Discover more from Huddle Up
Formula 1 Is Headed To The Las Vegas Strip
Huddle Up is a daily letter that breaks down the business and money behind sports.
Join more than 55,000 professional athletes, business executives, and casual sports fans that receive it directly in their inbox each morning — it’s free.
The newsletter is presented by…
When it comes to non-alcoholic beers, Athletic Brewing changed the game.
My fridge is always stocked with Athletic Lite, and the taste is simply amazing.
Now I can enjoy the taste of great beer without compromising my sleep or performance. Each can is only 25 calories, has 5 carbs, and is made with organic grains — it literally tastes better than most alcoholic beers.
Don’t believe me? Try it for yourself and get 20% off your first order.
Formula 1 has officially announced they are adding a race in Las Vegas, Nevada, starting in 2023 that runs along the famous Las Vegas strip.
This will be F1’s third race in the United States—more than any other country globally—and represents a significant step in their long-term growth plan considering the US hosted zero races from 2007 to 2012.
F1 United States Grand Prix’s
Las Vegas, Nevada
It’s initially a three-year deal between Las Vegas and Formula 1, but CEO Stefano Domenicali says the intention is to stay a lot longer than that:
“This is an incredible moment for Formula 1 that demonstrates the huge appeal and growth of our sport with a third race in the US. Las Vegas is a destination known around the world for its excitement, hospitality, thrills, and of course, the famous Strip. There is no better place for Formula 1 to race than in the global entertainment capital of the world and we cannot wait to be here next year.”
The street race is scheduled to start at 10 pm local time in Las Vegas. It will hit all three timezones in the US (Miami on ET, Austin on CT, Las Vegas on PT), but be an early morning start (6-7 am) for those in the UK, France, and Italy.
And since Formula 1 has no desire to compete with the NFL on Sundays, it will be the first grand prix held on a Saturday in nearly 40 years.
The Vegas track is a 3.8-mile (6.12km) street circuit with 14 corners, 3 straights, 2 DRS zones, and a top speed of 212 mph (342km/h).
Drivers will race past iconic venues like Caesars Palace, the Bellagio fountain, and Mandalay Bay, with the strip being used as a 1.2 mile (2km) straight — that’s nearly twice as long as the main straights in Monza, Mexico, and Abu Dhabi.
This announcement represents a significant step for Formula 1 globally.
When Liberty Media acquired the business back in 2016 for $4.4 billion, its revenue model was a mess. Bernie Eccleston had built the sport into a global phenomenon—nearly 100 million people were watching every race, but the organization was severely under-monetized on a per fan basis relative to other major American sports leagues like the NFL and the NBA, and MLB.
I mean, just look at this quote from F1 CEO Bernie Eccleston when he was asked about engaging a younger fanbase in 2017:
“Young kids will see the Rolex (watch) brand but are they going to go and buy one? They can’t afford it. Or our other sponsor UBS -- these kids don’t care about banking. They haven’t got enough money to put in the bloody banks anyway. That’s what I think.
I don’t know why people want to get to the so-called ‘young generation…Why do they want to do that? Is it to sell them something? Most of these kids haven’t got any money. I’d rather get to the 70-year-old guy who’s got plenty of cash.
So, there’s no point trying to reach these kids because they won’t buy any of the products here and if marketers are aiming at this audience, they maybe they should advertise with Disney.
I’m not interested in tweeting, facebook and whatever this nonsense is…I tried to find out but in any case I’m too old-fashioned. I couldn’t see any value in it.”
So after dismissing Bernie Ecclestone shortly after taking control of the sport, Liberty Media has worked diligently to transform the business.
They created custom advertising plans for individual partners, helping them appropriately monetize their inventory on a per-unit basis. They launched an over-the-top (OTT) streaming platform called F1TV.
They set up an esports series that saw 80% of its audience come in at less than 35-years-old. They reduced the performance gap between teams by altering the rules, and they relaxed league-wide social media rules, enabling teams and drivers greater freedom to engage with fans online.
But considering Formula 1’s mission was to expand geographically into the United States, a $20 trillion-plus GDP country that is 6-7x larger than any European economy, their most significant partnership was most certainly with Netflix.
The documentary-style show “F1: Drive to Survive” premiered in 2019, and nearly every sports league globally is jealous of the outcome.
It gave fans a never-before-seen glimpse into the paddock and the inner workings of the world championship series, revealing dramatic rivalries and friendships that traditional broadcasts fail to capitalize on.
And the results have been fantastic:
Formula One made significant digital gains in 2020, with social media engagements soaring 99% year-over-year (YoY) to 810 million (Source).
Formula One is the fastest-growing major sports property across Facebook, Twitter, Instagram, YouTube, Tiktok, Snapchat, Twitch, and Chinese social platforms, with total followers up 3% to 35 million (Source).
Over 75% of Formula One’s audience growth in 2020 came from those aged between 16 and 35, a key demographic for broadcasting and advertising partners (Source).
And the United States has quickly become F1’s fastest-growing market.
The first race of the 2022 Formula 1 season in Bahrain averaged 1.3 million viewers on ESPN. That’s up 40% year-over-year and made it the most viewed F1 race on cable television in more than 25 years.
But here’s the interesting part — the second race of the season in Saudi Arabia averaged 1.45 million viewers and shattered the 25-year-old F1 cable viewership record in America just one week after it was broken.
Even crazier, the United States GP in Austin, Texas, had over 400,000 people in attendance last year, making it the most-attended race weekend in Formula 1 history — that covers more than 70 years. Insane.
So with attendance and viewership continuing to increase in the United States, Formula 1 decided it was time to double down on its expansion plan.
They signed a 10-year deal to hold a second US Grand Prix in Miami, Florida, and have now added a third on the Las Vegas Strip less than a year later.
Some people will point to the three-year agreement and say that Formula 1 just wants to test out the concept. But I think the most significant part of this deal is the fact that Formula 1 is acting as the promoter of the event.
Formula 1 is traditionally a very asset-light business for those who don't already know. They own the IP, of course, but they don’t own any of the tracks and rarely take responsibility for selling tickets and arranging hospitality.
Instead, they sell the rights to operate a race to an entity that pays them between $10 million to $90 million (depending on the location) and let them handle all the logistics.
But again, F1 is the operator for this event. So maybe they bring in partners to ensure that everything goes smoothly in categories where they lack expertise, but in my mind, this is a huge
And one last thing — in case you still don’t believe me when I say that Liberty Media’s plan is working, just look at the stock price.
Even after dropping over 50% during the pandemic, $FWONK is still up over 60% in the last year and 280% over the previous 5+ years.
We’ll see how far this goes. I’ve said from the very beginning that content is king, and when something catches on in America, you can throw all your revenue expectations out the window. This is a sports-crazed country, and F1 is currently on center stage.
I hope everyone has a great day. I’ll talk to you tomorrow.
Your feedback helps me improve Huddle Up. How did you like today’s post?
The Joe Pomp Show: A new episode with Avinash Dabir is now live!
Avi Dabir is the Vice President of Business Development at FTX. He has been committed to spending more than $500 million on sports partnerships, including deals with the Miami Heat, Major League Baseball, the Mercedes Formula 1 team, Tom Brady, Stephen Curry, Naomi Osaka, and Shohei Ohtani.
So when Avi came into the studio this week, my brothers and I asked him exactly how these deals get negotiated, what it's like working with Tom Brady, how their Super Bowl commercial with Larry David came together, and what might be next for FTX.
Listen, subscribe, share, and enjoy!