It might not have been a perfectly smooth weekend, but the Miami Grand Prix was a huge success for Formula 1.
The crowds came, the place was thronged with more A-listers than we’ve ever seen at one event, and in the end it produced a decent race, helped by a late safety car that livened things up.
It was another important step in the sport’s bid to have a stronger presence in the USA in the wake of the huge success of Netflix’s Drive to Survive series.
“The verdict is a thumbs-up,” F1 CEO Stefano Domenicali told Autosport after the flag. “I think generally speaking it’s amazing, what we are living, and the success.
“You see all the people that were here? Honestly, I’ve never seen so many requests. Everyone wanted to be here. From the big perspective it has been amazing. Nine months ago there was nothing here.
“We will have as always a good debrief to see the details of the things, but that’s part of the normal process. But they did an incredible job. Everyone was talking already, when will we have Las Vegas? One more year!”
The success of the Miami race was especially sweet for F1 because it came just a few weeks after the announcement of the Las Vegas event, to be held for the first time in November 2023. Indeed many key players from Nevada who are supporting the project were present as guests in Miami, seeing F1 up close for themselves.
The race around the Hard Rock Stadium was a new departure for F1, as its promotion was a joint venture with Stephen Ross and the Miami Dolphins, or more specifically South Florida Motorsports, the organisation set up to actually run it.
Las Vegas will be another step. The city and the casinos that line the track are on board as partners, but its promotion is the responsibility of F1 itself, in conjunction with Liberty subsidiary Live Nation. F1 has in turn set up a standalone company to actually run the Vegas event, and some staff have already been transferred across.
Las Vegas track action
Photo by: Liberty Media
The Vegas plans looked great on paper when announced, but one question remained. F1 had pulled off a coup by getting all the agreements and permissions to use the city streets and run past the front yards of the major casinos. But where was the massive infrastructure associated with the pit and paddock, and which takes weeks to set up in places like Monaco and Baku, going to go? Was the city really going to put up with the disruption caused by its construction each year?
Teams had even heard whispers of the paddock being a mile away from the track, and that we would have basic pits without proper garages, with the cars prepared 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 bought a plot of land in central Las Vegas adjacent to the track on which to build a permanent pit and race control facility.
He also conceded that the event will require considerable investment in both capital and ongoing operating expenditure.
“Notably and differently than most places, F1 and Liberty Media are self-promoting the race in partnership with local stakeholders and Live Nation,” he explained.
“The build out for this track will require increased CapEx and OpEx to develop.
“I would note that Liberty Media did enter an agreement to acquire 39 acres east of the strip to lock in circuit design and create capacity for the pit and paddock, among other hospitality and race support venues.
“I expect that transaction will close in the second quarter, and the purchase price was $240 million, which will be funded by cash on hand at the F1 group level.
“And that’ll be the site of the pit and paddock, and some other hospitality.”
It’s an unprecedented investment by Liberty and F1, and also an inspired one. Finding the space for a temporary pit/paddock complex, and renting it every year in perpetuity, was going to be an expensive exercise. There would also be no guarantee that the owners wouldn’t one day sell or even build on the land, leaving F1 with nowhere to put its pitlane.
As noted earlier, there would be weeks of disruption while it was built up and taken down every year. The temporary buildings would also either have to be rented or more likely bought and stored between events – at considerable expense – somewhere in the Vegas area, which is how Monaco and Baku do it.
Instead F1 is now in charge of its own destiny. It will have the benefit of a permanent pit facility like those in Singapore and Miami (where the garages will henceforth serve as shops and food outlets for football games), and will have a year-round footprint in the city.
For the 360 or so days a year either side of the race weekend the possible uses for the site are endless – it can be an events space that generates income, while an F1 memorabilia shop that serves as a focus for the race is an obvious option. And why not an F1 themed café and hotel as well? All options are on the table.
“We will be very specific very soon,” Domenicali told this writer. “But you understand that is a place where F1 will put a flagship and there will be other activity organised with our structure.
“It shows the commitment of Liberty for F1. And that’s very important for the sport, you see what is behind this, the total thrust of what we’re doing, and even more, because we do believe that this sport can really grow even further.”
Las Vegas 2023
Photo by: Liberty Media
Even that 39 acres isn’t enough to house everything that an F1 paddock requires, and there will be a secondary plot some distance from the track that will house the customs area and all the flight cases and some other elements, and thus there will be some commuting between the two sites.
The land purchase is a fascinating development, and it brings into focus just why F1 and Liberty are taking on the Vegas promoter role seemingly full of confidence.
“I think our decision to promote Vegas in conjunction with Live Nation and local partners is driven by a couple of things,” said Maffei.
“One is proximity, it’s fairly easy relative to being in Denver [Liberty’s HQ] to get to Vegas for us to do the work. And we have some knowledge of the local US market relative to many other markets.
