Formula One’s growing pains

It was around a decade ago that Chad Hutchinson, a former US athlete turned investor, first looked into financing a Formula One racing team. But the onetime National Football League quarterback just could not get comfortable with the idea.

It was not just the teams’ lack of profitability that worried him but the dynamics of the motor racing series as a whole. The competitive balance was skewed in favour of the two or three highest-spending teams, and the also-rans struggled not only to turn a profit but to survive.

“There was no way to compete with a Ferrari or a Mercedes,” Hutchinson says. “Up until about three and a half years ago, I didn’t think it was an institutional grade asset class.”

But F1 changed his mind. Under US billionaire John Malone’s Liberty Media, which bought the series for $8bn in 2017, the sport introduced a mandatory limit on how much teams could spend, including on developing their cars.

“That’s when I stepped back and said, ‘I think it’s investable,’” says Hutchinson, now a senior figure at Arctos Partners.

The sports-focused investment team took a stake in Aston Martin F1 last year, in a deal that valued the team at north of £1bn, versus the £90mn that a consortium led by Canadian billionaire Lawrence Stroll paid to take the former Force India team out of administration in 2018.

The jump in team valuations reflects the transformation across F1 since Liberty Media ejected the former F1 supremo Bernie Ecclestone from the helm seven years ago.

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New spending rules and a fairer distribution of revenues among the teams have opened the sport up, and some of the more old-fashioned elements — such as “grid girls” — are gone.

Liberty has succeeded in cracking the US market, partly thanks to the hit Netflix documentary series, Drive to Survive, which brought the drama of the sport to a new audience of Millennials and Generation Z.

The average age of the sport’s followers consequently dropped from 40 in 2018 to 37 four years later, Liberty told investors last year. Fans are not just getting younger — women and girls represented 40 per cent of the fan base in 2022, a jump from 32 per cent in 2018, according to F1.

Ford and Audi have agreed to join F1 from 2026, key endorsements from the automotive industry, and new races in Miami and Las Vegas illustrate the potential for growth in the US.

In results announced this week, F1’s annual revenue increased to $3.2bn in 2023, up from around $2.5bn a year earlier. Operating profit increased by 64 per cent year on year to $392mn in 2023. FWONK, the stock that tracks the F1 business, closed at $69.89 on Wednesday this week, well over double the $29.16 closing price when Liberty completed the acquisition in January 2017.

But on the eve of F1’s new season, which gets under way in Bahrain this weekend, the sport is grappling with obstacles that might impede future growth.

Despite the new investment in the sport, it is still far from competitive. Reigning champion Max Verstappen of Red Bull Racing won a record 19 out of 22 races last season, and he is in a strong position to dominate this year’s 24-race calendar too.

Lewis Hamilton talks to Toto Wolff in the team garage
Sir Lewis Hamilton, pictured with Mercedes principal Toto Wolff, will leave the team to join rival Ferrari in 2025 © DPPI/Shutterstock

Meanwhile, the British star driver Sir Lewis Hamilton has decided to leave Mercedes to join rivals Ferrari in 2025 — a move widely seen as a sign that one of the most popular and celebrated drivers on the circuit is preparing to enter the final laps of his storied career. 

“Every era had its superstars,” says Mercedes team principal Toto Wolff, comparing the Briton to greats of the sport like Ayrton Senna and Michael Schumacher. “Definitely to fill the gap for Lewis for all of our sport is going to take a while.”

Off the track, the overwhelmingly male world of F1 was thrown into the spotlight over the off-season by allegations of inappropriate behaviour towards a female colleague made against Christian Horner, the principal of Red Bull, whose rivalry with Wolff was a key plotline in the Netflix show. Horner denied the claims and Red Bull said on Wednesday that the grievance had been dismissed after an investigation led by an external barrister.

But the dismissal was not the end of the matter. A cache of purported messages alleged to involve Horner was emailed to influential figures in the sport by an anonymous sender on Thursday and has circulated online. In a statement, Horner reiterated his denial of the allegations and said he would not comment on “anonymous speculation.”

With a superstar driver to replace, and new categories of fan to satisfy, the sport is evaluating what kinds of changes it can bring to the racetrack to capitalise on its newfound popularity but without alienating its core fan base of loyal petrolheads. 

