The end goal for any sports organisation is to grow an engaged fan base in order to earn substantial revenue from broadcasting, sponsorship, marketing and other digital opportunities. Less than 10 years ago, Formula One was slowly dying. Revenues were decreasing and fans were losing interest. Former owner of the Formula One Group, Bernie Ecclestone, was only interested in targeting the old and the rich which did Formula One no favours.
Who owns F1 commercial rights?
The Formula One Group was purchased by Liberty Media in 2017 for $4.6bn meaning they are responsible for the commercial rights and promotion of the sport.
Just 4 years after their takeover, Liberty Media generated $360m in revenue for the first quarter of 2022. What we want to know is, how they did it?
Formula 1 Broadcasting
Agreeing broadcasting deals can often be challenging, broadcasters want to know people will tune in and organisations are relying on the broadcast to bring in new audiences. The good thing about Formula One is it was already an established, well-respected sport.
Due to the fact Formula One produces its own global feed, they can easily negotiate broadcasting deals with several organisations worldwide. This arrangement allows F1 to have full control and copyright over all content, which is an ideal position to be in as a sports organisation.
Liberty Media were able to sign ESPN and Sky Sports deals very early on in the process and continue to sign multi-year agreements. In 2021 alone, Formula One sold $850m worth of media rights with the Sky deal bringing in $1.3bn from 2019-2024.
The only way they were able to make so much in media deals is because they increased the value of the rights through growing the audience and engagement around the sport. The team at Liberty media were able to turn the Sunday sporting event into a whole weekend of events that media houses could cover.
Formula 1 Digital Opportunities
A pivotal point for Formula One was the increased digital opportunities to reach and engage audiences. The organisation thoroughly understood what fans wanted, and that was to feel closer to the racing and know the drivers and teams on a personal level. This was executed perfectly in the Netflix Series: Drive to Survive. Due to the impressive success of the series several other media outlets are looking to capitalise on the engaged Formula One audience.
Apple has a Lewis Hamilton documentary and an F1 movie with Brad Pitt in the works, and Disney-owned Hulu recently signed a deal for a new half-hour scripted series with Daniel Ricciardo.
Formula 1 Sponsorship
In every sport, sponsorship is necessary to survive. Formula One is no different and their sponsorship offering has proven to be successful with $340m brought in in sponsorship agreements in 2021. This revenue is only for the sponsorships that correspond to track advertising, official F1 merchandise and anything that the Formula One Group have control over. The sponsorships seen on cars and drivers are separate agreements made among teams and brands.
How much does it cost to sponsor a formula one car?
Sponsoring a car is one of the first things people think of when they think about sponsorship. Teams see their car as prime real estate for brands and can charge anywhere between $1m and $50m for a spot on one of the fastest cars in the world.
The reason why Formula One has been so successful in terms of sponsorship is because they have made use of all of their assets. Brands can sponsor drivers, cars, tracks digital media and technology, the list is endless. Liberty Media have executed most of their sponsorships correctly because they understand the value and their audience and because of this they have worked with sponsors that align with the values and needs of the sport, the teams, drivers and fans.
The question still stands is how did Liberty Media make such a change to the sport in such a small amount of time? Really, they followed the same model most other sports have been doing for years – broadcasting and sponsorship. The thing which made the difference is they understood the audience they wanted to reach and absolutely covered digital platforms with content audiences couldn’t ignore. From this they were able to grow their commercials as they were confident the audience would grow too.
If you’re serious about commercialising your organisation, league or team, now is the time to start.
Book in a free call with us to talk through your plans for the future and how we can help.