AI transcript
0:00:00 (upbeat music)
0:00:04 Support for this show comes from Constant Contact.
0:00:07 If you struggle just to get your customers to notice you,
0:00:10 Constant Contact has what you need to grab their attention.
0:00:14 Constant Contact’s award-winning marketing platform
0:00:17 offers all the automation, integration, and reporting tools
0:00:20 that get your marketing running seamlessly,
0:00:23 all backed by their expert live customer support.
0:00:25 It’s time to get going and growing
0:00:28 with Constant Contact today.
0:00:30 Ready, set, grow.
0:00:34 Go to ConstantContact.ca and start your free trial today.
0:00:39 Go to ConstantContact.ca for your free trial,
0:00:41 ConstantContact.ca.
0:00:47 Support for this episode comes from AWS.
0:00:49 AWS Generative AI gives you the tools
0:00:51 to power your business forward
0:00:52 with the security and speed
0:00:55 of the world’s most experienced cloud.
0:00:58 For over 30 years,
0:01:00 XPRIZE has been the global leader
0:01:02 in designing and executing large-scale
0:01:04 incentivized competitions.
0:01:06 And through these competitions,
0:01:07 they’ve accelerated solutions
0:01:10 to some of the world’s greatest challenges,
0:01:13 such as climate change, water scarcity, and healthy aging,
0:01:15 just to name a few.
0:01:18 XPRIZE is a catalyst for radical breakthroughs
0:01:20 that have impacted the lives of millions,
0:01:22 and they’re just getting started.
0:01:24 Through the power of incentivized competition,
0:01:27 XPRIZE can drive scientific discovery,
0:01:30 cutting-edge innovation, and groundbreaking solutions.
0:01:33 The future is still ours to create.
0:01:37 Head to XPRIZE.org to learn how you could help architect
0:01:39 a future of equitable abundance.
0:01:47 I’m Scott Galloway, and this is No Mercy, No Malice.
0:01:51 Formula One may be the future of sports and media,
0:01:54 but it’s not without some speed bumps.
0:01:59 F1 is at an inflection point, as read by George Hahn.
0:02:07 Just as my obsession with relevance
0:02:10 and economic security have often crowded out
0:02:13 what’s really important, relationships,
0:02:16 I’ve let my preoccupation with the election results
0:02:19 crowd out the blessings in my life.
0:02:21 God, I’m so fucking sick of politics.
0:02:26 So let’s talk about cars, fast cars.
0:02:29 I’m in Vegas for Formula One.
0:02:33 Actually, the truth is I’m not here for the race.
0:02:36 It’s more a desperate attempt to avoid the inevitable melt
0:02:39 into irrelevance, which I believe can be arrested
0:02:40 by extending my adolescence.
0:02:43 Also, I love Vegas.
0:02:45 The last race I went to was the inaugural
0:02:48 Miami Grand Prix in 2022.
0:02:52 It was a great time, despite F1 races being boring.
0:02:54 Here he comes, there he goes,
0:02:58 and so on, and so on, and so on.
0:03:02 The real fun is found far from the track.
0:03:05 The vibe is money, tech, and glamour,
0:03:07 a Super Bowl for the super rich.
0:03:12 If NASCAR is Android, F1 is iOS.
0:03:16 In Miami, I went to a dinner party on the beach
0:03:19 hosted by Carbone, a fabulous restaurant
0:03:24 right in the middle of a COVID flare-up, Fab U. Luss.
0:03:29 Wyclef Jean played to 700 people crowded into a hot tent
0:03:31 with no ventilation.
0:03:32 I had two thoughts.
0:03:36 I’m getting COVID tonight and it’s worth it.
0:03:37 I was right on both counts.
0:03:42 F1 has long had large and rabid fan bases
0:03:44 in Europe and South America,
0:03:49 but that enthusiasm didn’t land on U.S. shores until 2017
0:03:52 when Liberty Media bought a controlling interest
0:03:54 in the league.
0:03:59 Under new boss Greg Mafay, F1 took a big swing at America.
0:04:03 Targeting young people, Mafay and the F1 team
0:04:07 built an iconic brand in the most competitive market
0:04:09 in less than a decade.
