Under the Bernie Ecclestone regime, TV rights and race hosting fees were F1’s primary sources of revenue; but FWONA, under Liberty Media, has focused on expanding its appeal to maximize revenue-generating sponsorship opportunities. Efforts to draw in the female fan (men are currently 50% more likely to watch F1 than women) and the launch of an esports program, are designed to build on already attractive fan demographics. 83% of F1 fans shop online each month, 50% buy products from brands they see marketed during the race, the average F1 fans spends 2 hours/day on the internet and 43% of all internet users are F1 fans. FWONA recognizes it’s going to take time for brands to overcome “their perception of what F1 is”, but, for those who consider the opportunity; they’ll find the company has combined a fan centric approach with a “yes, why not?” attitude. The result has been a series of unique experiential activities at the track (i.e. Heineken pool party at the Monza Grand Prix) and an “authentic integration” of sponsors into the sport.
Howie Long-Short: Liberty Media Corporation, controlled by Chairman John Malone, is comprised of assets including the F1 racing circuit (FWONA, FWONK), satellite radio provider SiriusXM (LSXMA, LSXMB, LSXMK) and the Atlanta Braves (BATRA, BATRK). The company reported Q3 earnings increased 37% YOY (to $168 million). Liberty Sirius XM (+$183 million) and Liberty Braves (+$22 million) drove the growth, while the Formula One Group lost $37 million.
Fan Marino: FWONA has announced plans to revamp how merchandise is sold at the racetrack; creating a “superstore tent”, operated by Fanatics, as opposed to individual team tents. F1 Commercial Chief Sean Bratches has said “all race supporters support the plan”, but that isn’t the case with all teams; Ferrari, which has sold more merchandise than any other F1 team in history, believes it will “lose revenue with the new structure”. They believe impatient fans won’t want the trouble of seeking out the product they wish to purchase. They may be right, NASCAR attempted a similar model in ’15; it was rejected by fans (i.e. sales were down) and the racing series returned to the old scheme for the ’17 season. Red Bull and Mercedes are on board with Bratches plan.
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