The Rise and Success of Formula 1
By Simon Bordoli
The market cap of the publicly traded Formula One Group has risen 27% in the last year. The sport is attracting new fans like never before, with the average age of fans just 32 years old — a significantly younger fanbase than 5 years ago. That age profile is younger than fans of sports like the NFL and NBA. So it begs the question: how did Formula One become so popular among younger fans, and how are they making money?
The Netflix series, Drive to Survive, started in 2019, and although viewership was low in its first year, many viewers flocked to the show once the pandemic came around. 77% of Netflix subscribers are under the age of 54, so it’s no surprise that the show garnered cult status among younger viewers. In its 5th season, Drive to Survive has accrued 570,000 weekly viewers, a 90% increase over its first season. The surge in popularity, along with the increased celebrity status of drivers, frames the show as almost reality TV, and it's addictive. While drivers used to be second to the racing team, new fans have chosen their favorite drivers based on their appearances in Drive to Survive. Racers like Lewis Hamilton and Lando Norris have a massive fanbase, as showcased by their 38 million and 9 million followers on Instagram, respectively.
To capitalize on this fandom, teams have sold more merchandise and cashed in on lucrative sponsorships. For bigger teams like Mercedes and Red Bull, a sponsor will fork out as much as $50 million a season to have their brand on the car as well as team uniforms and merchandise. Petronas, an oil-refining company, reportedly paid $44 million for its deal with Mercedes. Formula 1 teams can also charge premiums for their merchandise, with Ferrari able to charge $440 for a jacket given their unique brand visibility. While Mercedes and Red Bull rake in around $100 million per year, the less recognizable teams might only make $10-20 million, and some teams are still losing money.
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