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00:00As I think about it there were a lot of different ways. If one wins this we can always see for the drivers the teams the fans the city itself. What does success look like for the owner of the product as this weekend unfolds. Well I think it's a huge win for Formula One in many ways starting with the fans the chance to get to show them what's going to be an awesome track and awesome experience out there at the Hard Rock Stadium are our partners. The Miami Dolphins and Tom Garfinkel built a great experience. I think that'll be the first place. It's a win. I think it's a win that the track is going to be interesting for racing. It's a highly abrasive surface. They used a natural recycle product. It's gonna be highly abrasive on the tires. So there's gonna be a lot of tire strategy involved in figuring out how long you can go on. Soft medium's hard so that'll be interesting. Keep it competitive for us as an economic proposition. Miami is a great showcase. We really invested and bought Formula 1 on the basis that there was enormous opportunity in the United States. The Austin race has gone from being something that a hard time selling 80000 tickets a few years back to doing over 400000 this past October. But Miami is gonna be a whole nother level of showcase can be a whole other level of excitement. And I think you're going to see that exhibited both in the TV audience and in the general level of interest. The number of articles that have come out about the event the number of articles that have come out about where Formula 1 is going it's even the cover of BusinessWeek. Bloomberg is a Bloomberg Businessweek. I never remember this week. So Bloomberg Businessweek. So I get they've got the order right. A lot of you write a lot of press has come out around the event but not all of it positive. There has been some criticism from people within F1 and I suppose outside F1. Now formerly CEO Bernie Ecclestone saying that you're risking this sort of purity in the traditions of the sport by overly Americanized. Is that fair. Bernie has to say something. Do any of you know Bernie. They know that's how he operates. Look Bernie deserves massive credit for building the sport. He built an enormous juggernaut. But the reality is is it didn't move forward in our judgment over the last few years. And the audience has stalled. Bernie's line was a you know I like old rich white guys to pay for the sport. And our view has been that there's an opportunity to be much broader to bring in gender diversity to bring an age diversity. And I think that's worked out well. And I'm willing to take Bernie's criticism OK. But he was an economic animal. The US always existed. We've always been petrol heads here. They tried and failed quite spectacularly to crack the US market under the previous ownership. So what is it this time that you guys are doing differently. How have you tweaked dare I say the formula or Formula One to make sure that the US is a success this time around. Well I think the numbers speak for themselves. The as I said we went over forty thousand which was the largest grand prix in history last October. This will be over three thousand. And frankly they really are partners constrained the audience constrained the attendance because they want to make sure they've got a right in the first year. I suspect it'll be bigger in future years. There clearly was more demand. And now we've launched Las Vegas to a lot of acclaim which will start in November of 2003. What do we do differently. I think we've invested maybe it helps that we are an American company but we've invested the time in building out a great experience. We've done a lot to try and open the sport up. It used to be a fairly close sport. Very little containment. Very little product was released. Now we have we're the fastest growing sport on social media. We've had fan experiences for example a few years back. We had a the cars drive through Trafalgar Square and attract 100000 people to come see it in London. Of course the drivers were supposed to just drive around passively around Nelson and they all did doughnuts. So it was that kind of stuff is natural. And you want you want to see. We've seen obviously the growth of things by opening up like the Netflix Drive to Survive series has caused us to expand the audience. And I like to hear fans. Thank you. You know all of those things have been a big positive. And consequently as I mentioned you know what a time when other sports are aging. We can show by surveys that we've not only increased the gender. We've increased the average or brought down rather the average age of our audience in three years by four years which is a huge accomplishment. And we're seeing massive increases in the viewership here in the United States up 50 percent a year over year. And then we get another 20 percent this year. So in a time when a lot of sports because of the changing nature of sports on television are having declines we're having quite the opposite. How do you balance that sort of purity that I alluded to. And you know whatever historical sum may or may not say there is an aspect to the sport that has always been about being at the very pinnacle of motor racing and therefore has this sort of mystique and some extent that was maintained by being unacceptable. So how do you preserve that. And then at the same time do what you would just talk about in terms of opening the sport up to a broader audience by making it accessible. Well I think we still have those high end experiences. If any of you were you bought the car bone dinner or any of your trying to go to the Paddock Club or the Pom Club you know it's not exactly a low end experience here nor at anywhere else. And but we've also created opportunities