F1 has become a seller's market

In an interview with Gulf Business, McLaren CEO Zak Brown said, F1 has turned from a buyer’s market, to a seller’s market and all the teams are financially healthy under Liberty’s guidance.

2021 Italian GP podium, McLaren finished 1-2, Daniel Ricciardo beating Lando Norris

McLaren F1 partners include Richard Mille, Dell Technologies, British American Tobacco, Cisco Webex and Coca-Cola, among several others. McLaren hasn’t selected a title sponsor for its F1 team, and it’s a decision that Brown is happy to maintain. “We’re ahead of our business plan as far as where we want to be with our corporate partner portfolio to elegantly sell the car – you don’t want to turn [the car] into a patch of logos. Ultimately, we have a big partner on the side, and the rear wing. We’re not actively pursuing a title sponsor in our business plan and that is a conscious, deliberate decision that I made when we started.

“I’d rather not have all my eggs in one basket because our partners contribute a lot to our business growth and our brand. We’re not averse to having a title partner, but the way we’ve built our commercial proposition, we don’t need one.”

Formula 1 introduced a budget cap for teams of $145m for the 2021 season, and plans to drop that to $135m by 2023, giving newer teams a fighting chance to compete with the big names such as Ferrari, Mercedes and Red Bull whose previous annual budgets are believed to have exceeded $400m each. The new budget caps were drawn up alongside a fairer distribution of prize money and increasing the share of F1 revenue that smaller teams are entitled to. In October last year, Mercedes boss Toto Wolff added that the 10 teams currently on the grid were on the verge of all becoming profitable.

“I think the health of the teams has never been stronger. In Formula 1, there have always been two or three teams in trouble at any one time. Now, you have 10 very well-funded teams by very credible individuals or investment groups,” says Brown. “You know, Sauber was saved by Finn Rausing a few years ago [when] it was headed in the direction of administration. And here it is a couple of years later turning around $400m for the racing team.”

An ‘anti-dilution fund’ was reportedly introduced by way of the confidential Concorde agreement struck between F1 owners Liberty Media, the teams and the FIA that made any new team wanting to enter F1 pay a $200m fee, which will be shared by the existing teams. This will offer a sense of security to those teams currently on the starting grid.

“I’m now getting calls on a routine basis from very significant sports investors who are really keen on buying Formula 1 teams, and there’s no team to buy. So it’s become a seller’s market, and no one wants to sell,” Brown told Gulf Business.

“I think Netflix has done absolute wonders for our sport. I can’t recall another media platform that’s had the impact that Netflix has had. Formula 1 has such an interesting storyline to it on and off the track.”

“Our world revolves around Formula 1. I think Formula 1 is on fire at the moment. I see that continuing and only getting stronger as the competition gets closer,” says Brown.