What Is F1, And How Did It Become A $2.5B Company?
Everything you need to know about F1.
Ladies and Gents,
Welcome back to The Random Thought Of The Week. Today, we are going to be looking at the Formula 1 racing league. F1 is one of the fastest-growing sports leagues on the planet, and that growth shows no signs of slowing. F1 made over $2.5 Billion in 2022, so, let’s take a dive into how F1 has established itself as one of the most notable sports leagues in the world.
For those who don’t know what Formula 1 is, let me explain. Formula 1 is a racing league that is comprised of ten teams. Each team has two cars to race with. The season consists of 22 races (although there are talks to add more), with races happening 2-3 times per month. Because F1 is an international league, races happen in circuits all around the world (that way, we don’t see trailer hicks that fly confederate flags during the races - I’m looking at you NASCAR). Each race takes 2-3 hours to complete.
Each race event has three different sections. Practice (Friday) gives racers the chance to drive the track and get a feel for it. Qualifying (Saturday) determines starting positions for the final race on Sunday. For fans, F1 is not just one race, but a whole weekend to watch.
Because F1 is an international company, the fanbase for the league has unlimited growth potential. F1 has seen a tremendous amount of growth in recent years, especially among younger American audiences (I, H.R. Berry, am a part of that growth). Take a look at the average viewers per race for F1 in recent years.
Average Viewership Per Race In the U.S.
2018: 547,722 viewers
2020: 608,000 viewers
2022: 1,400,000 viewers
This growth is largely due to F1’s owner company Liberty Media. When they acquired F1 for 8 billion in 2017, total viewership was slumping and popularity was decreasing. Liberty Media launched a targeted media campaign, largely focused on the U.S. The campaign was a huge success. The spike of viewers came after the docuseries “Formula 1: Drive to Survive,” aired. It featured a behind-the-scenes look at F1 and the drama that comes with it (kinda like “The Kardashians”, but with cars). It is estimated that this documentary alone led to a 40% increase in viewership in the U.S.
The growth in F1 has also been seen in its revenue. The majority of F1 revenue comes from sponsorships and advertising (that’s why all the cars look stupid and don’t have cool paint jobs).
F1 Revenue:
2021: $2.136 billion
2022: $2.573 billion
The Trouble With F1
As F1 has grown, the problems it faces have been magnified. One challenge in acquiring new viewers is the complexity of the sport. While anyone can understand a race and who’s winning, F1 is much more complex than that. The sport has complicated rules and regulations about what cars can and cannot do. The strategy behind F1 is also complex and often confusing (when to pass, what kind of tires to use, when to make a pit stop, etc).
Getting into F1 is challenging unless you have someone who knows the sport well and is willing to be bombarded relentlessly with questions from H.R. Berry (you know who you are).
Another problem F1 faces is the monotonous nature of the sport. Not only do races run for 50-70 laps, but the outcomes can be repetitive. Because companies make their own car every year, we are seeing cars and teams that are significantly better than the rest of the competition. Take this year for example. Red Bull has by far and away the best car, winning every single race this season (seven for seven). Red Bull racer Max Verstappen has won five out of the seven races, losing only twice to his Red Bull teammate Sergio Perez. Even though teams are allowed to modify their cars as the season goes on, no team has come close to matching Red Bull this season.
Lastly, F1 is a very expensive sport to attend in person. The average ticket price to attend an F1 race is about $1,400. High-end tickets (premium experiences for the most sought-after races) can run upwards of $20,000 per person.
F1 has done a very good job combating these problems. Media campaigns help explain F1 in quick and easy posts that encourage viewership. F1 has also made races easier to watch. They put extensive funds into their visual technology, and they just signed a three-year ESPN deal for an estimated 75-90 million dollars per year. F1 also doesn’t air commercials during their races at all.
Random Shower Thought Of The Week
Maybe urinals were invented when a tall guy walked by the sinks and asked, "Why not?"
My Friends,
I hope you enjoyed this week’s post. As always, share and stay tuned for next week’s post. In the meantime, I’d like to leave you with a quote from two great philosophers, Bill and Ted. “Be excellent to each other, and party on dudes!”
-H.R. Berry