Off Exit 2X of the Florida Turnpike, Hard Rock Stadium’s parking lots are getting a Monaco-esque makeover. With six weeks to go before Formula One’s newest U.S. grand prix on May 8, the vast expanse is being outfitted with a 3.36-mile circuit, palm-tree-shaded villas, and VIP clubs that’ll cost upwards of $9,000 for a weekend pass. The home of the Miami Dolphins may not ooze the aristocratic decadence of Monte Carlo, where F1 drivers whip their multimillion-dollar machines through picturesque streets overlooking harborside yachts. But at Turn 7, where a line of port-a-potties sits amid the construction, a “marina” will host deep-pocketed fans aboard small boats trucked in and “docked” on stands surrounded by planks painted to look like water. The whole event is sponsored by Crypto.com. “The idea is that this is going to turn into an almost Disneyland map,” says Tom Garfinkel, chief executive officer of the Dolphins, pointing at a blueprint of the track at his office. “It’s kind of like, ‘Do you want to go to Space Mountain? Do you want to go to Pirateland?’ ”
Not too long ago, the thought of Disney-fying F1 would have sent Ferrari fanatics careening off the autobahn. For decades, the Fédération Internationale de l’Automobile-sanctioned series has been considered the pinnacle of motor sports, a rich fondue of exorbitant engineering and wheel-to-wheel speed. A posh international audience, mostly from Europe and South America, obsessed over circuits where Rolex, Shell, and other big brands craved association with the most epic cars on the planet. Stirring the pot was Bernie Ecclestone, the British tycoon who started building F1 into an empire in the 1970s and controlled it with monarchical power through 2016. Bernie, as he’s universally referred to, once said he managed F1 like a “Michelin restaurant, not a hamburger joint.” If F1 was synonymous with Moët, he believed it wouldn’t appeal to McDonald’s-loving Nascar fans.
But since U.S.-based Liberty Media Corp. acquired F1 in 2017 in a $4.4 billion deal, the sport has undergone a stateside surge. ESPN reported that average American viewership was up 56% last year compared with the 2020 season. Austin’s 2021 race saw a record 400,000 attendees, almost 70% of them first-timers. And Miami’s three-day suite and grandstand pre-sale tickets, the cheapest going for more than $600, sold out within 24 hours, with top tickets fetching $32,000 on secondary markets. Then, on March 30, Liberty announced a Las Vegas grand prix for 2023, making the U.S. host to more races than any other country.
The surprising ascent has been attributed to a range of moves, from Liberty transforming race weekends into Super Bowl-like spectacles to the popularity of Netflix’s Formula 1: Drive to Survive, a soap-operatic docuseries that turned F1 drivers into celebrities for an entirely new audience. But Liberty’s overhaul isn’t just about the theatrics. In the last five years the Colorado conglomerate, which also owns SiriusXM and baseball’s Atlanta Braves, has reengineered the formula of Formula One, risking in the process both its longtime business model and its oldest devotees. “They’re producing Formula One: American Style,” says Ecclestone, who worries that Liberty’s changes will spoil F1’s cachet. “It may well be that it’s good, because so many stupid things come out of America and everyone’s happy, but it wasn’t the way I ran things.”
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Then again, some Liberty supporters contend that Ecclestone’s tightly gripping, almost paranoid management style was dragging F1 toward irrelevance. It seems the more Americanized F1 becomes, the more global spectators are drawn in. Last year its cumulative television audience reached 1.6 billion worldwide, up 11% since the takeover, with the season finale drawing 108.7 million viewers—about what the Super Bowl attracted when Hard Rock Stadium hosted it in 2020. Meanwhile, the share price of F1, which trades as a subsidiary of Liberty, has more than tripled, hitting new highs last month. “Bernie can mouth off all he wants,” says Liberty CEO Greg Maffei. “But the reality is, everybody wants in now.”