“You’re watching in real time the growing pains of a sport,” says Kate Beavan, who worked at F1 for more than 18 years. “Even in Bernie’s day there was always a conflict between the diehard fans and the new fans.”

Liberty’s goal is to make the series as “interesting to as many people as possible”, says chief executive Greg Maffei. “We know some people are going to be absolutely obsessed with tyre performance and why this widget or that flange on [Red Bull’s new car] makes it go faster,” he adds. “And others don’t care.”


The spearhead of F1’s expansion has been in the US, where it has historically struggled for exposure due to the dominance of domestic sport leagues.

The growing fan base kindled by Drive to Survive is coming to where the action is. Last year’s United States Grand Prix in Austin, Texas, drew 432,000 visitors over three days — up from 268,000 before the coronavirus pandemic. The events in Miami and Las Vegas drew 270,000 and 315,000 in 2023.

Miami had been on the cards for years until Liberty got the deal over the line. But it was the Las Vegas GP that took F1 into new territory. Liberty invested heavily, acquiring 39 acres of land to build the paddock and pit building.

Liberty took on the risk of becoming the promoter of the event, in a major departure from the traditional model of outsourcing ticket sales to circuit owners, automobile clubs or governmental bodies.

Kylie Minogue, will.i.am and Cirque du Soleil featured in a glitzy opening ceremony, a move towards Liberty’s big picture ambition of transforming each F1 event into a Super Bowl equivalent.

Maffei says acting as the promoter offers an opportunity to better understand the fan base. “[Previously] when the circus came to town, [F1] didn’t know who attended, didn’t know why they attended, didn’t know what their real preferences were and what they wanted,” he says.

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Beyond race days, Liberty and F1 have outlined a series of initiatives and projects to keep fans engaged. It has licensed its brand to the F1 Arcade, where fans can race against each other in full-motion simulators, and to the F1 Exhibition, a travelling event designed to showcase the sport’s history.

Liberty also highlights opportunities in betting, where the data-heavy sport has a minimal presence. “You can actually be betting on how long it will take for the tyre to be changed or who’s going to crash out at turn three, and having that data as part of the distribution of the race itself,” says Renee Wilm, chief legal and administrative officer at Liberty Media.

“We’re not there yet but when you think about the connectivity that will be coming in the next few years with the cars, you get that real time data, which then also supports the ability to do gaming around the races.”

But transforming F1 into a spectacle that straddles sport and entertainment risks putting noses out of joint. In Las Vegas, the drivers themselves had mixed opinions about Liberty’s approach. On the eve of the race, Verstappen warned against the “show element” overshadowing the race itself. “It’s more important that you actually make [the fans] understand what we do as a sport, because most of them just come to have a party,” he said. 

David Richards, chair of engineering group Prodrive Technologies and domestic governing body Motorsport UK, speaks of the “fine balance” Liberty must walk in keeping F1 employees happy as well as its fans. “If you go purely for entertainment you might lose some of the real fundamentals that make F1 what it is today,” he says.

However, there are inbuilt limits to how much F1 can expand as a sport. Stefano Domenicali, F1 chief executive, has repeatedly said the series does not intend to go beyond the record 24 races planned this year. The strain of a global calendar means that teams spend weeks at a time on the road over a season lasting nine months, in arguably the most gruelling travel schedule in sport.

Aston Martin driver Fernando Alonso gets pushed back into this garage by his team
Arctos Partners, the sports-focused investment team, took a stake in Aston Martin F1 last year, in a deal that valued the team at north of £1bn © Darko Bandic/AP

In part, Liberty has been able to make up for time pressure by adding races in new destinations such as Saudi Arabia and Qatar, which are known to pay higher fees to F1 than the historic tracks such as Spa in Belgium or Monza in Italy. The classics might make “hardcore long-term fans happy”, says Paolo Aversa, professor of strategy at King’s College, London. But he adds: “They’re not good for business overall and need to be balanced by new destinations to develop new fans and [put] more money on the table to help the sport grow.”

F1 is one of the few sports in which every competitor takes to the arena at the same time, meaning there are fewer fixtures to sell to broadcasters. “One of F1’s challenges going forward is the relative paucity of content they have,” says a former F1 executive. “The Premier League and football have so many games.”