0:04:12 There were races with celebrities in attendance,
0:04:15 Tom Cruise, LeBron James, Rihanna,
0:04:19 new sponsorships, and an aggressive social media presence.
0:04:22 However, Liberty’s gangster move
0:04:27 was the Netflix docu-series Drive to Survive.
0:04:30 Now in its sixth season,
0:04:31 the show is rewriting the playbook
0:04:35 regarding how sports leagues market themselves.
0:04:38 It’s a behind-the-scenes look at a lot of young,
0:04:42 good-looking guys, as Mafay once told CNBC,
0:04:45 hard-charging billionaire team owners
0:04:48 and high-tech pit crews competing in a series
0:04:51 of UberLux international locations.
0:04:54 F1 wasn’t the first to try this.
0:04:58 The NFL’s Hard Knocks premiered on HBO back in 2001.
0:05:01 By focusing on individuals
0:05:03 and harnessing the power of storytelling,
0:05:08 Drive to Survive used streaming to introduce U.S. viewers
0:05:11 to drivers who were superstars overseas.
0:05:15 Among them, Lewis Hamilton and Max Verstappen.
0:05:19 It gave newbie, Reed, American fans,
0:05:20 a compelling point of entry
0:05:23 and became a fount of bingeable video
0:05:27 that was easily shared, particularly on Instagram.
0:05:30 There are accounts devoted to what Hamilton wears
0:05:32 as he walks on red carpets.
0:05:36 Tribal rivalries, betrayal, greed, revenge,
0:05:39 all the stuff humans are hardwired to love
0:05:42 in a lustrous package every week.
0:05:46 Champions muse about having a target on my back.
0:05:50 Young guns talk about being hungry.
0:05:53 Everybody obsesses about forces beyond their control.
0:05:56 Shakespeare knew this turf pretty well.
0:05:59 Marcus Aurelius would have felt at home.
0:06:01 The song remains the same.
0:06:05 The actual game being played is unimportant.
0:06:06 The results?
0:06:11 Liberty paid $4.6 billion for F1.
0:06:15 It now has a market cap of about $22 billion.
0:06:21 In 2023, F1 generated about $3.2 billion in revenue,
0:06:25 up from 2.6 the year before.
0:06:28 Most of it from promotional deals with host cities,
0:06:31 media rights and team sponsorships.
0:06:35 TV viewership has doubled since Liberty took over,
0:06:37 though the U.S. audience pales
0:06:40 besides those of the NFL and other big team sports,
0:06:43 and it’s only a third of NASCARs.
0:06:47 In 2022, F1 signed a three-year deal with the SPN,
0:06:51 up for renewal next year, worth $270 million.
0:06:55 American TV viewership of this year’s Miami Grand Prix
0:07:00 was 3.1 million, the largest ever for a U.S. race.
0:07:04 Meanwhile, between 2017 and 2021,
0:07:09 the average age of an F1 fan dropped from 36 to 32.
0:07:15 About 40% of fans are now female.
0:07:17 Earlier this year, Liberty announced
0:07:20 it had bought a majority interest in MotoGP,
0:07:24 which is to motorcycle racing what F1 is to autos.
0:07:29 Owning a team, F1 has 10, used to be a money pit
0:07:31 for a brand or a billionaire
0:07:33 in the throes of a mid-life crisis.
0:07:37 Now teams are a legitimate asset class.
0:07:41 Oracle is paying Red Bull $100 million
0:07:43 to put its name on their car.
0:07:48 Mercedes paid $176 million for its team in 2010.
0:07:53 It’s now worth $1.5 million.
0:07:57 The Phoenix Suns and Chelsea FC were recently purchased
0:08:02 for $4 billion and $5.3 billion, respectively.
0:08:07 So, media, tech, increasing value, and why Clefjean?
0:08:11 Everybody’s happy, right?
0:08:12 Sort of.
0:08:16 The mood in Vegas this year is subdued,
0:08:18 a bit chastened even.
0:08:22 For starters, the business face of all this success,
0:08:24 Mafe, is out.