For the uninitiated, F1 may not seem so different from other types of auto racing. Which is sort of like saying an F-35 fighter jet is not dissimilar to a Spirit Airlines plane. The 1,000-horsepower engines don’t so much purr or roar as threaten to rip your head off. Teams, called “constructors,” build open-cockpit cars that are feats of aerodynamics and materials science. Whereas the respective machinery of IndyCar and Nascar vehicles are largely similar, F1 cars, which share some league-mandated design specs and componentry, live or die by the absurdly expensive factory innovations of hundreds of engineers. These might include enhancing the airflow geometry of engine-cooling systems and wings to eke out millisecond advances. Some F1 parts alone cost about as much as an entire Nascar vehicle. There’s a reason the latter, built mostly for oval tracks, would get smoked on a twisty circuit against even the slowest F1 car—by about a half-hour across a full race.
The goal, obviously, is to go faster than your opponents. But even that’s a matter of complex analytics, with some 200 onboard sensors beaming real-time data to sideline strategists, who scrutinize everything from tire degradation to corner-by-corner splits and weather conditions. Currently there are 10 teams, each with two drivers in single-seater cars who often compete against each other as intensely as they do their rivals. (Job security is forever iffy.) Races themselves are usually 50 to 70 laps, with the top 10 finishers collecting points that translate to tens of millions of dollars in prize money. A perennial favorite like Mercedes might deem a finish outside a top-three podium position disastrous, whereas a lower-budget constructor such as Williams Racing will pop corks for snagging 10th—the cutoff for earning points. At the end of the season, which last year boasted 22 races, the team and driver with the most points each win a championship trophy—and a lot more money.
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The danger involved in reaching that achievement is impossible to fathom. It’s face-flattening enough to zoom to 220 miles per hour in seconds, but braking hard into a hairpin apex, a mere flinch away from severe injury and millions of dollars in damage, requires a healthy amount of insanity. Even more so when you realize the drivers have to manage those turns while simultaneously shifting gears about 50 times a lap, or 3,600 times a race. Between the fuming heat and yanking go-stop-go gravitational force, an F1 driver’s neck can bulk up like an English roast. Nascar icon Jeff Gordon once tested an F1 car and said he couldn’t handle the braking—it strained his neck too much. Mercedes’s Lewis Hamilton has said he loses between 5 and 10 pounds per race from sweat and stress on his body.
Dense rules and indecipherable jargon—parc fermé, drag-reduction system, etc.—have historically kept out newcomers. Even team sponsors aren’t typical: Brands like Red Bull don’t just pay to splash their logo on a car; they employ their own world-class engineers to actually build it.
None of this complexity came by accident. Ecclestone, a former motorcycle and car salesman, always knew exclusivity was essential to throwing what he describes as a “glamorous Champagne event.” There were no behind-the-scenes TV series, no all-access corporate passes to the team paddocks and pit lanes, territory Ecclestone considered sacred to F1’s purity and mystique. He got involved in motor sports following World War II, first as a driver and later as an F1 team owner, gaining power after organizing an association of constructors. He’s credited with commercializing what was then a ragtag league with blockbuster TV distribution deals and eight-figure grand-prix-hosting fees.
Ecclestone, who served as CEO of F1’s management group, had a reputation as a ruthless boss who protected the series’ financial interests, and his own, above all else. He reveled in negotiating new track locations with Middle East princes and Russian President Vladimir Putin and mostly dismissed the internet as a distraction. After private equity firm CVC Capital Partners bought a controlling stake in 2006—a deal that allegedly involved Ecclestone paying a $44 million bribe to a German banker to approve the sale—F1 teams grew furious that investors would reap huge profits while they struggled with annual operating expenses of $80 million to $300 million. (Ecclestone, who remained in power under CVC, settled the bribery case with a Munich court for $100 million, with no admission of guilt.) Adam Parr, then head of the Williams team, says Ecclestone treated revenue-sharing like budgeting his children’s allowance. “If there was any pie left on the table, then he’d lost,” Parr says. A CVC spokesperson says prize money quintupled during its ownership, and that the majority of revenue growth went to the teams.
