The US owners of Formula 1 are betting that the return of the sport to Las Vegas for the first time in four decades will generate $500mn in revenues, as they press ahead with an expensive effort to conquer the American market.
Las Vegas will host a race in November for the first time since 1982, making it the third US city to be added to F1’s global circuit by its billionaire owner John Malone’s Liberty Media. The group added Miami and Austin, Texas, in 2022.
Drivers including seven-times champion Lewis Hamilton hit the Strip in November for a launch party to start the countdown to the race.
Since acquiring F1 in an $8bn deal six years ago, Liberty Media has built the sport’s online marketing and profited from a tie-up with Netflix. The streaming platform’s Formula 1: Drive to Survive documentary series has been credited with growing interest in F1 by showcasing the drama of racing and highlighting the personalities of the sport.
“What we did is basically change completely, opening up a new way of communicating,” F1 chief Stefano Domenicali told the Financial Times. “Our objective is to make sure that all the fans attracted by the lifestyle, the protagonists behind the scenes . . . get into real racing.”
F1’s revenues reached $1.8bn in the first nine months of 2022, up $300mn from the same period in 2019, the last season before the coronavirus pandemic derailed the sport for the best part of two years.
The $500mn target for Vegas was revealed in investor documents and confirmed by Liberty Media. The racing series generates revenues from broadcast deals, sponsorships and fees paid by race promoters who sell tickets to race events. F1 also has a hospitality business called the Paddock Club.
Dutch beer brand Heineken is the title partner for the Vegas GP, which will take place at 10pm local time on a Saturday night rather than the typical Sunday slot. The founding partners — including Caesars Entertainment, MGM Resorts International and the hotel and casino Wynn Las Vegas — are key sponsors of the event and are heavily involved in promoting the event with Liberty Media.
Liberty Media acquired 39 acres of land for $240mn and expects to spend a similar sum on building the pit and 3.8-mile circuit. Construction of the paddock is already under way.
Amazing progress on the paddock building for the @F1LasVegas. Just 11 months aways… @f1 #Vroom pic.twitter.com/bfbTkAilEz
— gregmaffei (@gregmaffei) December 15, 2022
Liberty Media’s decision to acquire the land is a break with the usual practice in which a local promoter will carry some of the risks attached to staging the event but will benefit from the ticket sales.
In Las Vegas, admission will cost $500 for access over three days, with prices rising to at least $15,000 to attend all five days at the “ultra high-end”. It took just 45 minutes for the first batch of tickets to sell out.
The 2022 F1 set records in the US, according to ESPN, with each race watched by an average of 1.2 mn people. In October, F1 and ESPN renewed their broadcast deal until the end of the 2025 season.