0:08:27 His contract expires at the end of this year
0:08:29 and Liberty announced he’ll be leaving
0:08:34 to be replaced temporarily by Chairman John Malone.
0:08:36 Malone is brighter than me,
0:08:39 but that won’t stop me from making the following assertion.
0:08:44 He retired/fired the wrong guy.
0:08:47 Mafe has doubled Liberty’s shareholder value
0:08:50 in the past 12 months and received comp,
0:08:54 averaging $25 million per year.
0:08:59 David Zaslov has been paid an average of $115 million
0:09:02 for the last three years to destroy
0:09:05 two-thirds of Warner Brothers Discovery’s shareholder value.
0:09:09 Mafe says he’s ready for something new.
0:09:11 Liberty thanked him and said 2024
0:09:15 made a fitting capstone to his brilliant tenure.
0:09:17 Who knows what really happened?
0:09:20 Liberty is also restructuring assets with spin-offs
0:09:22 to tell a cleaner story.
0:09:24 Maybe Mafe didn’t want to drive a smaller car
0:09:25 or didn’t want to deal with
0:09:29 the Department of Justice’s antitrust investigation.
0:09:32 It’s looking into F1’s rejection of a proposed new team
0:09:35 from retired driver Michael Andretti.
0:09:39 Maybe a sale of F1 is looming, Liberty says it’s not.
0:09:41 Or none or all of the above.
0:09:42 Whatever the reason,
0:09:46 Mafe leaves a sport that, while still thriving,
0:09:48 is at an inflection point.
0:09:52 Last year’s much-hyped Vegas Grand Prix
0:09:54 was something of a shit show.
0:09:57 Race fans complained that prices were crazy
0:09:59 and getting around the event was difficult.
0:10:02 Drivers complained about the track.
0:10:04 Casinos, bars, and restaurants
0:10:05 complained about disruption.
0:10:10 US Grand Prix sites, with a few exceptions,
0:10:11 don’t have the infrastructure
0:10:15 that European and South American sites do.
0:10:18 Courses, grandstands, and other structures
0:10:21 tend to be ad hoc affairs.
0:10:23 Fans watching at home have complained
0:10:27 about glitchy streams on ESPN+ and other services.
0:10:31 Meanwhile, F1 still hasn’t completely shaken the funk
0:10:34 of last season’s uncompetitive races,
0:10:37 which wafted into 2024.
0:10:40 Max Verstappen won so many,
0:10:43 seven of the first 10 this year,
0:10:45 that a lot of bored fans tapped out,
0:10:48 and TV viewership and social media engagement
0:10:50 have sagged.
0:10:52 It all feels very 1990,
0:10:55 when Pete Sampras was so dominant and boring
0:10:58 that people felt he’d ruined tennis.
0:11:02 Seasoned race fans point out that periods of dominance
0:11:06 by a hot driver have always been part of the sport.
0:11:08 Think Michael Schumacher.
0:11:10 And it was just a matter of time
0:11:13 until the other teams figured out how to take him on,
0:11:16 which seems to have happened recently.
0:11:19 While Verstappen is a locked-to-win driver of the year
0:11:21 for a fourth time,
0:11:24 competition for the team championship
0:11:26 has gotten much livelier.
0:11:30 The downturn, though, highlights two weaknesses.
0:11:33 While F1’s marketing has been brilliant,
0:11:36 it has had trouble providing, one,
0:11:39 a consistently great product like high excitement,
0:11:42 competitive races, and two,
0:11:46 a consistently great experience at an affordable price
0:11:49 for fans who aren’t wealthy.
0:11:53 F1 must balance its luxe, aspirational vibe
0:11:57 with a simple fact, most auto racing fans are not rich.
0:12:02 A fan on a budget would have to spend at least $2,200
0:12:05 for a Bare Bones Vegas Grand Prix weekend.
0:12:07 Given last year’s fiasco,
0:12:09 it’s not surprising that hotel prices
0:12:11 are way off this year.
0:12:14 The hardest things in business
0:12:17 are pricing and compensation.
0:12:19 F1 blew the pricing.
0:12:24 Wimbledon’s center court has a capacity of 15,000
0:12:27 and seats there average $200.
