Liberty Media – Creating a new future for Formula One

Entering a new era of F1, significant change is taking place across all aspects of the sport. With the implementation of a new set of technical regulations aiming to promote wheel-to-wheel racing and shake up the order of performance, we move on from eight years of Mercedes and Lewis Hamilton dominance, towards an exciting and unpredictable future. But to think that the only evolution within F1 is taking place on-track could not be further from the truth!

In addition to changing the way teams battle for position over a race weekend, the new era of F1 brings with it a rapid growth of the global fanbase, with fan engagement revolutionised by a digital focus – F1 is the fastest-growing major sports property across Instagram, YouTube, and Tiktok. F1’s global expansion continues to break into new markets, spearheaded by lucrative multi-year deals for new races across North America and the Middle East. There has also been a sizeable shift in audience demographics, with the average age of fans dropping from 36 in 2017, to 32 in 2022. Alongside the role of F1 owners Liberty Media, these changes have been largely attributed to the popularity of the Netflix award-winning docuseries ‘Drive to Survive’, which has given fans the ability to see a more personal side to the drivers, better understanding the inter-team relationships that make up F1.

To develop a more thorough understanding of the major drivers of the rapid change we are observing within the sport, it’s important to acknowledge the evolution of F1 following its acquisition by American mass media company Liberty Media, back in 2017. This article will explore the work of Liberty Media in leading the global expansion of F1 into the US and transforming fan engagement through digital forms of media. The role of ‘Drive to Survive’ will be explored, outlining its role in captivating a global market, and raising the profile of the sport. Finally, we will look to the vulnerabilities that arise with an ever-increasing globalisation of the sport.

Liberty Media

F1’s growth is determined by its appeal as a commercial product – this measure controlled by the Formula One Group. The group holds responsibility for exercising F1’s commercial rights, along with its promotion, making it a key player in determining the future of the sport. In 2017, during a period through which the sport was suffering from declining viewer numbers, and an aging demographic, Liberty Media bought a majority stake in the group for $4.4 billion from previous owners Delta Topco - primarily owned by private equity group CVC. Following the approval of regulators, the deal was completed with Liberty appointing Chase Carey as CEO. Early on in their tenure, Liberty and Carey established goals which placed a focus on increasing the sport’s fanbase - especially in America - capitalising on digital rights, and social media opportunities, initiating a digital first approach.

New Circuits

A push to increase the number of circuits visited in a racing season was clear at the outset of Liberty’s ownership of F1. Through aims to promote the sport’s global exposure, race calendars have changed with unsurprising expansion into the US. From a 20-race season in 2017, increased to 23 in 2022, Liberty’s plan is clearly coming to fruition; F1’s current CEO Stefano Domenicali stating firm interest from “easily over 30 venues”.

The recent announcement of two new American races joining the calendar – Miami and Las Vegas – shows F1’s continued global expansion. With these developments, it’s important to address the vital role of Liberty and understand that such eye-catching deals come after years of planning and preparation, they are not merely the result of F1’s recent rise in popularity.

An incredible 10-year deal – the value of which is undisclosed - sees the Miami GP join F1’s calendar until 2032. Following Carey’s arrival to F1 in 2017, he announced plans to host a race in Miami with a commitment to US expansion. The proposal itself faced severe opposition from residents worried about noise and air pollution, and the bid was scrapped in 2019. Despite such strong opposition, Carey saw the expansion as vital to Liberty’s future for the sport and continued with the project. A new plan saw the track location changed, and a partnership struck with the Miami Dolphins – the city’s NFL franchise – facilitating the construction of a purpose-built track around the Hard Rock stadium. Following further agreements in which F1 pledged $5million to fund community benefits programmes, city commissioners voted in favour of the project.

