Formula 1 Is Headed To The Las Vegas Strip
Formula 1 Is Headed To The Las Vegas Strip
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Hey Friends,
We all know that Formula 1 is experiencing immense growth in the United States.
For example, ESPN averaged 934,000 viewers per race last year. That made it the most-watched F1 season in US history and beat the previous record of 748,000 set in 1995 by nearly 25%.
Just look at how attendance for the United States GP trended pre-and-post pandemic.
That growth led Formula 1 to add a second US race in Miami on a 10-year deal last year. And now it looks like the world’s most prestigious racing organization might soon be adding a third race in the United States.
According to Sports Business Journal, Formula 1 and government officials in Las Vegas are close to agreeing on a deal that would bring a night race to The Las Vegas Strip as early as next year.
That would be the third GP in the United States:
Austin, Texas
Miami, Florida
Las Vegas, Nevada
No other country currently hosts more than two races per calendar year.
A potential race on the Las Vegas strip has been in discussion for at least a year now, so it’s not surprising that the two sides have started making substantial progress.
But I think it speaks more to the long-term commitment from F1 & US organizers.
These races are not cheap to host — the finances have historically been extremely private, but Forbes did an excellent breakdown a few years back and revealed that the total investment required for a 10-year agreement is probably close to $1 billion.
The average host fee was $31.5 million, with annual escalators built-in based on a selected Consumer Price Index (CPI) or a fixed percentage of up to 5% per year.
In addition to the host fee, annual costs for running the actual event (think: staffing, grandstands, insurance, and more) came in at an average of $57.5 million annually — that’s $575 million over a 10-year deal.
Here are two charts that break it down:
With an estimated cost of close to $1 billion over a 10-year deal, government officials in Miami and Las Vegas are essentially placing a large bet that American interest in Formula 1 will continue to grow.
And Formula 1 recognizes that the United States is one of the most important markets within professional sports globally.
For example, US GDP of $20 trillion-plus is more than 6-7x any European country, and it enables domestic sports leagues like the NFL & NBA to bring in significantly more revenue than F1, despite having a much smaller fan base globally.
It’ll be interesting to see what happens over the next decade. I’m a fan of the sport, and I am most definitely biased, but I think people will continue to fall in love with the skill, drama, and technical detail surrounding Formula 1.
There is a reason why 100 million people tune in each weekend to watch.
I hope everyone has a great weekend, and we’ll talk on Monday.
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