0:12:32 The seating capacity at F1 Vegas last year was 100,000
0:12:37 and grandstand tickets were $2,500.
0:12:40 It may have set a record for the worst demand
0:12:42 slash elasticity forecasting
0:12:45 of any event its size in history.
0:12:49 I am not, as I said, into racing,
0:12:51 so I don’t know what kind of rule
0:12:54 or organizational changes F1 needs
0:12:56 to make it harder for another Verstappen
0:12:58 to dominate and kill viewership.
0:13:02 A secret to the NFL success is a draft system
0:13:06 that helps keep all teams somewhat competitive.
0:13:11 In the last five years, 94% of NFL teams
0:13:13 have appeared in the playoffs.
0:13:17 Similarly, in an attempt to maintain some level of parity,
0:13:21 F1 has implemented spending caps.
0:13:25 Also, F1 would be well-served to do more
0:13:27 to foster young U.S. talent
0:13:29 and produce a homegrown superstar.
0:13:32 At this year’s Brazil Grand Prix,
0:13:33 half of Argentina showed up
0:13:37 to watch Argentine driver Franco Colapinto.
0:13:38 American fans need someone
0:13:40 they can get that excited about.
0:13:44 Netflix could keep applying the drive
0:13:47 to survive formula to new sports,
0:13:50 going to teams and saying, pay us $100 million
0:13:52 and we’ll do two seasons of what it means
0:13:55 to play for the Boston Red Sox.
0:13:58 Or take a league in a second or third tier pro sport,
0:14:01 say pickleball or lacrosse,
0:14:03 to the next level at a lower price point.
0:14:06 Magazine publishers do this.
0:14:10 Their most profitable businesses are custom jobs,
0:14:13 like that Four Seasons magazine in your hotel room.
0:14:17 What is definitely going to happen though,
0:14:21 is that sports teams are going to keep increasing in value,
0:14:25 even though they’re shitty businesses in terms of cash flow.
0:14:28 Most of them will lose money every year.
0:14:32 Then in a few years, they’ll sell at extraordinary multiples
0:14:35 to the next generation of men in their 60s,
0:14:38 still trying to impress their dads.
0:14:44 However well or badly F1 handles the bumps it’s hitting now,
0:14:46 what it has done with Netflix
0:14:50 may become the default sports media model.
0:14:52 You’re going to start to see media businesses,
0:14:56 celebrities and streaming companies come together
0:14:59 to build sports entertainment enterprises.
0:15:04 Imagine Tom Cruise and Disney not buying the Anaheim Ducks,
0:15:06 but an entire league.
0:15:09 There’s something more here.
0:15:15 One in seven men can’t name a single friend,
0:15:19 and one in four can’t name a best friend.
0:15:25 The Premier League, the NFL and F1 give men license
0:15:30 to bond and express emotions in a safe place.
0:15:32 In addition, these events happen
0:15:35 in the most wonderful venues ever constructed,
0:15:38 not on a fucking screen.
0:15:42 We are a social and emotional species,
0:15:46 and being part of a collective watching people with speed,
0:15:50 strength and alien-like instincts compete,
0:15:51 puts us in the moment.
0:15:55 I’ll be at F1 this weekend,
0:15:58 and for a few moments, I’ll be in that moment.
0:16:02 Pardoned from the past where my anger and depression
0:16:04 won’t let me forgive myself,
0:16:06 and distracted from the future
0:16:09 where I’m focused on garnering more relevance and money,
0:16:13 I’ll be there, watching the collision of men,
0:16:16 machines, technology and culture.
0:16:22 But more than anything, I’ll just be there.
0:16:26 Life is so rich.
0:16:41 Support for this episode comes from AWS.
0:16:44 AWS Generative AI gives you the tools
0:16:46 to power your business forward
0:16:47 with the security and speed
0:16:49 of the world’s most experienced cloud.
0:16:56 Autograph Collection Hotels offer
0:16:59 over 300 independent hotels around the world,
0:17:02 each exactly like nothing else.
