Rumor: Liberty Media to buy historic European F1 Circuit(s) (2nd Update)

There is a valid argument for Liberty Media owning race events.  The France Family has been doing this successfully for years in NASCAR.

Liberty Media owns the Vegas GP and is partial owner of the Miami GP.

As Joe Pompliano lays out in this tweet, there is a strong argument for Liberty media to do more of this.

Formula 1 is an extremely asset-light business.

They don’t own the teams. They don’t own the cars. They don’t own the race tracks. And they don’t even put on the races.

Instead, Formula 1 makes most of its money through three main channels:

1. Race Promotion
2. Media Rights
3. Sponsorships

Media rights and sponsorships are self-explanatory — TV networks pay F1 to host the races, and brands pay F1 to reach their 1B+ person audience.

But race promotion is an entirely different beast.

That’s because Formula 1 doesn’t actually put on the races themselves.

Instead, they collect a hosting fee from cities/race promoters all over the world to bring their show to town.

Each racetrack pays between $15 million to $55 million per year, and promoters are happy to pay it because they make hundreds of millions on ticket sales, merchandise, concessions, parking, etc.

But Formula 1 sees this as an opportunity.

So instead of simply collecting a $50 million-plus fee for this year’s inaugural Las Vegas Grand Prix, Formula 1 itself will serve as the race promoter.

That means they are in charge of ticket sales, sponsorships, luxury hospitality, track construction, and more — and this process will reportedly require a $500 million investment just in year one.

But F1 has already gotten Las Vegas to extend the contract for 10 years.

So if everything runs smoothly, and Formula 1 makes way more money than they typically would on an individual race, don’t be surprised when F1 starts doing much more of this in the future.

The company’s market cap has already increased by over $10 billion in the last several years.

But after turning down a $20 billion offer from Saudi Arabia, it’s clear Liberty Media thinks Formula 1 could be much bigger than it currently is.

And my guess is that race promotion is a big part of that strategy.

If you enjoy learning about the business and money behind sports, follow me @JoePompliano for more.

–by Mark Cipolloni–

As I mentioned below, there are rumors that Liberty Media may buy certain distressed F1 circuits in European to ensure F1 never loses its roots – Europe is where F1 originated, and it is still a European-based series despite racing all over the world.

I mentioned below that Spa, Silverstone and Monza could be on Liberty Media’s radar screen.

FormulaPasion.it is reporting that F1 CEO Stefano Domenicali and the Italian Minister of Transport, Matteo Salvini, have held a series of meetings to discuss the future of the Italian Grand Prix, whose contract expires in 2025.

We noted below that Monza is in a park and the government owns the Monza circuit.  However, it is becoming increasingly difficult to ask the taxpayers to keep ponying up to keep the track in operation.

Domenicali and Salvini discussed, in Italian, several issues, including of course that of the Italian Grand Prix.

As we reported previously, Aci president Angelo Sticchi Damiani has expressed all his concern for the future of Monza, invoking economic aid: “We are facing a challenge, which is to go beyond 2025. I believe that Aci has made a crazy effort, but our budget is starting to run into difficulties. Italy cannot fail to have its GP in Monza, but we have reached the limit.”

“We need someone to realize what has happened and what is about to happen because we can’t do it alone anymore. We have performed a miracle in having two races (Monza and Imola) until 2025,” continued Sticchi Damiani. “It takes great optimism to think that after 2025 Italy can have two GPs. What we have to show Domenicali and F1 is that we are proceeding with seriousness and concreteness. We did what we had to do, now the rest is all done by procedures.”

Whether the solution is for the Italian Government to sell Monza to Liberty Media, remains to be seen, but word on the street is that Liberty Media is looking to take ownership where needed to ensure the historic races are preserved.

–by Mark Cipolloni–

The Belgium GP at Spa has been on the verge of dropping off the Formula 1 calendar for a number of years now because the local government cannot support the F1 race with the money it needs.

2023 is the last year of the current F1 contract, and everyone assumes it will be the last F1 race at Spa.

Not so fast.

