🏎️ How Formula 1 Teams Really Make Money

Three years ago, Lawrence Stroll (the CEO of Aston Martin) struck a deal to make the Aston Martin Vantage the official safety car for Formula 1.

That car is a masterpiece and retails for $200,000 when bought individually.

A year later in an interview with Business Insider, Stroll said that the company had sold 400 extra Vantage model cars directly as a result of that F1 exposure returning an £80 million revenue boost for Aston Martin. In no surprise to anyone, they are already in talks to extend the deal!

Formula 1 returned to action this weekend with a brilliant race down under in Melbourne. I have been a lifelong fan of the sport and I truly believe this season is the most highly anticipated season ever. For the first time in a long time there genuinely feels like many eventual outcomes for both the Drivers Championship and the Constructors championship. It’s thriving on the track, but thanks to some recent changes, it’s no longer just the manufacturers cashing in, the teams themselves are raking it in too.

Let’s rewind to 2015, back in the Bernie Ecclestone era. McLaren were going nowhere, they were a loss-making team without much hope for the future. If we contrast their fortunes then with their fortunes now, it paints a fascinating picture:

• Turnover: £180m (2015) → £431m (2023)

• Profit: -£2.6m loss (2015) → £30.4m (2023)

• Valuation: $650m (2015) → $2.2bn (2023)

What changed? Liberty Media.

In 2016, Liberty Media bought Formula 1 in what I consider to be one of the greatest sports acquisitions in modern history. Not only are they making billions for themselves, they are turning F1 teams into cash-generating gold mines.

There are three key ways in which F1 teams have taken advantage. The first is with selling product.

Ferrari have a fantastic car in the SF90 XX Stradale (pictured below). They made two models of it:

• The Spider (599 units made). Price: £744,000

• The Couple (799 units made). Price: £673,584

Ferrari have a fantastic loyalty program with a wide roster of high-net worth individuals waiting to get their hands on new releases. But with this car in particular, they gifted one to Charles Leclerc and the Monagasque driver became the defacto marketing engine for the release.

Within a week all units were rendered sold out, making over £983m in topline revenue for Ferrari.

Leclerc is one of the most marketable athletes in sports today and Ferrari have been a beacon of excellence in Formula 1 for decades. When you couple those two things with the unbelievable work by Liberty Media, its no surprise that the hypercar sales for Ferrari surge through the roof.

Liberty Media came into F1 and got to work quickly. Previously:

• F1 drivers were banned from posting content. Liberty reversed that.

• F1’s YouTube channels were sparse. Liberty exploded everything with highlights, behind-the-scenes footage, and analysis online within hours of races

• Then came Drive to Survive, one of the greatest sports documentaries ever made

This exposure has been insane for sponsors.

Ferrari have 40 sponsors. Their title sponsor with HP is reportedly worth £75m/yr(!). McLaren have even more. They currently have 53 sponsors on their roster. 

All teams are raking it in from commercial revenue currently and that is in large part to the worldwide appeal of the sport post-acquisition from the American Private Equity house Liberty.

This has had a massive impact on the Teams' valuations.

To give you an idea, these some examples taken from Forbes from 2015 to 2023:

• McLaren: $650m → $2.2bn 238%

• Ferrari: $1.35bn → $3.9bn 188%

• Red Bull: $625m → $2.6bn 316%

The growth is truly insane and with 24 races in the calendar this year including 3 races now in the States, the sport is only getting bigger.

General Motors paid $450m to enter F1 from the 2026 season.

That seems like an insane amount of money, but when you consdier how many cars they will sell as a result of the exposure, it starts to make perfect sense.

I’ll leave you this week with a crazy story from the NBA. See the below video detailing how Jeff Teague got his contract extension playing for the Atlanta Hawks

Cold world.

See you next week.