Liberty Media Corp Series A (NASDAQ: FWONA) Deep DiveThe Formula 1 (F1) championship has delivered goosebump-inducing racing for 73 years, and the show just arrived in Las Vegas for one of the most anticipated events of the year.
F1 previously visited the entertainment capital of the world for two races in 1981 and 1982, but the 2023 reboot from Nov. 16 to 18 is set to be bigger than ever -- not just for the sport but also for F1 parent company Liberty Media and its investors.
Formula 1 is going from strength to strength
Formula 1 is more successful right now than it has ever been, whether you look at fan attendance or its financial performance. Much of that is owed to Liberty Media, which acquired the sport in 2016 and brought major growth initiatives to the table.
The F1 championship hosts 10 teams with 20 cars developed by some of the largest brands in the automotive industry. They include Ferrari, Mercedes-Benz, McLaren, and Aston Martin, to name a few. In 2026, other legendary automakers like Audi and Ford will partner with existing teams to enter the sport.
But Liberty has focused more on growing the calendar as a way to engage new fans in different parts of the world. There were 21 races during the 2016 season, whereas now there are 23. They span across Asia, the Middle East, Europe, and the Americas, with the latter region benefiting most from the expansion. The two new races both take place in North America specifically, with Miami and Las Vegas each signing 10-year deals.
The calendar will expand again to 24 races in 2024 with the return of the Chinese Grand Prix.
Last year, 5.7 million fans physically attended races around the world. It was a record high and also 36% above the 2019 season, which was the last one unaffected by the pandemic. Of course, more races equals more attendance, but interest in the sport is also bolstered by off-track initiatives. Endless streams of behind-the-scenes content from each team and each individual driver can be found all over social media. Furthermore, Netflix's ongoing Drive to Survive series remains a raging success.
Future Prospect
The Formula One Group will finish 2023 with about $3.26 billion in revenue, according to Wall Street analysts, marking a solid 26.7% increase from 2022. It averages out to $148.2 million per race (note that revenue figure includes race promotion, licensing fees, and sponsorship deals).
But here's the mind-blowing part: The Las Vegas Grand Prix is expected to bring in at least $500 million in revenue on its own! Some estimates suggest it will also have a whopping $1.3 billion economic impact on the city, which is double the $600 million impact the NFL Super Bowl could have in Feb. 2024.
But taking over the Las Vegas strip for an entire weekend isn't cheap. And F1 has leased the famous Las Vegas Sphere -- inside and out -- and it will also feature an epic slate of entertainment from John Legend, Steve Aoki, Tiesto, will.i.am, and more.
Liberty expected to invest $400 million in the event, but some estimates suggest it's approaching $500 million already. However, a portion of that money went toward one-time costs like the construction of the pit building, which is the largest on the F1 calendar. Without those expenses going forward, the race should be far less capital intensive and more profitable from the second year onwards.
Is this the Right Time to Invest In Liberty Formula One stock?
Formula 1 has expansion on its mind, and it isn't slowing down. In addition to growing the calendar, there are ongoing talks to put two more cars on the grid by bringing in another team. While nothing is confirmed, more races, more automotive brands, and more driver personalities will only create opportunities to attract new fans.
Plus, rumors were swirling in October that tech giant Apple is interested in bidding a whopping $2 billion per year for the global rights to broadcast F1. Media rights accounted for 36.4% of the sport's total revenue last year, making them the largest contributor ahead of ticket sales (28.6%) and sponsorship fees (16.9%).
Price Momentum
FWONA is trading in the middle of its 52-week range and below its 200-day simple moving average.
What does this mean?
Investors are still evaluating the share price, but the stock still appears to have some downward momentum.