Spa is regarded as one of the most important venues on the F1 calendar.  The circuit is not only historic and beautiful, the racing is breathtaking. Watching the cars go through Eau Rouge at speed is something to behold.

The 4.352 mi circuit is located in Stavelot, Belgium. It is the current venue of the Formula One Belgian Grand Prix, hosting its first Grand Prix in 1925, and has held a Grand Prix every year since 1985 (except 2003 and 2006).

Spa also hosts several other international events including the 24 Hours of Spa, the World Endurance Championship 6 Hours of Spa-Francorchamps. It is also home to the Uniroyal Fun Cup 25 Hours of Spa, one of the longest motor races in the world.

Despite its name, the circuit is not in Spa but lies in the vicinity of the town of Francorchamps within the boundaries of the municipality of Stavelot, with a part in the boundaries of Malmedy.

The circuit underwent a major facility and safety facility redevelopment ahead of the 2022 race. Extra run-off was added to the Eau Rouge/Raidillon part of the course – changes made in response to several big accidents in recent years at that section of the track, including the fatal accident of Anthoine Hubert during the 2019 Spa-Francorchamps Formula 2 round.

In addition, gravel traps were added to six corners on the circuit, these being: La Source, Raidillon, Blanchimont, Les Combes, Stavelot and Pouhon.

Rumor has it that Liberty Media may buy the circuit.  They already own the Las Vegas GP and have a partial ownership in the Miami GP, so buying Spa would not be out of the question given its important significance to F1.

It makes sense for Liberty Media to own more venues, to have more assets and more revenues on the balance sheets.  One can imagine that Liberty might be looking at buying one of F1’s most famous venues, to exploit its history, to create synergies and generate more money. More on that in a minute.

Other events held at Spa:

April: FIA World Endurance Championship 6 Hours of Spa-Francorchamps, Porsche Carrera Cup Germany, Porsche Carrera Cup Benelux
May: TCR World Tour, International GT Open, Euroformula Open Championship, TCR Europe Series, 24H Series 12 Hours Spa, Eurocup-3, F4 Spanish Championship, Italian F4 Championship, Renault Clio Cup Europe, Fun Cup Franco Fun Festival, Spa-Classic
June: FIM Endurance World Championship 24H Spa EWC Motos, Sidecar World Championship, Alpine Elf Europa Cup Spa Euro Race, Supercar Challenge, GB3 Championship, FFSA GT Championship, French F4 Championship
July: Formula One Belgian Grand Prix, Intercontinental GT Challenge Spa 24 Hours, GT World Challenge Europe, Formula 2 Championship, FIA Formula 3 Championship, Porsche Supercup, GT4 European Series, Formula Regional European Championship, Fun Cup 25 Hours of Spa
September: European Le Mans Series 4 Hours of Spa, Le Mans Cup, Ligier European Series, Ferrari Challenge Europe
October: FIA Masters Historic Formula One Championship Spa Six Hours, Supercar Challenge Spa Racing Festival

What else might Liberty Media do with Spa?

One of Liberty’s other businesses is ‘Live Nation Entertainment’, a company that promotes, operates, and manages ticket sales for live entertainment and owns and operates entertainment venues, and manages musical talent.

Notice that there are no races at Spa in the month of August – the heart of the European vacation season. Given Spa’s size, might Liberty Media look to host numerous live concerts at the circuit with some big name talent during the month of May to generate additional revenue?

Finding a hotel for the Spa race is also difficult given it rural mountainous setting. Might Liberty Media also construct a large hotel and convention facility at the circuit?

What else?

Silverstone is another venue that could be on Liberty Media’s radar screen. Like Spa, it too has significant historic F1 significance and has become a hub for a number of F1 teams and ancillary businesses. And like Spa, at times it too has found it difficult to afford their F1 race, though they have always managed to find a way in the end.

Now that Dietrich Mateshitz has passed away, one has to wonder if Red Bull may try to sell the Red Bull Ring as well.

Monza is another circuit that could use an infusion of cash from Liberty Media, but it sits in the middle of a government owned park, and getting it out of the hands of the government would be difficult. Saving the event is of utmost importance to F1.

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