The impact of Formula 1’s expansion in the U.S., heightened legal scrutiny
Writer: Mirella Franzese
August 2024 — The surging American interest in Formula 1 is driving a high-stakes race off the track, as both domestic and international investors scramble for a piece of the action. They are vying for greater access to the sport and media rights, as the F1 circuit drives significant economic growth in cities like Miami and Las Vegas.
The global motorsport market — which encompasses Nascar Racing, MotoGP, Formula 1, Indycar, and Rallying, among other racing series industries — is valued $56 billion and expected to reach $122 billion by 2028. F1’s presence in key U.S. markets like Miami, Austin, and Las Vegas also means bolstered investment in infrastructure, city planning, and hospitality, as well as job creation.
Last year’s inaugural Formula 1 Las Vegas Grand Prix, was the largest sporting event in city history, according to the Clark County Department. The GP, which took place in November 2023, resulted in a $1.5 billion economic impact on the city, with $88 million spent on infrastructure and an additional $77 million in tax revenues. Visitors in town for the GP also spent an estimated 3.6 times that of a typical traveler.
However, F1’s rapid growth and recent decisions have attracted heightened scrutiny. Last week, the U.S. Department of Justice (DOJ) launched an antitrust investigation into Formula 1’s commercial arm, Liberty Media, after the company rejected a bid from American automaker Andretti-Global to join the grid.
In May, a group of six U.S. senators expressed concerns in a letter to the DOJ, noting “serious concerns that the rejection of Team Andretti-Cadillac was based on a desire to exclude a rival from the racetrack, marketing opportunities, and prestige that competing in F1 can lend to a car manufacturer competing to sell cars across the globe.”
With three U.S. races on the 2024 calendar, American companies have significant opportunities to capitalize on sponsorships and branding.
“If you look at the partners that we’ve brought on most recently, Coca-Cola, Dell, Cisco, Goldman, these are all U.S. based companies that previously had very little knowledge about what Formula One was,” said McLaren CEO Zac Brown, as cited by CNBC.
Andretti’s bid to enter Formula 1 reflects not only the expanding American fanbase but also the broader national fascination with motorsports.
In a Q2 press release, Liberty Media announced plans to acquire the MotoGP — F1’s motorbike racing counterpart — by year’s end as part of a larger strategy to capitalize on renewed public interest.
“Formula 1 is having an incredible season with particularly high engagement in growth markets. Five races have already set U.S. live viewership records for their events, and we look forward to our new opportunities ahead including Apple’s highly anticipated F1 film which will debut in June 2025,” said Greg Maffei, Liberty Media president and CEO, in the press release.
The 2024 Miami GP recorded the highest U.S. viewership in Formula 1 history, with 3.1 million Americans tuning in. In contrast, NASCAR’s TV ratings, though still robust at an average of 53.9 million viewers across the 2023 season, have shown little growth over the past two years.
While F1 continues its exponential growth in U.S. markets, Nascar’s viewership appears to have plateaued.
The outlook for Texas Motor Speedway, located north of Fort Worth, remains uncertain, with only one race, NASCAR’s AutoTrader EchoPark Automotive 400, scheduled for the entire year. Conversely, Nashville Superspeedway, which hosts NASCAR and IndyCar events, plans to maximize revenue-generating opportunities through additional sporting and entertainment events.
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“We are actively pursuing public large-scale events in both motorsports and non-motor sports, focusing on sports and entertainment. Our next step is to identify and attract other marquee events to this property. We have numerous sister partners and are seeking the right one to organize music events. It’s crucial to find the right partner in this busy music market, as we want to ensure success in our first opportunity,” said Matt Greci, SVP and general manager of Nashville Superspeedway, in an interview with Invest:.
On a broader scale, the arrival of a storied American team in Formula 1, backed by Cadillac and General Motors, could open new doors for brands and investors.
“American teams driving American cars should have the same opportunities to compete. And I’m very concerned that there may have been collusion to avoid competition from Andretti on the race track and competition from Cadillac in selling cars,” said Minnesota Sen. Amy Klobuchar, one of the members of Congress who asked for an official investigation, as cited by NBC News.
After Cadillac’s U.S. sales took a big hit in 2020 during the pandemic, the company’s revenue has remained below pre-Covid levels, despite positive growth over the last couple of years. As an F1 power unit manufacturer, both Cadillac and the GM brand could unveil their supercar capabilities in an attempt to boost sales.
In 2Q24, Cadillac’s year-over-year sales fell by over 1% percent for each of their models, excluding the company’s first luxury all-electric SUV, the Cadillac Lyriq.
“Involvement in motorsports and racing helps manufacturers showcase their technology and performance capabilities, creating a direct influence on consumer interest in supercars. There is a growing trend towards electrification in the supercar segment. Manufacturers are developing electric and hybrid models to meet stringent environmental regulations and cater to environmentally conscious consumers,” as stated in a report by the Transparent Market Research.
