Formula 1 represents one of the most coveted platforms for investors and sponsors globally. Its combination of cutting-edge technology, intense competition and an ever-expanding fan base makes it a unique investment opportunity. In recent years, interest in F1 has grown exponentially, attracting not only motorsports fans but also major brands and institutional investors.
F1 Economics, the scenario
Exponential Growth in the Value of Teams
According to recent analysis, the average value of a Formula 1 team has increased by 276 percent since 2019, reaching an average of $1.88 billion. Leading this ranking are Ferrari and Mercedes, with valuations of $3.9 billion and $3.8 billion, respectively. Mercedes, in particular, saw revenues for 2023 around $700 million.
Expanding Audience and Growing Interest
Circus 1 saw significant increases in audience in several key markets. In the United States, for example, there was a 58 percent year-on-year increase, while in France and Italy the increases were 48 percent and 40 percent, respectively. This growth is attributable to a combination of effective marketing strategies, strategic partnerships, and an increased digital media presence.
Interest of Major Brands and Investors
Large conglomerates such as LVMH have recognized the potential of Formula 1 as a global marketing platform. LVMH, for example, has signed a 10-year agreement with F1, involving brands such as Louis Vuitton, Moët Hennessy, and TAG Heuer. This agreement, estimated at nearly 100 million euros per year, highlights the attractiveness of F1 for luxury brands aiming to reach a global audience.
Diversification of Sponsorships
In addition to luxury brands, Formula 1 is attracting a diverse range of sponsors including consumer brands such as Nestlé, McDonald’s, Lego, and Mattel. This diversification reflects F1’s appeal to a younger and more diverse audience, in part due to the popularity of the Netflix series“Drive to Survive.”
How to invest in Formula 1
Investing in the world of Formula 1 is therefore a fascinating opportunity for motor enthusiasts and investors seeking diversification. Although direct access is limited, there are several strategies for participating financially in this growing industry.
Investing in Liberty Media Corporation
Formula 1 is owned by Liberty Media Corporation, a U.S. company that acquired control of the championship in 2017 for $8 billion. Liberty Media offers three types of shares related to Formula 1: Series A (FWONA): Each share confers one voting right. Series B (FWONB): Unlisted and held primarily by company insiders. Series C (FWONK): Does not confer voting rights and is the most affordable for retail investors. Investing in FWONK allows you to participate in the growth of Formula 1 without direct involvement in corporate decisions.
Investing in Participating Automobile Manufacturers.
Some automakers involved in Formula 1 are listed on the stock exchange, offering an indirect investment opportunity: Ferrari (RACE): Listed on both the Italian Stock Exchange and the New York Stock Exchange, Ferrari has experienced significant growth since 2016, with share value increasing by about 600 percent. The Maranello-based company plans investments of 4.4 billion euros by 2026 to support its development. Aston Martin Lagonda Global Holdings plc: Designs, develops and sells luxury sports cars globally. Has a strategic technology agreement with Mercedes-Benz AG, strengthening its position in the market.
Investing in Formula 1 Sponsors and Suppliers
Another way to invest in the world of Formula 1 is through companies that sponsor or supply components to teams. For example, companies such as Brembo and Pirelliare involved in supplying essential components for Formula 1 cars.
Acquisition of Shares in Stables
For investors with significant capital, acquiring stakes in Formula 1 racing teams is an option. For example, RedBird Capital Partners recently acquired a 24 percent stake in the Alpine Racing stable, along with a coalition of investors, including actor Ryan Reynolds.
Investing in F1, a global and strategic choice
Formula 1 offers a dynamic and ever-changing investment landscape. Its ability to attract a global audience, combined with sponsorship opportunities and strategic partnerships, makes it an ideal platform for companies and investors seeking to expand their relevance and associate with a brand synonymous with excellence and innovation.Investing in Formula 1 requires careful evaluation of the various opportunities available. It is essential to conduct thorough research and consider one’s risk profile before embarking on any investment. Formula 1 continues to grow in popularity and value, offering potential attractive returns for informed investors.
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