Many of you will remember when Red Bull purchased the Jaguar Formula 1 team for $1 in 2004. It seems like an absurdly cheap number today, but no one blinked an eye two decades ago because the deal required them to spend hundreds of millions of dollars annually to even show up to the racetrack. Rivals like Ferrari and McLaren were losing tens of millions annually, and other teams were just hoping to break even.
But fast forward two decades, and the economics behind a Formula 1 team look much different. Red Bull Racing, for instance, is now valued at $2.4 billion. The Mercedes F1 team brought in $114 million in operating profits last year despite not winning a single race, and even the worst team, Haas, is now worth an astonishing $710 million.
The reason for this transformation is Liberty Media. Everyone knows the U.S.-based media company introduced new regulations and launched the now-popular Drive to Survive series on Netflix after acquiring the sport for $8 billion in 2017. But the part rarely discussed is how Liberty Media made the sport sustainable.