Liberty’s plans have been further realised through the announcement of the highly anticipated Las Vegas night race to be introduced in 2023. Despite the current short-term contract of 3 years, Domenicali hopes for a longer future in Vegas, capitalising on F1’s popularity in the “global entertainment capital of the world”. There is a clear sense of excitement flooding through the F1 community following the promise of a race down the Las Vegas Strip, for fans and drivers alike. Yet, one of the most intriguing outcomes from the deal comes in F1’s decision to handle the promotion of the event itself, in partnership with Liberty Media and Live Nation Entertainment. For all other circuits on the calendar, F1 as an organisation sells the rights of promotion to an external company, such contracts providing a significant portion of revenue over a race weekend. The decision to take on management of promotion for the race alludes to F1 and Liberty’s views on the importance of the inaugural ‘Las Vegas Grand Prix’. There are great expectations of high fan engagement, and a truly global audience being drawn in for such a high-profile race that holds significance in determining the success of F1’s US expansion.

Since their acquisition of the Formula One Group, Liberty Media have placed a focus on increasing fan engagement through a digital first approach. Previous F1 Group CEO Bernie Ecclestone was very public in his stance that F1 did not need to market towards the younger audience. Carey and Liberty looked to change the commercial approach of F1, tackling its per fan revenue – the lowest of all major American sports leagues - the NFL, NBA, and MLB. In a similar way to the sports listed above, Liberty introduced an over-the-top (OTT) streaming platform – F1TV – that helped enable digital fan engagement and bring more content to the viewer. Through establishing a global Esports competition, and developing greater interaction on social media, F1 has been able to transform the way fans engage with the sport and its athletes, contributing to the rise we are currently observing.

Drive to Survive

Less than a month after its release on Netflix, the number of viewers for the fourth season of “Drive to Survive” has already surpassed that of its three previous seasons, racing to number one in 33 countries. Providing an insight into the relationships of teams and drivers in the F1 paddock throughout a controversial season, there is little surprise that a fifth season has been announced for 2023. So, exactly how influential has the series been in F1’s rapid consumer growth?

As previously detailed, the logistical expansion of F1’s races have been grounded in the work of Liberty Media from 2017 to the present day. Yet, the rapid advancement of the past two years has certainly been influenced by Netflix’s docuseries. F1’s social media engagement during 2020 rose by 99% year-over-year (YoY) to 810 million, following an influx of fans into the sport after its exposure through the premier series of ‘Drive to Survive’. It is of very little surprise then, that over 75% of Formula One’s audience growth in 2020 came from those aged between 16 and 35.

The benefits that come with such an increase in the global fanbase centre largely around the sport’s commercial value. For both broadcasting and advertising partners, the opportunity to market to a younger demographic is appealing, with greater demand for further sponsorship of teams and circuits.

Vulnerabilities of growth

With increased global expansion, the sport has seen heightened influence from politics, with geopolitical events forcing operational change within F1. Most recently, this has been experienced through the termination of contracts for both Russian driver Nikita Mazepin and the Sochi Autodrom circuit, following calls for the sport to cuts ties with Russian investment. The rising influence of geopolitics has been further exemplified through a unanimous plea by the drivers, which urged for the cancellation of the Saudi Arabian GP following a rebellion group missile strike fewer than 10km from the track – the race went ahead with Saudi authorities claiming adequate safety measures were in place for all at the race.

Final Comments

F1 has experienced an influx of change across all aspects of the sport since its acquisition by Liberty Media in 2017. The introduction of significant change to technical regulations for the 2022 season, has provided to challenges to teams and drivers. With closer on track battles, racing has become more entertaining for the consumer. In further efforts to create a more attractive commercial product for sponsors and broadcasters, a digital approach from Liberty has seen increased fan engagement both in-person and virtually. The addition of new races to the calendar continues a focus to raise the profile of the sport through global expansion. The release of Netflix’s docuseries has allowed for fans to develop more a personal connection to the drivers, with the sport looking to engage more positively with younger demographics. The new era promises to provide more entertaining racing, becoming a greater spectacle for fans. Hoping to continue its growth, the F1 community looks forward to a more positive future.

Article written by Thomas Anderton, undergraduate at Durham University, UK.