The poor economics kept constructors under Ecclestone’s thumb, but it also meant they were constantly teetering on the edge of bankruptcy. Teams operated at breakeven or with losses that an NFL owner like Jerry Jones or Robert Kraft would never stomach. The calculus, particularly for the car brands, was that the lavish marketing and extreme engineering—which could transfer to the design and mechanics of the models they sell to consumers—justified the cost. Yet in the aughts alone, big automakers such as BMW, Toyota, and Ford-owned Jaguar left the sport. “Ford has decided it can no longer make a compelling business case for any of its brands to compete in F1,” Jaguar’s then-chairman, Joe Greenwell, said at the time.
Ecclestone orchestrated races in Abu Dhabi, Azerbaijan, Bahrain, and Russia, each estimated to bring F1 fees of $50 million or more annually. But that barrier to entry proved too tall for major markets in the U.S. Michael Payne, a former strategic adviser to Ecclestone, remembers Bernie pushing for a New York race, to no avail, due to F1’s cost and complexity. “Forgive me, but the staging of an F1 race is ever so slightly more complicated than an American football match,” Payne says.
There had been at least half a dozen attempts to build an audience for F1 in the U.S., though as with soccer, American fans didn’t seem to have much patience for the pretensions of the sport. A slapdash 1989 grand prix in Phoenix drew disappointing ticket sales and scorching June heat that likely played a role in the majority of cars retiring early. A farcical 2005 dispute over tire (er, tyre) issues at the Indianapolis Motor Speedway saw 14 of 20 cars boycott the race. Many in the crowd of 120,000 booed and flipped the bird, threw beer cans on the track, and headed for the exits. A 2012 Texas race, at the Circuit of the Americas in Austin, was more successful, but struggled financially. COTA Chairman Bobby Epstein recalls Ecclestone telling him, “Frankly, I don’t care where we have it. I only care if the check clears.”
Critics say F1 grew too stale and unwelcoming to any changes that might have threatened Ecclestone’s precious fees from track promoters and TV broadcasters, whose unique viewership (the number of individuals tuning in at least once during any point of the season) fell from a peak of 600 million in 2008 to about 400 million in 2015. Mercedes’s Hamilton joked that Bernie sent him cease-and-desist letters whenever he posted clips on Instagram. (“All I wanted to make sure was that he wasn’t producing images that other broadcasters had the rights to,” Ecclestone clarifies.) Says Mercedes’s team principal Toto Wolff of the pioneer: “Bernie was great at his time. He invented this sport. But the technology changed.”
When YouTube co-founder and racing fan Chad Hurley funded an American constructor, USF1 Team, with the aim of entering the 2010 season, it struggled to build a car in a former Nascar facility. Team leaders hoped to develop a cheaper model in America using repurposed Nascar machinery and less bespoke parts, but the operation ultimately collapsed from financial pressures. “One of the diseases of Formula One is having any kind of budget,” says Ken Anderson, principal of the failed USF1 team. “If you ask the average person, the rich geniuses go to Formula One, and the dumbasses go to Nascar. Somewhere in between lies the truth.”
In 2016, CVC put F1 up for auction. A string of suitors went after the league, but Liberty’s bid won. It was an odd marriage. Chase Carey, an American who previously worked for Rupert Murdoch, had never even attended a grand prix before being appointed F1’s new chairman. Still, Ecclestone remembers Carey summoning him the morning after the acquisition was completed in January 2017 to relieve him of his CEO duties. “He really had no idea what he was doing,” Ecclestone says.
This was true and arguably an advantage: Liberty’s higher-ups were oblivious about what not to change. In F1, they saw one of the few truly global sports, on the scale of FIFA or the Olympics, that could still capture a gigantic live audience at a time when cord-cutting and social media were fragmenting consumer attention. Executives quickly learned that under Ecclestone the corporate structure didn’t even include a digital division, let alone a research department. “There really was no business to run,” says Sean Bratches, an ESPN veteran Carey hired as F1’s managing director of commercial operations. “Bernie ran F1 out of his house—a very nice house—but nonetheless F1 was not hitting on all cylinders.”