0:17:04 Hand-selected for their inherent craft,
0:17:06 each hotel tells its own unique story
0:17:09 through distinctive design and immersive experiences
0:17:13 from medieval falconry to volcanic wine tasting.
0:17:16 Autograph Collection is part of the Marriott Bonvoy Portfolio
0:17:20 of over 30 hotel brands around the world.
0:17:23 Find the unforgettable at AutographCollection.com.
0:17:25 (upbeat music)
0:00:04 Support for this show comes from Constant Contact.
0:00:07 If you struggle just to get your customers to notice you,
0:00:10 Constant Contact has what you need to grab their attention.
0:00:14 Constant Contact’s award-winning marketing platform
0:00:17 offers all the automation, integration, and reporting tools
0:00:20 that get your marketing running seamlessly,
0:00:23 all backed by their expert live customer support.
0:00:25 It’s time to get going and growing
0:00:28 with Constant Contact today.
0:00:30 Ready, set, grow.
0:00:34 Go to ConstantContact.ca and start your free trial today.
0:00:39 Go to ConstantContact.ca for your free trial,
0:00:41 ConstantContact.ca.
0:00:47 Support for this episode comes from AWS.
0:00:49 AWS Generative AI gives you the tools
0:00:51 to power your business forward
0:00:52 with the security and speed
0:00:55 of the world’s most experienced cloud.
0:00:58 For over 30 years,
0:01:00 XPRIZE has been the global leader
0:01:02 in designing and executing large-scale
0:01:04 incentivized competitions.
0:01:06 And through these competitions,
0:01:07 they’ve accelerated solutions
0:01:10 to some of the world’s greatest challenges,
0:01:13 such as climate change, water scarcity, and healthy aging,
0:01:15 just to name a few.
0:01:18 XPRIZE is a catalyst for radical breakthroughs
0:01:20 that have impacted the lives of millions,
0:01:22 and they’re just getting started.
0:01:24 Through the power of incentivized competition,
0:01:27 XPRIZE can drive scientific discovery,
0:01:30 cutting-edge innovation, and groundbreaking solutions.
0:01:33 The future is still ours to create.
0:01:37 Head to XPRIZE.org to learn how you could help architect
0:01:39 a future of equitable abundance.
0:01:47 I’m Scott Galloway, and this is No Mercy, No Malice.
0:01:51 Formula One may be the future of sports and media,
0:01:54 but it’s not without some speed bumps.
0:01:59 F1 is at an inflection point, as read by George Hahn.
0:02:07 Just as my obsession with relevance
0:02:10 and economic security have often crowded out
0:02:13 what’s really important, relationships,
0:02:16 I’ve let my preoccupation with the election results
0:02:19 crowd out the blessings in my life.
0:02:21 God, I’m so fucking sick of politics.
0:02:26 So let’s talk about cars, fast cars.
0:02:29 I’m in Vegas for Formula One.
0:02:33 Actually, the truth is I’m not here for the race.
0:02:36 It’s more a desperate attempt to avoid the inevitable melt
0:02:39 into irrelevance, which I believe can be arrested
0:02:40 by extending my adolescence.
0:02:43 Also, I love Vegas.
0:02:45 The last race I went to was the inaugural
0:02:48 Miami Grand Prix in 2022.
0:02:52 It was a great time, despite F1 races being boring.
0:02:54 Here he comes, there he goes,
0:02:58 and so on, and so on, and so on.
0:03:02 The real fun is found far from the track.
0:03:05 The vibe is money, tech, and glamour,
0:03:07 a Super Bowl for the super rich.
0:03:12 If NASCAR is Android, F1 is iOS.
0:03:16 In Miami, I went to a dinner party on the beach
0:03:19 hosted by Carbone, a fabulous restaurant
0:03:24 right in the middle of a COVID flare-up, Fab U. Luss.
0:03:29 Wyclef Jean played to 700 people crowded into a hot tent
0:03:31 with no ventilation.
0:03:32 I had two thoughts.
0:03:36 I’m getting COVID tonight and it’s worth it.
0:03:37 I was right on both counts.
