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Formula 1 stock zooms higher on nascent American fandom

The company is owned by Liberty Media, the conglomerate controlled by John Malone which also has a significant stake in SiriusXM (LSXMA) and the Atlanta Braves (BATRA) baseball team – which has three categories of actions for F1 (FWONA) that track business performance.
Those F1 Stocks (FWONK) have risen nearly 10% this year and around 50% over the past 12 months as more and more fans flock to tracks around the world and watch the races on TV. The follow-up actions (FWONB) don’t give people ownership of the underlying company or a vote at shareholder meetings like common stock does, but investors don’t care.

Can F1 stocks continue to accelerate? CNN Business spoke via email with F1 Chairman and Chief Executive Stefano Domenicali ahead of the Australian Grand Prix race this weekend in Melbourne.

“It’s a great time for Formula 1 right now, and in the US we’re seeing exciting growth,” said Domenicali.

F1 has races scheduled for this year in Austin, Texas – where attendance rose to 400,000 last year from 260,000 in 2019 – and Miami. Next year it adds a race in Las Vegas.
That’s a lot of American fandom, considering F1 has no American drivers and only one American-owned team. Give credit to the show “Drive to Survive,” which launched its fourth season on Netflix last month just before this season’s first race in Bahrain.

“Netflix has been very important in reaching new fans and showing the emotion and drama behind sports,” Domenicali said.

Although it may attract new F1 enthusiasts, “Drive to Survive” is not loved by all. Some fans – as well as drivers, including defending champion Max Verstappen – say it’s too contrived. Verstappen opts out of filming the show, even though his team principal, Red Bull’s Christian Horner, is featured prominently.

“Drama and controversy are part of our sport and to pretend that it isn’t would be a mistake,” Domenicali said. “Netflix has done a great job of shining more light on the personalities, intense battles and physiological elements of our sport.”

Liberty Media CEO Gregory Maffei is also a fan of the series and what it has done for the F1 fanbase.

The average age of F1 fans has fallen by four years since the launch of ‘Drive to Survive’, Maffei revealed during Liberty’s latest earnings call with analysts in February. (This reporter’s 12-year-old boy has watched all four seasons and is glued to every run.)

“We are very confident that our product will be more desirable in the coming years in the United States than it is even today,” Maffei said.

ESPN gives sport a boost

The number of viewers of the races in the United States is also skyrocketing. ESPN noted last month that the second race of this season in Saudi Arabia, which featured Verstappen dueling by Ferrari (RACE) Charles Leclerc for the win, had the highest ratings for an F1 race on US television since 1995.

“This is in stark contrast to many other sports that have both aging fanbases and declining TV viewership,” Maffei said.

Formula 1 stock zooms higher on nascent American fandom

Domenicali – who took over as F1 CEO from former Fox and DirecTV executive Chase Carey in 2021 – told CNN Business that success in the United States might not have been possible without the support of Liberty. Liberty bought F1 from a private equity firm in 2017 for over $4 billion.

“Liberty acquired the sport because they believed in its future and its potential. The changes that have happened since 2017 have helped develop the sport and make it more sustainable for everyone,” said Domenicali. “The teams are stronger than ever. Fan and sponsor interest in the sport is very exciting and we’ve tried new ways to engage the public that work.”

There has been some controversy, however. Several drivers have criticized racing in Saudi Arabia due to the country’s poor human rights record.

Domenicali defended F1’s decision to continue racing there, saying “I sincerely believe that racing in Saudi Arabia has the potential to be a positive force for good and to help accelerate change in the world. country. It won’t happen overnight, but we all have a greater chance of having an impact and highlighting the issues by being there, with the spotlight and the attention we bring.”

Upcoming changes?

It’s also not lost on Domenicali that the lack of diversity is another significant issue. Lewis Hamilton, seven-time F1 champion and arguably the sport’s most well-known personality, is the sport’s only black driver.

“Diversity and inclusion are hugely important to our sport. We have Lewis as a great ambassador for that and we are working to create an F1 that reflects the world we race in,” he said.

Formula 1 stock zooms higher on nascent American fandom
F1 was quick to react to the Russian invasion of Ukraine. The Haas F1 team, the sport’s only American team, has terminated its contract with Russian driver Nikita Mazepin. The team also ended its sponsorship with Russian chemical company Uralkali, which is controlled by Mazepin’s father, Dmitry, who is now on an EU sanctions list for his company’s ties to Vladimir Putin.

Meanwhile, a race in Sochi scheduled for later this year has been cancelled. Plans to eventually move the Russian Grand Prix race to St Petersburg have also been scrapped. Domenicali told CNN Business that “it was impossible to organize the Russian Grand Prix under the current circumstances and we have also terminated the contract”.

“I don’t see us going back there unless things change significantly in the future, because recent events have been appalling,” Domenicali said.

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