Focus groups revealed that fans around the world found the racing too dull and predictable. The spending gaps between the bigger and smaller teams made the sport uncompetitive. (Mercedes has won the constructors’ championship every season since 2014.) Yet even tiny changes were met with resentment. Drivers hated Liberty’s redesigned F1 logo. Others were aghast when the company had boxing-ring announcer Michael Buffer trumpet “Let’s get ready to rumble!” before a grand prix. “The environment when we entered was ‘Who are you Americans?’ It felt like we were landing on Mars,” recalls Maffei, Liberty’s CEO.
During Ecclestone’s reign, the teams were used to fighting each other for the crumbs that fell off Bernie’s plate rather than working together to bake a bigger pie. During an early strategy session where Liberty talked about pushing into digital areas such as e-sports, podcasts, and streaming, a person present, who requested anonymity to speak about the confidential meeting, recalls the team principals reacting harshly: “The perspective from the entire room was ‘What’s the point of all this stuff? How can I actually make money from doing any of this?’ ”
The awkward answer: You might not. To Liberty, the fixes seemed obvious to avoid obsolescence. The company loosened restrictive TV deals so clips could be shared on YouTube and other digital platforms, launched an overdue subscription streaming app and fantasy sports service, and licensed mounds of unused data to betting platforms. It also began discussions about an F1 show with Netflix, but even that was fraught with conflicting incentives. Mercedes, for one, had already pursued a solo docuseries with Amazon and chose not to participate.
This sort of tension became especially visceral as Carey pushed to revise F1’s rules and introduce a team cost cap to level the field. Why would Mercedes’s F1 team, which spent $442 million on its championship victories in 2019 and still reported a profit, agree to slash its budget so rivals had a shot at winning? Why would Red Bull agree to new race formats that would give underdogs a leg up? Carey, who eventually instituted the cost cap of $145 million, viewed these traditions as a “straitjacket,” noting that the NBA once resisted the 3-point shot. “With Bernie, who at the end of the day was a secondhand car dealer, there was always a deal to be done,” says Red Bull team principal Christian Horner. “Whereas Chase was ruthlessly boring in the way he dealt. He grinded everyone down to acceptance.”
Daniel Ricciardo first realized Liberty’s plan was working when he returned home to Los Angeles after being on the road. The 32-year-old Australian, who now races for McLaren, had become a breakout star of Netflix’s Drive to Survive, which charted drivers’ career highs and lows. Before its March 2019 premiere, he’d been virtually anonymous in Hollywood, estimating one or two people would recognize him during his weekslong visits. “At customs when I landed in the States, I’d be like, ‘Oh, I’m an F1 driver,’ and they’d ask, ‘Is that like Nascar?’ ” Ricciardo remembers. “After the first season, every day I was out somewhere someone would come up being like, ‘I saw you on that show!’ ”
The Netflix series was a hit in the U.S. and educated a new generation of fans about the sport’s technicalities and helmet-hidden personalities. (Seeing the show’s viral success, Mercedes pulled a 180 on its participation.) Ricciardo, who’s been an F1 driver since 2011, had long wished the sport would find inspiration in U.S. pro leagues, which he loved for their drama. He’d urged F1 to mimic Fox’s “Crank It Up!” feature, which replaced color commentary with Nascar’s roaring engine sounds and camera-shaking speed. “All the cars would flash by, and you’d literally feel the vibrations from the couch,” says Ricciardo. “Americans do sports right.”
Finally league bosses were listening, and Netflix was only the start of F1’s American adaptation. A new helmet camera, which looks like a GoPro strapped to a SpaceX rocket, would soon put “Crank It Up!” to shame. The Texas grand prix soared in popularity. Ricciardo showed up at last year’s race dressed as a cowboy and did pre-show donuts in a vintage Chevrolet stock car. Later in the weekend, COTA hosted the world Spam-eating championship and a DJ performance by Shaquille O’Neal. And Carey was eyeing Vegas and Miami for future races.