0:03:42 F1 has long had large and rabid fan bases
0:03:44 in Europe and South America,
0:03:49 but that enthusiasm didn’t land on U.S. shores until 2017
0:03:52 when Liberty Media bought a controlling interest
0:03:54 in the league.
0:03:59 Under new boss Greg Mafay, F1 took a big swing at America.
0:04:03 Targeting young people, Mafay and the F1 team
0:04:07 built an iconic brand in the most competitive market
0:04:09 in less than a decade.
0:04:12 There were races with celebrities in attendance,
0:04:15 Tom Cruise, LeBron James, Rihanna,
0:04:19 new sponsorships, and an aggressive social media presence.
0:04:22 However, Liberty’s gangster move
0:04:27 was the Netflix docu-series Drive to Survive.
0:04:30 Now in its sixth season,
0:04:31 the show is rewriting the playbook
0:04:35 regarding how sports leagues market themselves.
0:04:38 It’s a behind-the-scenes look at a lot of young,
0:04:42 good-looking guys, as Mafay once told CNBC,
0:04:45 hard-charging billionaire team owners
0:04:48 and high-tech pit crews competing in a series
0:04:51 of UberLux international locations.
0:04:54 F1 wasn’t the first to try this.
0:04:58 The NFL’s Hard Knocks premiered on HBO back in 2001.
0:05:01 By focusing on individuals
0:05:03 and harnessing the power of storytelling,
0:05:08 Drive to Survive used streaming to introduce U.S. viewers
0:05:11 to drivers who were superstars overseas.
0:05:15 Among them, Lewis Hamilton and Max Verstappen.
0:05:19 It gave newbie, Reed, American fans,
0:05:20 a compelling point of entry
0:05:23 and became a fount of bingeable video
0:05:27 that was easily shared, particularly on Instagram.
0:05:30 There are accounts devoted to what Hamilton wears
0:05:32 as he walks on red carpets.
0:05:36 Tribal rivalries, betrayal, greed, revenge,
0:05:39 all the stuff humans are hardwired to love
0:05:42 in a lustrous package every week.
0:05:46 Champions muse about having a target on my back.
0:05:50 Young guns talk about being hungry.
0:05:53 Everybody obsesses about forces beyond their control.
0:05:56 Shakespeare knew this turf pretty well.
0:05:59 Marcus Aurelius would have felt at home.
0:06:01 The song remains the same.
0:06:05 The actual game being played is unimportant.
0:06:06 The results?
0:06:11 Liberty paid $4.6 billion for F1.
0:06:15 It now has a market cap of about $22 billion.
0:06:21 In 2023, F1 generated about $3.2 billion in revenue,
0:06:25 up from 2.6 the year before.
0:06:28 Most of it from promotional deals with host cities,
0:06:31 media rights and team sponsorships.
0:06:35 TV viewership has doubled since Liberty took over,
0:06:37 though the U.S. audience pales
0:06:40 besides those of the NFL and other big team sports,
0:06:43 and it’s only a third of NASCARs.
0:06:47 In 2022, F1 signed a three-year deal with the SPN,
0:06:51 up for renewal next year, worth $270 million.
0:06:55 American TV viewership of this year’s Miami Grand Prix
0:07:00 was 3.1 million, the largest ever for a U.S. race.
0:07:04 Meanwhile, between 2017 and 2021,
0:07:09 the average age of an F1 fan dropped from 36 to 32.
0:07:15 About 40% of fans are now female.
0:07:17 Earlier this year, Liberty announced
0:07:20 it had bought a majority interest in MotoGP,
0:07:24 which is to motorcycle racing what F1 is to autos.
0:07:29 Owning a team, F1 has 10, used to be a money pit
0:07:31 for a brand or a billionaire
0:07:33 in the throes of a mid-life crisis.
0:07:37 Now teams are a legitimate asset class.
0:07:41 Oracle is paying Red Bull $100 million
0:07:43 to put its name on their car.
0:07:48 Mercedes paid $176 million for its team in 2010.
0:07:53 It’s now worth $1.5 million.
0:07:57 The Phoenix Suns and Chelsea FC were recently purchased
0:08:02 for $4 billion and $5.3 billion, respectively.
