F1 Finds Las Vegas a Gateway to Global Sponsor Deals

Brendan Coffey

Sat, Nov 23, 2024, 6:00 AM 4 min read

UPDATE: Max Verstappen won his fourth straight championship Saturday night at the Las Vegas Grand Prix as he finished fifth, ahead of title rival Lando Norris. Mercedes driver Mercedes driver George Russell won the 50-lap race after qualifying in the pole position, ahead of Mercedes teammate Lewis Hamilton in second place and Ferrari’s Carlos Sainz in third.

The second edition of Formula 1’s Las Vegas Grand Prix Saturday night is proving parent Liberty Media’s bet that the addition of the race would elevate the whole circuit’s business.

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“Las Vegas really did help to elevate their visibility, because it’s quite the spectacle, putting it on at nighttime,” Seaport Research Partners analyst David Joyce said on a phone call. “Really right time, right place—Las Vegas has had one success after another bringing new teams into town and the Sphere, so a lot of elements came together.”

Las Vegas is singular for Liberty Media for more than just its glitzy location: It’s the one race Liberty wholly owns all aspects of—other grand prix have some portion licensed out to local partners who partake in both putting on the race and splitting the revenue. The sole ownership of Las Vegas allows Liberty to use the event as a testing ground for ways to grow the business.

That’s especially true in sponsorship. When Liberty Media closed on its $4.6 billion acquisition of Formula 1 in early 2017, the league had just one full-time and two part-time employees working on a sponsorship arm that counted 14 sponsors worldwide. By comparison, at that time MLB had 80 people working on sponsorship and counted 75 corporate partners just in the U.S. Expanding sponsorships was a key goal of Liberty when it acquired F1, and it appears Las Vegas is unlocking the business.

“What happened in Vegas didn’t actually stay there,” outgoing CEO Greg Maffei said at Liberty’s investor day last week. “We’ve talked a lot about the broader value that Vegas has brought to F1, but that thesis has absolutely been playing out.”

At least three limited sponsors of last year’s inaugural Vegas race have expanded to global sponsorship deals, Maffei said. Last year American Express was a presenting partner, offering presale tickets to cardholders and the like, and it has now signed on to be a global official sponsor starting in 2025. Similarly, LVMH signed on last year to promote a few drink brands like its Volcan Tequila during Las Vegas events. The LVMH executive in charge of Volcan saw enough value in the association that he helped set up talks between Liberty and the French leadership of the luxury conglomerate. Starting with the new year, LVMH will be F1’s largest global partner, according to Maffei.

The Grand Prix hasn’t just been about bringing global brands to Vegas, but also getting Vegas out into the world. Wynn Resorts was the hospitality partner for last year’s race, offering ultra-luxurious Paddock Club experiences called the Wynn Grid Club package for $1 million. The Wynn Grid Club will be rolled out to other race cities Abu Dhabi, Monaco and Shanghai starting next year.

The growth in sponsorship is important for Liberty, because it lags other revenue streams. From a 2019 baseline through September this year, sponsorship revenue has more than doubled to $632 million. But that is still behind the billion-dollar-plus revenue from both media rights, up 42% from 2019, and race promotion (the various fees Liberty collects to run races in cities), which is up 61%.

“Sponsorship is sizable for them, but it’s still not the main revenue generator. It is generally thought of as a high-margin revenue stream, so that is one of the main areas where investors are looking for growth,” Joyce said.

Still, Las Vegas doesn’t deserve all the credit. Liberty made strides in drawing more and younger fans when it stopped treating F1 like a closed garden, content-wise, and pushed for a sizable social media presence that has quintupled followers on various platforms to 89 million the past five years. Being multi-channel with content helped too: Netflix’s Drive to Survive behind-the-scenes series has been watched in some portion by a third of Netflix’ 85 million North American subscriber base. Coming to theaters next summer: a Brad Pitt, Jerry Bruckheimer F1 movie. Liberty also helped itself by expanding the race schedule from 21 in 2016 to 24 this year (Las Vegas is the 22^nd race of the F1 season). Attendance is up roughly 50% under Liberty’s ownership to an expected 6 million fans this year.

Expectations for fan attendance at Saturday’s race have been muted—historically across racing there is a dip in a race’s second year—but Maffei said Liberty expects the fan experience information it gleans over 2023’s edition and this year’s Grand Prix will enable it to roll more innovations out worldwide.

“There’s been a lot of under-monetization of Formula 1, the brand,” Joyce said. “Now Liberty Media and Formula 1 have a lot of learnings last year from putting on their own race. They know more about how to activate with sponsorships and be thinking outside the box constantly to have new way to monetize fans in attendance. These learnings can be applied to races throughout the world. [Las Vegas] is a springboard.”

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