Liberty’s goal was to modernize not only F1’s entertainment but also its economics. When McLaren ran into severe financial difficulties in 2020, New York-based private equity firm MSP Sports Capital announced it would plow about $240 million into the team. The pitch was that F1 properties were comically undervalued compared with their American counterparts. It didn’t hurt that Ricciardo was becoming a bankable celebrity and his teammate Lando Norris is an e-sports darling, with 1.2 million Twitch followers. “There was no reason F1 teams shouldn’t have the same value appreciation as an NBA, NFL, or MLB team,” says Zak Brown, McLaren Racing’s CEO, who’s American. “Why do the LA Clippers trade for $2 billion? The NBA is a great sport, but it doesn’t have a global reach, and the Clippers don’t have 20 world championships to its name. So why are they worth four times McLaren?”
Maffei says if MSP hadn’t come through, Liberty would have funded McLaren, a remarkable shift from the Ecclestone era. It wanted to prove to F1 stakeholders that it was invested, even if that meant upending the business. The reality was that hot U.S. destinations weren’t going to fork over $50 million like Azerbaijan merely for the privilege of hosting a race. So to lock in the new grand prix on the Vegas Strip, Liberty assumed the role of promoter. “We are more involved on a risk basis,” Maffei says.
In late 2020, F1 announced that Stefano Domenicali, who once led Ferrari’s F1 team and later served as CEO of Lamborghini, would replace Carey, who became nonexecutive chairman. Domenicali has since said demand is so strong that Liberty could expand from 23 to 30 races a season. He’s expressed particular interest in Africa and Asia, markets Ecclestone had underserved. Domenicali dismisses concerns that the Vegas framework will eat into F1’s promoter fees elsewhere—which historically represented a third of sales—or inspire the Azerbaijans of the world to negotiate for better terms.
Following a rocky 2020, in which Covid-19 shut down race attendance and F1 posted an operating loss of $386 million, the league bounced back to record $2.1 billion in revenue and a profit of $92 million in 2021, in part because of a thrilling battle between Mercedes and Red Bull that was decided in the final moments of the season finale. (Spoiler: Hamilton lost to Red Bull’s Max Verstappen in a controversial last lap.) Unique viewership has ticked up since the Bernie era, to about 445 million, attracting blue-chip advertisers such as Salesforce, while McLaren recently signed a huge deal with Google to deck out its liveries in Chrome and Android colors.
It was initially unclear whether Domenicali, an Italian, might slow F1’s Americanization. Ecclestone, who’s been close with Domenicali for decades, says he chats with him at least three times a week. “We talk a lot about the way things are, and could be, and should be,” Ecclestone says, vaguely. “Stefano hasn’t done anything to rock the boat.” Domenicali says he stays in touch with Ecclestone out of respect. “I knew Bernie since I was 14, because I was parking the motor home in the paddock at Imola,” referring to the storied Italian F1 circuit.
Domenicali insists the U.S. market has “really been at the center of our attention.” Despite the momentum in the U.S., its audience remains fairly small, with an average of 1.4 million TV viewers watching races this season. Barclays analyst David Joyce expects Liberty to renegotiate with ESPN and triple its annual U.S. broadcast fee, to $30 million, which is both a pittance compared with NFL deals and a signal of possible growth on the horizon.
The thing that could hold F1 back in the U.S. is the lack of an American driver. Alfa Romeo’s Zhou Guanyu, the first starting F1 driver from China, is expected to help the country’s TV and WeChat engagement explode. Mario Andretti, the last American F1 champion—in 1978!—says the sport has to be more open to new talent if it really wants traction in the U.S. He’s long pushed for stateside picks, like IndyCar phenom Colton Herta, who recently signed on as a test driver for McLaren. If Liberty can build up a star American driver, says Andretti, “the country will just go crazy.”
For now, locking in Miami and the Vegas grand prix is a sign Domenicali is serious about catering to F1’s American converts. Sure, that may mean more Spam-eating competitions and faux yacht clubs, but the growing audience has meant there’s talk of Audi and Porsche entering the league. “The old traditionalists see every single little detail and change as an attack to the system, but it’s not,” Domenicali says. “There is place for Michelin, and there is place for burger.”
©2022 Bloomberg L.P.
