Liberty’s $4bn MotoGP Takeover is a Savvy Two-Wheel Mobility Play

Liberty’s $4bn MotoGP Takeover is a Savvy Two-Wheel Mobility Play

Liberty Media Corporation recently took over MotoGP in a deal with an enterprise value of $4.53 billion. 

Most investors/stakeholders recognize the large leap forward Formula One took under Liberty control, both commercially and in terms of promotion, and are hopeful Greg Maffei & Co. can replicate the playbook and achieve similar success with the motorcycle racing series. 

“MotoGP is an asset that looks like Formula One, smells like Formula One, and like Formula One prior to Liberty’s involvement, does not yet have full capacity of global manufacturers and needs to gain additional exposure to the United States customer base,” Chris Lencheski (chairman and CEO, Phoenicia Sport and Entertainment) said. “It’s an easy bolt on.”

Far fewer see the deal in the context of being a savvy two-wheel mobility play that broadens the top of Liberty’s sales funnel and puts the company in a position to ‘own’ performance motorsports globally. Remember, there are far more potential buyers of two-wheel vehicles around the world than there are of the four-wheel variety.

“From a global perspective, where automotive and motorcycle performance as entertainment is a fast growing sector, Liberty will now have an ability to control the two largest [circuits]; Formula One, and MotoGP, and with that, they should have unfettered access as a single source provider of this kind of entertainment to major [sponsors and] manufacturers (and the PE that own some),” Lencheski said.

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Liberty Media acquired 86% of Dorna Sports. It purchased the interests previously owned by Bridgepoint Group (40%) and the Canada Pension Plan Investment Board (39%). The balance of the equity obtained came from Dorna Management, which will retain the other 14%.

Dorna holds the exclusive commercial and media rights to MotoGP. It also controls the rights to the sport’s development series’ (Moto2 and Moto3), the MotoE World Championship, the Superbike World Championship, and the new Women’s Circuit Racing World Championship.

That reality enables it to dictate the sport’s on-track and back gate opportunities (think: manufacturers who pay to be on the track and for all the activation/event promotion), and to maximize revenues in the process. 

While Dorna will remain an independent company (its financials will be attributed to Formula One’s tracking stock), the investment places Liberty in the proverbial driver’s seat of two-wheel and four-wheel performance racing moving forward; and by proxy performance vehicle sales.

“The customer who lives that MotoGP lifestyle, the same way someone lives a Formula One lifestyle, they're going to [buy] bikes that are racing,” Lencheski said. “The race on Sunday sell on Monday model is still very real–especially in MotoGP.”

And the bet is now that Liberty has backstopped MotoGP’s future and alleviated any growth capital concerns that existed it will be able to expand the grid. Manufacturers value stability. 

Of course, those OEMs pay to participate in the sport.

“MotoGP should be in a position to attract manufacturers who have heretofore stood behind [the excuse that] there was a bit too much European political and competitive influence,” Lencheski said.

That list could include Suzuki, BMW, Kawasaki, and Triumph. 

MotoGP will be immediately accretive to Formula One’s bottom line (i.e. without any additional OEMs or teams). Liberty will then look to apply the playbook used to propel F1 to accelerate the motorcycle racing series’ growth further (think: sponsorships, international expansion, fan experience, media rights). 

Controlling the premier two- and four-wheel performance motorsports series should open doors to new sponsorship verticals and global partnership opportunities, and create some additional optionality within those that already exist.

“It’s like having an NBA team and then adding a hockey team in the same market, one that may sometimes play in the same venue,” Lencheski said. “If a brand wants two wheels or four wheels, Liberty is now the solution provider to reach that consumer on a global basis.” 

There should also be opportunities for Liberty to broaden MotoGP’s reach and appeal. The bulk of its current 21-race slate takes place in Europe (there are a few stops in Asia and the Middle East). 

“There’s [just] one U.S. race, there’s not a lot of U.S. sponsorship, and the media rights money [domestically] is basically nothing,” Curry Baker (director, media and entertainment equity research, Guggenheim Partners) said.

That can change though, if Liberty invests in the market. So, expect MotoGP to add or move another race (or races) to North America.

Having an increased presence in the U.S. won’t change the financial realities of the sport overnight. 

“The upside is probably more medium to long-term,” Baker said.

In fact, constructing tracks to accommodate more races stateside would come with some additional costs.

However, adding or moving races to select Middle Eastern or Asian markets might.

Liberty “could do a [lucrative promotor] deal with [a country in the gulf] in exchange for bringing a race there,” Baker said.

For context, the average circuit stop pays MotoGP somewhere between $5mm and $9mm to host an event (some pay a lot more or less). 

VIP hospitality is another area where Liberty should be able to quickly make headway.

“They’re just more sophisticated [than the previous ownership group], and have assets with inherent synergies, like Quint, that they can leverage,” Baker said.

If successful in developing and engaging fans in new or emerging markets, media rights revenue should follow. 

Liberty “can step in and within 36 months reset the [sport’s] global media drop,” Lencheski said.

At first glance, the valuation attributed to Dorna may appear rich. But 23.5x ’23 EBITDA is in-line with what F1 trades at (so it’s not dilutive), and Liberty wasn’t the only buyer interested at that price. It has been reported that Bridgepoint rejected a higher bid from TKO.

MotoGP also has a better business model than F1. Its payments to the teams are fixed and less significant, there’s low CAPEX intensity, and from a team perspective, they’re a lot less expensive to run.

“The operating leverage, if [Liberty is] successful in executing, is just a lot higher in terms of the upside,” Baker said. 

FWIW, Guggenheim Partners pegged the EV at 18x ’25 EBITDA estimates.

That’s not to say the takeover is without risk. 

There is going to be a culture change within the sport with Liberty in control that is certain to upset some of the core fan base, and two-wheel supercross (a different form of mobility) threatens to pull from a segment of the target audience. 

Perhaps the biggest risk is that Liberty may have invested under a faulty premise. It’s not certain the company will be able to turn MotoGP into a valuable global sales asset the same way it did with F1. 

“Racing series’, Formula One included, operate with individual profit maximizers; the teams,” Lencheski said. “The bike owners in MotoGP are generally working against each other. That’s different than owning 1/32^nd of a big four league and being partners with your competitors. Each of the race teams has shown historically that they will attempt to undercut the series to benefit themselves.”

But Curry doesn’t envision that dynamic standing in the way of Liberty’s planned execution. 

As long as it “can move the needle in terms of engagement, fan base, and all of that globally in certain areas, like it has with Formula One, [MotoGP will] become pretty meaningful in terms of media rights, sponsorship, promotion fees and everything else down the road,” he said.

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