The Miami Grand Prix may not have been the perfect weekend, but it was a huge success for Formula 1.
The crowds packed Miami International Speedway, the track had more stars and VIPs than we’ve ever seen at an event, and we had a decent race in the end, aided by a late pace car to liven things up.
It was another important step in the sport’s bid to have a greater presence in the United States, after the great success of the Drive to Survive docuseries.
“The verdict is positive,” F1 CEO Stefano Domenicali told Motorsport.com after the race was over. “I think, in general, what we are experiencing and the success [of the category] is incredible.”
“Do you see all the people who have been here? Honestly, I have never seen so many requests [to go to a grand prix]. Everyone wanted to be here. From the general point of view it has been incredible. Nine months ago there was nothing here”.
“As always, we’ll have a good meeting to go over the details of things, but that’s part of the normal process. But they’ve done an amazing job. Everyone was already asking, when are we going to have Las Vegas?”
The success of the Miami race was especially sweet for F1 because it came just weeks after the announcement of the Las Vegas event, which will be held for the first time in November 2023. In fact, many key figures from the state of Nevada who supporters of the project were present as guests in Miami, wanting to experience F1 first-hand.
The race around Hard Rock Stadium was a new starting point for F1, as its promotion was a joint venture with Stephen Ross and the Miami Dolphins , or more specifically South Florida Motorsports , the organization set up to run it in practice.
Las Vegas will be one step further. The city and the casinos that line the track are on board as partners, but their promotion is the responsibility of F1 itself, along with Live Nation, the Liberty affiliate. In turn, F1 has created an independent company to manage the Las Vegas event, and some of the staff have already been transferred.
The Las Vegas plans looked great on paper when they were announced, but one question remained. F1 had made a splash by getting all the agreements and permissions to use the streets of the city and go through the front yards of the main casinos. But where was the huge infrastructure associated with the pits and paddock to go, and which takes weeks to install in places like Monaco and Baku? Was the city really going to put up with the inconvenience caused by its construction every year?
The teams had even heard rumors that the paddock would be a kilometer and a half away from the track, and that we would see a basic pit without full garages, with the preparation of the cars taking place far away. A bit like Monaco before the current pit complex was introduced…
The answer came a few days before the Miami race, when Liberty CEO Greg Maffei revealed to Wall Street analysts that the company had purchased a piece of land in downtown Las Vegas, adjacent to the track, on the which will build a permanent pit and race control facility.
He also admitted that the event will require considerable investment, both in capital and running costs.
“F1 and Liberty Media, unlike most circuits, promote the race in collaboration with local stakeholders and Live Nation,” Maffei explained. “The construction of this track will require a higher CapEx and OpEx (Capital Expenditure and Operational Expenditure) for its development.”
“I want to point out that Liberty Media has reached an agreement to acquire 39 acres (almost 160,000 square meters) to the east of the track to fix the layout of the circuit and create space for the boxes and the paddock, among other reception facilities for people and career support.
“I expect that transaction to close in the second quarter, and the purchase price was $240 million [€227 million], which will be financed from the cash available in the Formula 1 Group .”
“And there the boxes and the paddock will be located, and some other reception areas for people.”
It is an unprecedented investment by Liberty and F1, and also a studied investment. Finding the space for a temporary pit and paddock complex, and renting it out each year in perpetuity, was going to be a costly exercise. Furthermore, there was no guarantee that the owners would not one day sell or build on the land, leaving F1 with nowhere to put its pitlane.
As stated, there would be weeks of downtime while it is being built and dismantled each year. Temporary buildings would also have to be rented or, more likely, purchased and stored between events – at considerable expense – somewhere in the Las Vegas area, which is how Monaco and Baku do it.
Instead, F1 is now mistress of its own destiny. It will have the advantage of having a permanent pit facility, like the ones in Singapore and Miami (where garages will now serve as shops and food outlets for football games), and will leave a mark all year round. in the city.
During the 362 days of the year that it will not be part of the competition, the possibilities of using the venue are endless: it can be an event space that generates income, and an F1 souvenir shop that serves as a center of attention for career is another obvious choice. And why not an F1-themed cafe and hotel? All options are on the table.
“We will be very specific very soon,” Domenicali told Motorsport.com. “But you will understand that it is a place where F1 will put a flagship and there will be another activity organized with our structure.
“This shows Liberty’s commitment to F1. And that’s very important to the sport, you see what’s behind it, the full momentum of what we’re doing, and even more so because we believe this sport can grow much more. .”
Even that almost 160,000 square meters is not enough to house everything that an F1 paddock requires, and there will be a secondary parcel some distance from the track that will house the customs area and all the flight containers and some other items, so that there will be some commuting between the two sites.
The land purchase is a fascinating development, and highlights why F1 and Liberty are taking on the role of Las Vegas promoter with seemingly confidence.
“I think our decision to promote Las Vegas in conjunction with Live Nation and local partners is down to a couple of things,” Maffei said.
“One is proximity, it’s fairly easy to get to Las Vegas from Denver [where Liberty’s headquarters are located] to do our work. Also, we have some knowledge of the local US market relative to a lot of other markets.”