for fans both on television streamed or in other ways to get the experience. And I think we've maintained that pretty well. Really. I think we tried to do a bunch of things which not only democratize the sport in that sense and open it up but we tried to create a more interesting experience for the viewership. If you look at how the television has changed over the last few years I think Sky does a very good job. I give him a lot of credit and that's moved a lot over the last five years. If any of you watch the Indy 500 and I'm certainly not biased against it because actually we were investors and owners of the team that won the Indy 500 last year. But look at the difference in the coverage and how strong the F1 coverage is versus the Indy 500 coverage. I think you'd walk away thinking the F1 experience on television is a way better experience. We've done things to try and make the sport more competitive. The Concorde Agreement is a relationship we have with the 10 teams and we instituted new Concorde Agreement this year. It had I think four big elements which are gonna make a better product over the long term. The first of those is we putting a cost cap. You had team spending as much as 40 and 50 million dollars and team spending one hundred and twenty five million dollars. And guess what. The Ford and 25 million dollar team in this case Mercedes won for eight years in a row seven years in a row constructor a driver champion of seven. That's changed. Now this cost CAC much more competitive to we have a new design. These cars create massive downforce. The track allows them to do unbelievable things in terms of performance but throw off a horrible amount of dirty air. Meaning if you get behind one of these things your ability to overtake is massively destroyed limited and very tough. The new car designs have less bad flow off the back create an easier chance to overtake. And you've already seen some of the some of the great racing that we've had where back and forth which really had not happened over the last few years. Third we leveled out how some of the money gets paid out. So we have a couple of big source of revenue. Broadcast promoter fees which is ticketing from people like our friends at the Dolphins and advertising and sponsorship some ancillary things like the Paddock Club hospitality. We collect all that revenue. We split it with the teams and that was heavily stacked towards the winning team and toward some historical relationships like Ferrari. You got a big bonus. We've tried to level that out so that the midfield and lesser teams have a better chance to be competitive. And the last thing we did is we create them as franchises. So historically there's been as many as 10 or 15 are said to me 15 or 20 teams on the grid. They got down to 10 right when we ended the sport manner which was the 11th team went into receivership. The UK called into bankruptcy and got sold for a pound. Now the bottom team because they're all locked in as franchises is worth 40 million dollars minimum maybe more. And I think you're seeing numbers discussed as much as a billion dollars for a team or two billion dollars for a team that attracted investment that attracted interest. Again make the bottom teams the second third tier teams more competitive. So I think we're just at the beginning of seeing that happen. This year you've seen Horse which was the laggard do quite well this year. You've seen Ferrari come back. A lot of excitement and a lot more mystery to what's going to happen on a weekend a lot more excitement about what who's going to overtake and where. So all four of those things I think set up well done to increase our fan interest as the year as the years go forward. Will we see the expansion from 20 teams up to I think it's twenty three has been talked about as a possibility. No you're saying let's not confuse their 23 races. There are 10 teams 20 cars sorry 10 teams. Yeah. Well there is a potential that we may increase the teams over time. I don't think it's a pressing need. There are a lot of people who would like us to do it. Most of them want to buy in but we haven't. We have not felt that need. In some cases are actually problems. The paddocks the garages there's some places that really don't have more than 10 garages. So there are challenges literally around the. The dynamics of putting a team on the track. Obviously the the deal that you signed here with ESPN few years ago which has been rumored to be worth around five million dollars a year is going to end this year. As you talk about the popularity of the sport and how much that's increased and how much the sort of the television products if you like has improved. What are you thinking in terms of where that deal could go. I mean could this be a hundred million dollar a brand. Could it be bigger than that. What's the sort of analog we should look at for F1. Well that's a good kind of number. We'll see how it goes. We're gonna see a massive increase. Again we're one of the few sports. It's had this explosion in audience and we were historically very under monetized historically cheap. We'd like to be less cheap. We'd like to obviously provide good value to our broadcast partners. But I think there's a real opportunity to see that increase. And what does that look like. Would you consider going over the sort of when I think about I guess the options that you could go down the traditional TV route which will give you more eyeballs but perhaps a lower check on the way in or you could do something more like what boxing has done where you go to an over the top product which might give you a very very good amount of money coming into it but potentially lose you some of those eyeballs longer term. Look we own a baseball team pretty successful on so we pay attention to the breadth and