“But I think more importantly, we see the opportunity to be a promoter as a way to expand our understanding of the business, understand how to be the best F1 product on the track for other promoters as well, to look at an opportunity to grow our knowledge and our understanding, and potentially promote other races down the road.
“And lastly, I think Vegas is going to be large and unique, perhaps unique, opportunity. So from a financial perspective, we think this one sets up pretty well to be worth the time extra focus to become the promoter.”
The showbiz buzz around Miami might not have gone down well with all traditional F1 fans, but it’s the way that the sport is going, boosted by Drive to Survive. We can expect Vegas to be another step again.
“I would say that Vegas has always been a place where we do believe that the association between the values of F1 and the glamour and the attractiveness, the possibilities to be in that community, is crucial,” said Domenicali.
“And I think that it is a great win to win business also for the ones that are investing there, but for sure our knowledge of the business and our opportunity to explore with our Live Nation partner.
“I think it’s the best [arrangement] in order to make sure that next year in November, we’re going to have the race, that event will be spectacular, that will be unique. As I would say, we can feel here in Miami already.”
Vegas is a huge bet for Liberty and F1, but if Miami is anything to go by, the right numbers should come up.
Where the money comes from and where it goes is one intriguing aspect. Is the investment in the Las Vegas event being made by Liberty itself, or specifically under the F1 banner? And what percentage of the revenues will go into the F1 pot, and what might go elsewhere? In other words how does Live Nation fit in?
Where the money goes is significant because it’s from the F1 revenue pot that the 10 teams receive their prize fund income, and it’s obvious that they will require clarity on exactly how it will all work.
“In general, we’re the primary partner, Live Nation from a financial perspective is a secondary partner,” said Maffei.
“They have a role that is very important. 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 be called out separately on our income statements, it won’t be material in that sense. So the lines will generally be folded in promoter fees, and the like, sponsorship, hospitality, etc.”
F1’s revenue is essentially split into key categories. The bulk of it is primary income, comprised of that from race promotion fees, sponsorship and broadcasting, the first two of which will be directly impacted by a race actually run by F1.
Hospitality, which will be a huge element in Vegas just as it was in Miami, is part of “other” revenue.
“We will consolidate,” noted Liberty financial boss Brian Wendling. “So the revenue and CapEx will be on our books, as well as the costs. And also we would expect that we need to ultimately fine tune this once we have the race. But our expectation right now is that you would see the revenues go into their traditional buckets.
“Paddock Club would go into other revenue, and then sponsorship would go where sponsorship currently goes. And then to the extent we’re selling tickets, we would expect that probably goes into our promoter revenues.
“So it’ll look very similar except for the fact that we’re consolidating the costs, and all the revenue, whereas under normal promoter relationship, we just have that fee.”
Las Vegas track map
Photo by: Liberty Media
Traditional promoters, that is everyone except Miami and Vegas, are now watching developments with some interest. They know that they have to raise their games, and put on a better show.
Zandvoort was a landmark in terms of what can be achieved by a private organisation without local or national government backing. And as deals are renewed, venues are all being asked to pay more. Domenicali is happy that there’s been a wake-up call.
“I think that the beauty if I may say that of this moment, is it’s because the new promoters are really putting new energy and new vibes into the system,” he said.
“I think it is something that has a collateral effect on the traditional promoter that needs to keep up the pace, with respect. And we do respect a lot of our promoters because they are the ones that are really working with us to make sure that we have a great ratio around the world.
“But this effect is giving us an incredible boost to make sure that all the system is very active, to maximise what we’re bringing into the platform.”
What will be next for F1 after Vegas? Maffei dropped an intriguing if slightly convoluted hint that the organisation is at least eyeing getting involved in other events.
“I don’t think we’ve announced any plans,” he said. “We’re going to start and see how we do this, hopefully make the success of it that we believe we can make it.
“I would only cautiously say, don’t be so certain that places which are iconic, are places where we will not eventually become a self-promoter. I wouldn’t cast aside that opportunity.”
So Liberty has an eye 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 fees. As joint ventures with F1, or as promotions solely by F1, those races will make more sense for Liberty.
You could suggest that Monaco is also ripe for an arrangement where F1 has a direct involvement given Liberty’s obvious frustration about the mega deal that the principality has, with a nominal fee and control over the TV feed, hospitality and circuit signage and so on that no other venue has.
That special deal has survived for decades on the basis that F1 needs Monaco more than the other way around. Sources are keen to downplay that such a joint venture is on the cards, but it would certainly make sense.
Domenicali concedes that Vegas might not be the last race promoted by F1, although he’s keen to not rock the boat too much.
“What Greg said is never say never,” he noted. “But with this in mind, I would say we are very happy with the promoters that are working with us. They’re very, very loyal, reliable partners, on which we’re going to build up an even stronger future together.”