The Financial Evolution of Formula 1
Formula 1 has undergone a dramatic transformation from a niche motorsport to a global entertainment juggernaut, increasingly seen by private equity firms and institutional investors as a legitimate asset class in its own right.
The sport’s unique mix of glamour, high-performance engineering, multinational sponsorship and media spectacle has made it not only resilient to economic cycles but also highly monetisable across diverse channels. Since Liberty Media acquired Formula 1 in 2017, the sport has evolved from a legacy business reliant on race-day attendance and exclusive broadcasting deals into a digitally fluent, globally scaled, multi-platform brand. That evolution has brought with it a new breed of capital — investors who view F1 not as a passion play but as a strategic opportunity to generate long-term, uncorrelated returns in the intersection of sports, technology and media.
The investment thesis for Formula 1 is built on several interlocking pillars. First, it is one of the rare global sports properties that operates under a centralised commercial model. Unlike fragmented leagues or team-based ownership structures, Formula 1 retains consolidated control of its media rights, sponsorships and brand partnerships, providing investors with a unified, high-margin revenue stream. Second, it operates under a scarcity model: there are currently only ten teams on the grid and a limited number of annual races, making expansion highly controlled and value protective. Third, the sport delivers premium global viewership — a quality audience spanning Europe, Asia, the Middle East and increasingly and importantly the United States — which remains deeply attractive to advertisers, broadcasters and streaming platforms seeking real-time engagement.
Liberty Media’s acquisition of F1 for US$4.4 billion was not simply a change in ownership but a strategic repositioning of the entire product. It brought in professional media operators, rebranded the sport for a younger audience and prioritised fan engagement through social media, streaming content and experiential activations. The launch of the Netflix series “Drive to Survive” became a cultural catalyst, attracting millions of new fans and transforming F1 into a lifestyle and entertainment brand rather than a motorsport niche. This move reshaped F1’s investor appeal: no longer was the value derived solely from legacy fan loyalty or ticket sales, but from a broader and more scalable content and social media ecosystem.
Private equity followed swiftly. CVC Capital Partners had previously owned Formula 1 from 2006 until 2017, extracting substantial value through dividend recapitalisations and rights packaging, but it was Liberty that modernised the sport’s business model. Since then, private capital has begun flowing into the teams themselves. In 2020, MSP Sports Capital, an investment firm focused on sports media and technology, took a significant stake in McLaren Racing. In 2022, Arctos Partners acquired a stake in Aston Martin F1. More recently, RedBird Capital Partners — known for its investments in the New York Yankees and AC Milan — joined with Otro Capital and Maximum Effort Investments in acquiring a stake in Alpine Racing. More recently, there has been increasing speculation that the Saudi Arabian PIF Fund is poised to acquire a significant stake in the Aston Martin F1 racing team. These deals reflect a growing appetite for exposure not only to the central rights-holder but to the team ecosystem, where brand partnerships, fan bases and commercial operations can all be scaled with private capital expertise.
The F1 ecosystem offers several levers for growth. The first is media rights. As traditional broadcasters compete with streaming platforms for premium live content, F1’s global footprint and time-zone-flexible schedule make it a valuable commodity. Its recent broadcast deals, including with ESPN in the US and Sky Sports in the UK, demonstrate that rights fees are rising in line with demand. Second, sponsorship and commercial partnerships remain a significant revenue driver. Luxury brands, fintech and technology companies, including Australia’s Virtual Gaming Worlds (VGW Play) sponsorship of Scuderia Ferrari, continue to pour money into F1 to access its affluent audience. From Rolex and Salesforce to AWS and Lenovo, the F1 paddock is a high-end advertising arena. Teams themselves are able to monetise brand visibility at scale, with the value of primary sponsorships reaching tens of millions of dollars per season.
Third, there is the expansion of race venues. Formula 1 has added new Grands Prix in the Middle East, Asia and the United States, with the Miami and Las Vegas circuits exemplifying the blending of sport, entertainment and hospitality. These events are designed not just as races but as destination festivals — multi-day experiences with concerts, VIP lounges and influencer activations. This format attracts a younger, spend-ready demographic and brings higher returns to promoters and investors alike.
Australia has played a long-standing role in F1’s global presence, firstly with Adelaide in the mid-1980s and now Melbourne Grand Prix among the most popular and commercially successful events on the calendar. The race has become a flagship sporting event in the Australian calendar, contributing to the Victorian economy and reinforcing Australia’s visibility in the global sporting ecosystem. Although no Australian teams currently compete in Formula 1, there is growing interest among Australian investors in global sports assets, with institutional capital increasingly seeking exposure to international franchises. Moreover, rising Australian talent — including Oscar Piastri, currently racing for one of the leading team, McLaren — is driving renewed national attention to the sport and enhancing its long-term domestic commercial potential.
What makes Formula 1 particularly attractive to private equity is the operational leverage embedded in its transformation. Teams are no longer simply racing outfits but full-spectrum businesses that manage merchandising, digital content, esports ventures and automotive R&D partnerships. With spending caps introduced in recent years, profitability has become more achievable, reducing the historical reliance on billionaire backers. Teams now have more predictable cost structures and can scale revenue without proportional increases in expenditure — a key consideration for financial investors focused on margin improvement and exit pathways.
The risks are not insignificant. F1 remains a high-cost, high-visibility business and any missteps in governance, regulation, safety, or equity between teams can impact the sport’s brand integrity. Environmental criticism also poses a reputational risk, though the FIA and Liberty have committed to net-zero carbon targets by 2030 and have introduced sustainable fuel initiatives. Additionally, like many global sports, Formula 1 is exposed to geopolitical instability, as race cancellations or controversies in host countries or involving other participants can disrupt schedules and sponsor sentiment. The complexity of governance — including FIA regulatory oversight, Concorde Agreements and commercial contracts — also requires specialist knowledge and patient capital.
Still, private equity firms are increasingly well-equipped to manage these nuances. Many bring not only capital but also deep operational capabilities in media, marketing and technology — all critical to unlocking the full value of a modern sports property. F1 offers them a premium brand with built-in scarcity, global reach and expanding monetisation opportunities, from OTT platforms to digital collectibles and fan tokens. The fact that some of the world’s most sophisticated investors are taking equity positions in F1 teams or forming funds focused on motorsport underscores how seriously this asset class is now being taken.
As more institutional capital enters the space, we may see the emergence of dedicated sports investment funds with a focus on motorsport. These vehicles would offer investors diversified exposure to teams, circuits, hospitality ventures and even emerging categories such as Formula E or F1 Academy — the latter aimed at developing female drivers and diversifying the sport’s talent pipeline. For Australian investors and institutions, co-investment in global sports funds, or direct exposure via infrastructure and media partnerships, may offer an indirect but lucrative pathway into this dynamic and high-octane asset class.
Formula 1 is no longer just about winning races — it’s about winning market share in the global competition for fan attention, media value and experiential engagement. The fusion of speed, spectacle and smart capital has redefined what the sport represents. For private equity, it is a rare combination of glamour and discipline, scarcity and scalability. And for those with the foresight to invest at the intersection of culture, commerce and competition, Formula 1 offers a fast track to long-term value.
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