“But I think more importantly we see the opportunity to be a promoter as a way to broaden our understanding of the business, to understand how to be the best F1 product on the track for other promoters as well, to see an opportunity to increase our knowledge and our understanding, and potentially promote other careers in the future.
“And lastly, I think Las Vegas is going to be a big, once-in-a-lifetime opportunity. So financially, we think this is worth the extra time to become the promoter.”
The buzz of spectacle around Miami may not have sat well with all traditional F1 fans, but it is the way the sport is headed, powered by Drive to Survive. We can hope that Las Vegas is another step forward.
“I would say that Las Vegas has always been a place where we believe that the association between the values of F1 and the glamor and the appeal, the possibilities of being in that community, is crucial,” said Domenicali.
“And I think it’s a great win for doing business as well for those who are investing there, but for sure also for our knowledge of the business and our opportunity to explore with our partner Live Nation.”
“I think it’s the best [agreement] to make sure that next year, in November, we’re going to have the race, that event will be spectacular, it will be unique. As I would say, we can already feel it here in Miami.”
Las Vegas is a big bet for Liberty and F1, but if Miami is any yardstick, the right numbers should come up.
Where the money comes from and where it goes is an intriguing aspect. Is the investment in the Las Vegas event made by Liberty itself, or is it made specifically under the F1 banner? And what percentage of the revenue will go to F1 and what could go elsewhere? In other words, how does Live Nation fit in?
Where the money goes is important, as it comes from the prize fund from which the ten Formula 1 teams receive part of their income, and it is clear that they will need to know exactly how it all works.
“Overall, we’re the primary partner. Live Nation, from a financial perspective, is a secondary partner,” Maffei said.
“They have a very important role. But most of the capital investment, most of the outlays, will come from us, not from Live Nation.”
“And we don’t anticipate that this is going to show up separately on our income statements, it won’t be material in that sense. So the lines will generally be included in promoters’ fees, and the like, sponsorship, hospitality, etc. .”
F1’s revenue essentially falls into key categories. Most of it is primary income, made up of race promotion rights, sponsorships and broadcasting, the first two of which will be directly affected by a race that has actually been organized by F1.
The service areas for those attending the event, which will be an important element in Las Vegas as they were in Miami, are part of “other” income.
“We are going to consolidate,” Liberty chief financial officer Brian Wendling said. “So revenue and CapEx will be on our books, as well as costs. And we also hope that ultimately we will have to fine-tune this once we have the race. But our expectation right now is that revenue will go to its traditional sites.
“Paddock Club would be part of other income, and then the sponsorship would go where the sponsorship currently goes. Then, to the extent that we sell tickets, we expect that to go to the promoters’ income.”
“So it will be very similar, except for the fact that we are consolidating the costs, and all the income, whereas in the normal relationship with the promoter, we only have that share.”
The traditional promoters, that is to say, all except Miami and Las Vegas, are now watching the evolution of the situation with some interest. They know they have to raise their game and put on a better show.
Zandvoort set a milestone in what a private organization can achieve without the backing of local or national government. And as agreements are renewed, all venues are being asked to pay more. Domenicali is glad that there has been a wake-up call.
“I think the beauty, if I may say so, of this moment is that the new promoters are bringing a new energy and new vibe to the system,” he said.
“I think it’s something that has a knock-on effect on the traditional promoter having to keep up the pace, with respect. And we respect a lot of our promoters because they’re the ones that really work with us to make sure we have great relationships all over the world. world”.
“But this effect is giving us an incredible boost to make sure the whole system is very active, to maximize what we’re bringing to the platform.”
What will be next for F1 after Las Vegas? Maffei dropped an intriguing, if slightly convoluted, hint that the organization is at least looking into other events.
“I don’t think we have announced any plans,” he said. “We’re going to start and see how we do, hopefully we’re as successful as we think we can be.”
“I would just say, cautiously, that we shouldn’t be so sure that the places that are iconic are places that, in the end, we’re not going to become self-promoters. I wouldn’t throw away that opportunity.”
So Liberty has its sights set on taking over “iconic” events, which makes sense given that places like Spa and Monza are needed on the calendar but are clearly struggling to keep up with the rest of the world in terms of rates. As joint ventures with F1, or as F1-only promotions, those races will make more sense for Liberty.
It could be suggested that Monaco is also mature enough to reach a deal in which F1 has a direct stake, given Liberty’s evident frustration with the mega-deal the principality has, with a nominal fee and control of the broadcast television, the guest reception area and circuit signage, etc., which no other venue has.
That special deal has survived for decades on the grounds that F1 needs Monaco more than the other way around. The sources insist on downplaying the possibility of a joint operation of this type, but the truth is that it would make sense.
Domenicali admits that Las Vegas might not be the last race promoted by F1, although he is keen not to disturb the existing situation too much.
“What Greg [Maffei] said is never say never,” he said. “But, with this in mind, I would say that we are very happy with the promoters who are working with us. They are very, very loyal and reliable partners, on whom we are going to build an even stronger future together.”