F1 has also experimented with new, shorter-format “Sprints” ahead of race day to give fans another flavour of racing. Verstappen and other purists have argued that sprints detract from the main event of the grand prix, but F1 points to data that suggests the format attracts bigger viewership than the qualification rounds that decide where drivers start on the grid.

The trend of the championship being dominated by drivers in a small top tier of teams also risks putting off viewers, but most in F1 do not see it as a problem. “The history of our sport and all sport has seen the dominance of a driver, of a team,” says F1 chief Domenicali. “It’s not only Formula One, you can talk about NFL, you can talk about soccer, the relevancy is how to create a narrative, the story around it.”

The game-changer would be to multiply the value of F1’s media rights in the US, where Liberty has prioritised exposure over money. With ESPN, F1 has broken numerous viewership records since signing a new deal in 2022. However, people with knowledge of the deal estimate that it is worth $80mn-$85mn a season, a small slice of the more than $1bn F1 made from global media rights in 2023.

“Given the big investment Liberty has made in the US, can you get that to the next level and multiply the value of the media rights,” says Jefferson Slack, managing director for commercial and marketing at Aston Martin F1. “That supercharges Ebitda for Liberty, the sport, the teams.”


F1 is conscious it needs to expand its horizons in terms of the diversity of its personnel.

Hamilton is not just the most successful driver in F1’s history, but also its only black driver. He has lobbied the sport to break down the barriers to entry for people of different races and backgrounds. 

But F1 also knows it must address its total exclusion of women from the grid. It is almost 50 years since Lella Lombardi started a grand prix, and no female driver has raced in one since.

Beavan, who is also strategic adviser to More than Equal, an organisation that is trying to identify and nurture future female F1 drivers, says the group’s research suggests the sport’s new fans are keen for female faces in drivers’ seats. “If there were more female competitors involved they’d be more likely to follow the sport, watch a race and attend a race.”

It is almost 50 years since Lella Lombardi started a grand prix, and no female driver has raced in one since © Victor Blackman/Express/Hulton/Getty Images

The launch of an all-female racing championship, the F1 Academy, last year was intended to give women drivers track time and practice. But by the sport’s own admission, it could take years to find Lombardi’s heir. “The finances have always been an issue and will always be an issue,” Susie Wolff, who runs F1 Academy, told the FT last year. “It’s not like football or tennis, which in the end if you have a pitch and a ball or a court and a ball you can go and practise. The nature of this sport means you need a team and you need a car.”

The problems begin in karting, the typical gateway to the sport for children all over the world, according to several people interviewed for this article.

“When you’re 11 and a girl is overtaking you, the reaction is sometimes a bit harsh,” says Frédéric Vasseur, principal of Ferrari. “That’s stupid. We really need to change this. Girls can do gymnastics but they can also do go-karts.”

Another underserved demographic in the pit lane is American citizens. The US currently has only one F1 driver — Logan Sargeant of Williams — and no American has won a grand prix since Mario Andretti in 1978. 

Andretti’s son Michael, who also raced in F1, is eager to change that record by bringing an all-American team to the grid. But his application to add an 11th team to the grid was rejected in January.

Andretti, who is backed by Guggenheim Partners chief Mark Walter’s Group 1001, says his team could help F1 increase its commercial appeal in the US.

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F1 “is scratching the surface in the United States,” he says. “There’s so much more to be grown here, especially on TV and media . . . and I believe we can help [it] get there.”

Other principals are sceptical that another team would make the difference in terms of bringing in more American fans. “If you want to develop a sport in a country it’s not about teams,” Vasseur says. “Look at the Netherlands with Max [Verstappen], it’s about drivers. We need to have American drivers winning races.”

From talking to F1 leadership, there is a sense that very little is off the table in terms of bringing the sport to new fans — as much for its survival as its growth.

F 1 has the “duty and obligation” to be creative and to “push for change without being crazy”, says Domenicali.

“As always when you change there is a sort of polarising approach, where if you look from one side it’s a total disaster and from the other it’s fantastic,” Domenicali says. But the way people watch the sport is already changing, he notes. “We cannot afford to be still.”

Data visualisation by Aditi Bhandari

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