A month-long break between the Azerbaijan and United States Grands Prix has provided the opportunity for Formula 1 to share a number of announcements about the business of the sport, specifically its true money-maker, sponsorships.
Last Wednesday, French luxury group LVMH and F1 jointly announced a 10-year global partnership worth a reported $1 billion, marking the end of a number of iconic sponsorships fans have come to expect over recent years. Trackside signage will swap Rolex for Tag Heuer, Ferrari sparkling wine sprayed on the podium for the past four years will return to Möet & Chandon — the sport’s original champagne supplier from 1966-1999 — and the group’s classic brands will permeate hospitality on race weekends.
The partnership announcement was made by LVMH Chairman and CEO Bernard Arnault, F1 CEO Stefano Domenicali and Liberty Media President and CEO Greg Maffei.
When Rolex signed on to sponsor the sport in 2011, they paid $10 million per year and 14 years later, their current deal is said to be worth $50 million. What changed in that time to quintuple the value of such a sponsorship?
For one, F1′s ownership. Liberty Media acquired the Formula One Group in 2017, which holds exclusive commercial rights to the FIA Formula One World Championship. The deal cost a whopping $4.4 billion, but with returns from deals like the LVMH partnership, this investment is surely paying out.
In fact, since Liberty Media’s acquisition, the sport’s annual revenue has increased nearly 75%, to $3.2 billion. F1 is also more accessible than ever, at least online. Deals with ESPN and the creation of F1TV in 2018 bring the sport to viewers around the world, and behind the scenes access became possible through the hit Netflix series, “Drive to Survive.”
Forbes suggested the show has “turned F1 into the Real Housewives of Monte Carlo,” but the reality TV venture has reeled in more than 6.8 million viewers, 31% of whom are 18 to 29 years old. This shift to a new generation is no doubt due to the digital-first approach. A survey in 2017 found the average age of F1 fans was 36, and four years later, a 2021 study saw that drop to 32 years old, with double the participation from women.
The drivers are seeing this difference too. Motorsport.com reported in 2021 that then-Alpine driver Fernando Alonso said “There’s a younger generation following Formula 1, so I’m pleased to see what they think about the sport. I think the fanbase is a bit different from before, in the last two or three years with the Netflix series.”
Liberty Media may own F1, but the sport’s increased digital presence and Liberty’s role in the LVMH announcement indicates the growing influence the group has over the direction of F1. This is demonstrated by a record three U.S. races with talk of another in Chicago, as does the departure from the brands that F1 fans have seen on their screens and trackside for years.
As the costs to sponsor increases, so too do the costs to view and attend the sport. As Liberty Media dips its toes into F1-operated races such as the Las Vegas Grand Prix (rather than by each track as is typical), more money goes directly to the media corporation.
One might think this would allow F1 to set affordable pricing to incentivise more folks to experience the pinnacle of motorsport in person, but alas, the LVGP is the most expensive race to attend of any on the 24-race calendar in 2024. Its average ticket price is $1,617 compared to the cheapest race, the Chinese Grand Prix, which only sets fans back $199 on average.
With this high cost to attend, the LVGP aims to put on a show, and to the protest of the drivers, it certainly does. Last year, Championship Leader Max Verstappen objected to the pomp and circumstance around the night race: “It’s 99% show, 1% sporting event,” he said in an interview via The Guardian.
This shift from sportsmanship to showmanship, older to younger fans, and affordability to digital accessibility, yet physical exclusivity, is representative of the Liberty Media age of F1. But with a growing fanbase — 99% of whom will never attend a race — F1 is leaning into opulence and bringing the racing to the average fan, instead of bringing the average fan to the race.
For that average fan, luxury goods may not be in the budget, but the F1 - Hot Wheels collaboration announced Wednesday might be more your style.