making sure is as wide an audience can see your product. And that's true for all sports. It's particularly acute here because we have a big advertising and sponsorship component. So Heineken and Rolex and the like. They want to make sure we're not on a narrow cast way as well. It is interesting how the world fragmenting you think about cable households and how many there are and then compare now with how many Netflix households and how many prime households. The idea that the broadest audience was historically on television on cable that's becoming a lot less clear. And if you look at the trend lines over the next five years that's going to be a lot less clear. Those lines are going to cross. You know we come from cable as our history. We watch that well but that's not where the growth is today in terms of video. But Netflix be a logical buyer for the content bearing in mind the success that they have had with drive to survive. You'll have to talk to Reid and Ted. You know Reid has made the smart line that he wished he'd bought the company. We'll see if he gets a chance to just rent the product but we'll we'll see. I did mention the potential to increase the number of races on the calendar. Obviously you're not going to have three in the US which is unprecedented. No other country has more than two currently. Which other markets might you look at in terms of expanding the sport with the race. Look I think we have a careful balance. We have a lot of demand from a lot of places. We are truly a global sport. The one continent where we are not operating. Put aside Antarctica is Africa and we've looked hard at that Johannesburg. And I think that's a real potential. So we can be on every continent and a lot of reasons to be there. I know Lewis Hamilton would love us to get to Africa and Lewis is our biggest star. So that's we certainly listen. But there's also demand in more demand in Latin America. There's more demand in Asia. And then the historical European races fight for their position on the calendar as well. So this isn't this is a somewhat about balancing act between your historical audience trying to make sure they're happy tracks with a lot of iconic history and new tracks where in some cases we're getting better economic deals and we're also opening up a new fan base. Talk to me a little bit about the decision to keep racing in Saudi Arabia. Obviously there is a lot of controversy surrounding that country. There have been accusations of sports washing around other sporting events there. You already have the Middle East with the Bahrain Grand Prix. So I wonder why stay there. What's the decision that sort of drives them. Well you know it's it's not always easy to choose the politics of the places where you race. We have people who are not very pleased that we're racing in China. They weren't pleased that we're racing in Russia before we pulled the race obviously after the Ukraine incident there. People are not pleased. We're racing in Bahrain and they're people frankly who are displeased. We're racing in America tweeting about Roe v. Wade being overturned. So we are never going to satisfy all of the interests political interests of everybody there. I think the Saudi in my estimation you know Saudi is a society that can improve. Like many others. And they're actually making some progress in good ways. You mentioned some people are not delighted that you're racing in America. I mean look Miami thought I should say generally has has been through some issues itself recently with the bill that was passed the parental rights and education bill. And obviously Disney have been sort of foremost in being caught up in that as a company. Has that impacted a tool the decision to hold a race here or the decision to potentially hold the race here in future years. Fortunately no one has ever asked me the question. You're the first person to miss that. That's good. We get that. We get the exclusive answer. As I said no one's ever asked me the question. I don't feel the need to answer. So I think it's a fair question isn't it for a media company holding an event in Florida at this time such a big and prominent event. I really don't think that's. Again if we responded to every political complaint that went on we'd race nowhere. You know no Norway maybe everybody happy with Norway. I'm sure they have their own issues as well. You mentioned to us Hamilton as being the biggest star. Obviously there were some complexities. Let's say how the season was decided last year. How concerning was it for you as the owner of the F1 brand when it looked like he may not return to the sport and he took a sort of hiatus from from even discussing his future in it. Well I I consider Lewis a friend somebody I have a lot of respect for. I can understand why he was shaken by what happened and why he was disappointed. And you know Lewis endures as many athletes do a lot of scrutiny and a lot of second guessing and a lot of spotlight. And so I think his chance to go and you know revitalize himself in private was well-deserved. You know would I preferred a race where there was no controversy there was no issue in terms of how it was decided. Absolutely. You know I watch a lot of sporting events and I see controversy about calls quite frequently. And this was I think sort of the same in terms of growing the sport. Obviously when I think about sort of taking eyeballs in a sport often it's it's taken from other sports. Where do you see F1 going in terms of market share. Is it after other motor sports. Is it off to some of the the bigger traditional sports in the U.S. or what do you what do you sort of dig into to actually get those new you view as interested. Well I'm not sure. You know what. We're starting from relatively small base. I'm not sure we're taking share so much