0:08:07 So, media, tech, increasing value, and why Clefjean?
0:08:11 Everybody’s happy, right?
0:08:12 Sort of.
0:08:16 The mood in Vegas this year is subdued,
0:08:18 a bit chastened even.
0:08:22 For starters, the business face of all this success,
0:08:24 Mafe, is out.
0:08:27 His contract expires at the end of this year
0:08:29 and Liberty announced he’ll be leaving
0:08:34 to be replaced temporarily by Chairman John Malone.
0:08:36 Malone is brighter than me,
0:08:39 but that won’t stop me from making the following assertion.
0:08:44 He retired/fired the wrong guy.
0:08:47 Mafe has doubled Liberty’s shareholder value
0:08:50 in the past 12 months and received comp,
0:08:54 averaging $25 million per year.
0:08:59 David Zaslov has been paid an average of $115 million
0:09:02 for the last three years to destroy
0:09:05 two-thirds of Warner Brothers Discovery’s shareholder value.
0:09:09 Mafe says he’s ready for something new.
0:09:11 Liberty thanked him and said 2024
0:09:15 made a fitting capstone to his brilliant tenure.
0:09:17 Who knows what really happened?
0:09:20 Liberty is also restructuring assets with spin-offs
0:09:22 to tell a cleaner story.
0:09:24 Maybe Mafe didn’t want to drive a smaller car
0:09:25 or didn’t want to deal with
0:09:29 the Department of Justice’s antitrust investigation.
0:09:32 It’s looking into F1’s rejection of a proposed new team
0:09:35 from retired driver Michael Andretti.
0:09:39 Maybe a sale of F1 is looming, Liberty says it’s not.
0:09:41 Or none or all of the above.
0:09:42 Whatever the reason,
0:09:46 Mafe leaves a sport that, while still thriving,
0:09:48 is at an inflection point.
0:09:52 Last year’s much-hyped Vegas Grand Prix
0:09:54 was something of a shit show.
0:09:57 Race fans complained that prices were crazy
0:09:59 and getting around the event was difficult.
0:10:02 Drivers complained about the track.
0:10:04 Casinos, bars, and restaurants
0:10:05 complained about disruption.
0:10:10 US Grand Prix sites, with a few exceptions,
0:10:11 don’t have the infrastructure
0:10:15 that European and South American sites do.
0:10:18 Courses, grandstands, and other structures
0:10:21 tend to be ad hoc affairs.
0:10:23 Fans watching at home have complained
0:10:27 about glitchy streams on ESPN+ and other services.
0:10:31 Meanwhile, F1 still hasn’t completely shaken the funk
0:10:34 of last season’s uncompetitive races,
0:10:37 which wafted into 2024.
0:10:40 Max Verstappen won so many,
0:10:43 seven of the first 10 this year,
0:10:45 that a lot of bored fans tapped out,
0:10:48 and TV viewership and social media engagement
0:10:50 have sagged.
0:10:52 It all feels very 1990,
0:10:55 when Pete Sampras was so dominant and boring
0:10:58 that people felt he’d ruined tennis.
0:11:02 Seasoned race fans point out that periods of dominance
0:11:06 by a hot driver have always been part of the sport.
0:11:08 Think Michael Schumacher.
0:11:10 And it was just a matter of time
0:11:13 until the other teams figured out how to take him on,
0:11:16 which seems to have happened recently.
0:11:19 While Verstappen is a locked-to-win driver of the year
0:11:21 for a fourth time,
0:11:24 competition for the team championship
0:11:26 has gotten much livelier.
0:11:30 The downturn, though, highlights two weaknesses.
0:11:33 While F1’s marketing has been brilliant,
0:11:36 it has had trouble providing, one,
0:11:39 a consistently great product like high excitement,
0:11:42 competitive races, and two,
0:11:46 a consistently great experience at an affordable price
0:11:49 for fans who aren’t wealthy.
0:11:53 F1 must balance its luxe, aspirational vibe
0:11:57 with a simple fact, most auto racing fans are not rich.
0:12:02 A fan on a budget would have to spend at least $2,200
0:12:05 for a Bare Bones Vegas Grand Prix weekend.
