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Why Las Vegas is key to F1's growth plans

On 1 March, Liberty Media released its 2022 annual results, and they indicated a spectacular performance by Formula 1 as the effect of COVID finally disappeared.

Las Vegas track action

Autosport Business

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For the first time in three years, there were no restrictions on attendance, and F1 reported a 36% increase since 2019, the last season before the pandemic hit.

The boom in the sport propelled in large part by Drive to Survive contributed to an impressive turnover figure of over $2.5 billion, up 20% year-on-year. The operating profit of the business – the number left after the 10 teams were paid – rose from $92m to $239m.

Liberty and F1 have achieved a lot over the last couple of years, and they did a stellar job of steering the sport through the pandemic, but they are not going to rest on their laurels.

And it's crystal clear that the Las Vegas GP is a key part of the strategy of continuing to build F1 in the USA and worldwide, and crucially hold onto the fans whose interest was piqued by the hugely successful Netflix show.

"We are very focused on sustaining the growth and interest in F1, in many, many ways," said Liberty CEO Greg Maffei when discussing the 2022 performance.

"That's with new innovations on the track, ensuring more competitive racing, with new innovations on around the weekend like the sprint races, lots of ways to grow fan interest on the track. Lots of ways to grow fan interest in some of the things we do off the track, and exposing the drivers.

"Drive to Survive was obviously a key part, but not the only one. We're helping and the teams are helping create what will be a very exciting movie next year, with Brad Pitt, and the director and the producers of Top Gun Maverick, all of which we think will be another thing to sustain growth."

But at the heart of F1's plans is the return to Nevada for the first time in 41 years.

Las Vegas 2023

Las Vegas 2023

Photo by: Liberty Media

"The Las Vegas race is going to be a massive noisemaker for our sport," said Maffei.

"And it'll open up our sport to many people who previously were not aware. While there are 16 and 17-year-olds who are crazed and get up every Sunday morning to watch, there are many people who really do not follow F1.

"It will be hard to miss F1 after Las Vegas, it will be loud, and we will get a lot of attention. So we're not only thinking about things which are current, but we're thinking about things for the long term, to try and to stay in that interest, convert that interest into long-term fans.

"And I think we have a lot on our on the plate and many more things in front of us that we're working on to do that."

The Las Vegas event is special because it's a first as F1 itself is the promoter, working with the city and other stakeholders such as the major casinos.

It was intriguing to note that the 2022 results already included $19 million in costs related specifically to the Las Vegas event, which Liberty financial chief Brian Wendling said was "mostly related to personnel and marketing initiatives."

Wendling also gave a clear indication of just how lucrative the race is expected to be for F1: "Looking at total race-specific economics Vegas is projected to be in the top five of all races in year one in terms of total profit to the company."

That suggests that even in the first season it will be up there with F1's biggest-paying races – those in the Middle East.

The biggest single investment, and an inspired one, was in a piece of land not far from the Strip where F1 is building a permanent pit and paddock facility, and which includes the starting grid and a few nearby corners.

It's an expensive exercise, but it takes away the costs and logistical challenges associated with building a temporary pit complex every year.

The building will be used year-round as F1's toehold in the city, although few details have emerged thus far about the plans to exploit it. Wendling made the interesting observation that the Las Vegas GP will rent it from F1 Corporate for the race weekend.

The Las Vegas business model is being watched with interest, not least by promoters of the established races. However, Maffei indicated that F1 is in no rush to take sole control of other events, although he hinted at an expansion of the sort of partnership deal that it has with Miami.

Las Vegas track action

Las Vegas track action

Photo by: Liberty Media

"Vegas is unique for many reasons," he said. "The economic opportunity is large, we're operating in a country with which Liberty is reasonably familiar, it's pretty close to us. The ability to go negotiate and make something happen on a street circuit, rather than an owned circuit, made it easier in many ways.

"There wasn't a natural promoter. It was a role that was good for us to fill in. And it was good for us to test some of the theories we had about promotion. So it was a unique opportunity. And it's a great test lab.

"Could there be other cities? I think there are many countries where it's obvious we would be less effective as a promoter than in the US. There may be somewhere we could operate reasonably effectively, or maybe have some form of co-promotion.

"And that could be interesting. But Vegas is relatively unique in terms of being the kind of place where we would go all out and do what we have done. And what we are doing here in 2023 in Vegas."

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F1 CEO Stefano Domenicali agreed with Maffei's assertion that for the time being at least, Las Vegas is a special case.

"I think that is absolutely totally right," said the Italian. "And we don't have to forget that in such a short time, we moved in a new dimension that is being the promoter, in a way that no one was thinking before possible. So first step for us is to make sure that Vegas is right at the first attempt. So total focus on that.

"And then of course, I'm sure that this will be an incredible push for all the promoters to see what can be done better. So I think that already by doing that it will be an incredible push for everyone to push for a better qualitative result for everyone.

"We have a huge demand around the world to host Grands Prix. Not only in US, but also in the Far East. So this could be experience that can be used to better organise Grands Prix in the future. But so far, let's make sure that we are totally focused on making Vegas a super special event."

Domenicali says that plans are progressing well: "Our second wave of public ticket sales will launch soon. And in spring, the work begins on resurfacing the track roads, with plans in place to minimise disruption to the Las Vegas flow of traffic in the process.

"We have made a long-term investment in Las Vegas, which we expect to set up the race for decades to come."

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