from other sports. There has been a you know a whole you could argue. I mean NASCAR was massively hot several years ago and has not been as hot recently. I don't think we're taking share from them. But maybe there was a latent audience that was interested in motor racing. But I really think when you look at these younger viewers who are really had our growth you know where we may be you know take. Share from tick tock. I don't know. We're not. I don't think we're really stealing a lot of Martin's market share out there yet. So we put a small Twitter poll out there which Bloomberg did this. I should say which asked the question what is the best way for Formula One to continue to grow its U.S. fan base. And 39 percent of people said it was to attract Gen Z fans. Forty six percent said more races in the US and live and 14 percent I should say said increase the number of teams. I think we talked about increasing the teams. You've certainly talked about having more races in the U.S. but talk to me about the Genzyme offense and how you did. Did you order all of these choices. I believe they were offered these choices. So if you put up three choices somebody is going to chose all of them right. I think we've already done one and two now. Is there more we can do. Absolutely not. More race in the US but we're going to have a third race or on that one. Genzyme fans I think things like Netflix these sports we do the social media we do all of that has been a big factor in growing our Genzyme base. And actually that is probably where we've grown faster than anybody else recently. So actually I think that part's going OK increase the number of teams. I honestly think that's probably an American team that did well. American driver that did well. American OEM all those obviously. But just another team random put an 11th team. And I don't think that's going to add a lot of to the audience per say. What can you do as owners to actually try and encourage that to try and encourage you know as you say whether it's a U.S. driver team OEM how do you get them more into the sport. Because presuming that would help boost things over here. So look the reason why these drivers are so good and why it's hard to imagine someone just getting in these cars is you know I was with Dave David Coltart on another panel. He was a driver from the 90s and 2000s who very amusing character. But he said he started carding at three. And you know what. We have kids throwing a football and perhaps a baseball. Maybe now they're picking up a lacrosse tech. These kids are in motor carts for racing at 5 and 6. And we don't have that program here in United States. Now we've started it and the teams have started it. And I credit for example Red Bull has a big program to try and grow younger drivers but we just don't have that depth in the US. And as you know someone once said if you if you start with ten thousand kids at the top and pour them through you're gonna kick out one. So when we have 10000 you know starting at 5 our chances to get one well we don't have that near 10000 not starting at 5. But that's what we'll that's what we'll build a U.S. driver base. And the other reality is is it's only 20 drivers. So it's not a huge you're not talking about the thousand baseball players there are. Right. Is there any I suppose possibility for a U.S. team to come over from some of the other U.S. Open will sports you know in deal whatever else. Or are they just not competitive in the same way. Look you get a diversity of opinion. I think you could get a U.S. team and that's true. Would one of those drivers translate across. There is a diversity of opinion. Some people think that some of the those drivers would be great. Other people are less sure just moving away from F1 before we wrap up. You're one of the few businesses left that have a special purpose acquisition company. I'm deployed which is pretty good because the market has obviously been so bad recently that the opportunities presumably are a lot better now in terms of cheaper assets. What can we expect their web. Where where are you sort of looking with that spec. Look I. Our experience our strength historically has been in a lot of subscription businesses a lot of consumer facing brands a lot of experiential things. Remember we're a big shareholder and Live Nation Ticketmaster. We own the Braves. We own Formula One. We think we have knowledge of that experience. And there's probably some opportunity cross promote and do things which are positive. But we'll see. You know you're in a world where the markets have crashed in a lot of places but the expectations of sellers may not have moved as quickly. So we'll see if those two things come together and we can get something done. Can we see you do something in sports. I think sports is very exciting. We do have entrants for example as I said Formula One has a big sports component. We've done some other things. We're a small investor. Not exactly but in the drone racing league. So you know we've done some different things. They're not scale big businesses to date. So you know we tend to try and do something larger that'll move the needle. That would be the spark alternative. Our spark is pretty big for us back. So the opportunity has to be a pretty big opportunity relatively. Watch this space. We will keep keep checking in on it and see where it gets too. Great. Great. Great conversation. Thank you so much for your interest Formula 1.

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Liberty Media Corporation’s Maffei on The Growth of Formula One

Greg Maffei, President & CEO, Liberty Media Corporation discusses the growth of Formula One with Bloomberg’s Ed Hammond at the Bloomberg Power Players Miami event. (Source: Bloomberg)

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