0:12:07 Given last year’s fiasco,
0:12:09 it’s not surprising that hotel prices
0:12:11 are way off this year.
0:12:14 The hardest things in business
0:12:17 are pricing and compensation.
0:12:19 F1 blew the pricing.
0:12:24 Wimbledon’s center court has a capacity of 15,000
0:12:27 and seats there average $200.
0:12:32 The seating capacity at F1 Vegas last year was 100,000
0:12:37 and grandstand tickets were $2,500.
0:12:40 It may have set a record for the worst demand
0:12:42 slash elasticity forecasting
0:12:45 of any event its size in history.
0:12:49 I am not, as I said, into racing,
0:12:51 so I don’t know what kind of rule
0:12:54 or organizational changes F1 needs
0:12:56 to make it harder for another Verstappen
0:12:58 to dominate and kill viewership.
0:13:02 A secret to the NFL success is a draft system
0:13:06 that helps keep all teams somewhat competitive.
0:13:11 In the last five years, 94% of NFL teams
0:13:13 have appeared in the playoffs.
0:13:17 Similarly, in an attempt to maintain some level of parity,
0:13:21 F1 has implemented spending caps.
0:13:25 Also, F1 would be well-served to do more
0:13:27 to foster young U.S. talent
0:13:29 and produce a homegrown superstar.
0:13:32 At this year’s Brazil Grand Prix,
0:13:33 half of Argentina showed up
0:13:37 to watch Argentine driver Franco Colapinto.
0:13:38 American fans need someone
0:13:40 they can get that excited about.
0:13:44 Netflix could keep applying the drive
0:13:47 to survive formula to new sports,
0:13:50 going to teams and saying, pay us $100 million
0:13:52 and we’ll do two seasons of what it means
0:13:55 to play for the Boston Red Sox.
0:13:58 Or take a league in a second or third tier pro sport,
0:14:01 say pickleball or lacrosse,
0:14:03 to the next level at a lower price point.
0:14:06 Magazine publishers do this.
0:14:10 Their most profitable businesses are custom jobs,
0:14:13 like that Four Seasons magazine in your hotel room.
0:14:17 What is definitely going to happen though,
0:14:21 is that sports teams are going to keep increasing in value,
0:14:25 even though they’re shitty businesses in terms of cash flow.
0:14:28 Most of them will lose money every year.
0:14:32 Then in a few years, they’ll sell at extraordinary multiples
0:14:35 to the next generation of men in their 60s,
0:14:38 still trying to impress their dads.
0:14:44 However well or badly F1 handles the bumps it’s hitting now,
0:14:46 what it has done with Netflix
0:14:50 may become the default sports media model.
0:14:52 You’re going to start to see media businesses,
0:14:56 celebrities and streaming companies come together
0:14:59 to build sports entertainment enterprises.
0:15:04 Imagine Tom Cruise and Disney not buying the Anaheim Ducks,
0:15:06 but an entire league.
0:15:09 There’s something more here.
0:15:15 One in seven men can’t name a single friend,
0:15:19 and one in four can’t name a best friend.
0:15:25 The Premier League, the NFL and F1 give men license
0:15:30 to bond and express emotions in a safe place.
0:15:32 In addition, these events happen
0:15:35 in the most wonderful venues ever constructed,
0:15:38 not on a fucking screen.
0:15:42 We are a social and emotional species,
0:15:46 and being part of a collective watching people with speed,
0:15:50 strength and alien-like instincts compete,
0:15:51 puts us in the moment.
0:15:55 I’ll be at F1 this weekend,
0:15:58 and for a few moments, I’ll be in that moment.
0:16:02 Pardoned from the past where my anger and depression
0:16:04 won’t let me forgive myself,
0:16:06 and distracted from the future
0:16:09 where I’m focused on garnering more relevance and money,
0:16:13 I’ll be there, watching the collision of men,
0:16:16 machines, technology and culture.
0:16:22 But more than anything, I’ll just be there.
0:16:26 Life is so rich.
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0:17:25 (upbeat music)
As read by George Hahn.
F1 Is at an Inflection Point
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