride.
- Paretta Autosport have announced a multi-year educational partnership with The Henry Ford focused on outreach, awareness, growth and accessibility of STEM learning and career opportunities in automotive, racing, business, innovation and entrepreneurship to educate and inspire girls and women. “Paretta Autosport embodies The Henry Ford’s mission to inspire that next generation of innovators, thinkers and doers,” said Patricia Mooradian, President and CEO of The Henry Ford. “Beth and her team are changing the world of racing and paving the way for women from all backgrounds to discover their potential and achieve their dreams. We are thrilled to partner with Paretta Autosport to create more awareness around opportunities for women in the automotive and racing fields.”
- Additive manufacturing specialist Stratasys has been named an official partner of Toyota Racing Development (TRD), the Japanese marque’s US racing and performance arm. The first fruits of the partnership will be 3D-printed production parts on the forthcoming Toyota GR86 for the GR Cup, a new single-make racing series sanctioned by SRO America. “Additive manufacturing has allowed us to quickly iterate, design and create parts for our race vehicles in a way that would have been far more expensive or labor intensive through traditional manufacturing methods,” said David Wilson, president of TRD. “By partnering with Stratasys we are able to advance our manufacturing practices beyond what is currently possible and really harness the possibilities of additive manufacturing for production parts.”
- Jim Glickenhaus has brought up a potential legal battle with IMSA again if he is not allowed to compete with his 007 car next year. “Glickenhaus would like to race the 007 next year in the US-based IMSA GTP class, its version of the WEC’s Hypercar, but so far, IMSA doesn’t seem that interested. “The only crazy wrinkle in this situation is IMSA. They originally told us that Le Mans Hypercars would be able to race in IMSA equally in the same way that LMDh would be allowed to race in WEC equally, and at Le Mans,” Glickenhaus says. “They’ve told us that because we don’t sell 2500 cars a year in the United States we’re not eligible to race in IMSA. Quite honestly, we feel, and our lawyers feel, that this is just a stupid violation of US antitrust laws. We may very likely sue IMSA for antitrust.”
Motorsport Sponsorship News
- The growth for F1 in the United States comes after decades of struggling to crack the market, but is not only reflected in the number of American races. In recent years, a number of US big tech companies have started to work with F1 teams and the series itself through partnerships, including Amazon, Google and Oracle. Speaking at the Business of F1 Forum organised by the Financial Times and Motorsport Network in Monaco at the end of last month, Williams commercial director James Bower said the team’s analysis showed a huge increase in the number of American brands involved in F1. “In 2015, the count was there were 45 US-headquartered companies in the sport – the current count this year so far is there are 108, so it’s a double increase,” Bower said.
- A replay is available of CSM’s recent webinar Netflix, New Fans and the Renaissance of F1. “If you weren’t able to tune into our latest webinar live, watch it now to find out what’s driving Formula 1’s renaissance and the opportunities on offer to key partners within the sport.” You can watch it here.
- The Force Indy race team announced that they are now sponsored by the Lear Corporation, the presenting sponsor of last week’s Chevrolet Detroit Grand Prix. “Force Indy entered the 2022 Indy Lights Championship with the expectation of being consistent and competitive,” says Team Principal Rod Reid. “The Force Indy Race team has a strong commitment to developing diverse talent. We are excited to be sponsored by Lear that shares the same values and dedication to diversity, equity, and inclusion.”
- Yamaha has announced that Monster Energy will remain as title sponsor of the MotoGP team in a multi-year extension. “[Monster Energy] will be the title sponsor of our factory MotoGP team for several seasons to come. Yamaha and Monster Energy have been close partners in various motorsport disciplines for numerous years,” said Lin Jarvis, Yamaha Motor Racing’s managing director. “Monster Energy have a great understanding of the motorsports industry and MotoGP – the pinnacle activity of the motorcycle racing world – which allows us both to work together very smoothly.”
The Business of Running a Race Team
- Autosport Plus looks at how Prema is preparing for sportscars after years in single-seaters in how an Italian junior formula giant is readying for its Le Mans future. Prema, says Rene Rosin, is a team that “were looking for some new challenge. The market of single-seaters for me was saturated. There was nothing else for Prema to do. What else you can do apart from F4, FRegional, F3, F2 is Formula 1. Formula 1… yes, it’s always a nice dream to have, but financial and economical-wise it’s of course something not always realistic.”