Miami F1 race a big boon for the sport — and for big brands
It was a thrilling end to the inaugural Miami F1 Grand Prix, in which Red Bull F1 driver Max Verstappen took the win despite a Ferrari (RACE) lockout of the first row of the grid after qualifying. After five rounds of the 2022 season, Ferrari driver Charles Leclerc still leads the driver’s championship over Verstappen, but that lead has shrunk to only 19 points.
While it was a win for Verstappen and Red Bull, the Miami GP was also a big win for Formula 1 (FWONK) and its various teams and sponsors, several of which are multinational publicly-traded companies keen to be associated with the growing F1 audience in the U.S.
Recent ratings bear this out — and justify F1 majority owner Liberty Media’s investment and strategy for U.S. growth.
ESPN, which owns the rights to F1 in the U.S. market, has seen its F1 viewership surge, with the 2021 season the most watched in the U.S. Thus far through the 2022 season, F1 races are averaging 1.1 million viewers, a 22% jump over the same period last year.
The Netflix effect
The much-discussed Netflix (NFLX) effect, following the release of the “Drive to Survive” F1 docu-series, has clearly given the sport a boost in the U.S., with the show coinciding with rising F1 viewership and interest. And with F1 and Miami getting lots of coverage ahead of the race, Netflix recently announced it's renewed “Drive to Survive” for an additional two more seasons.
Miami is now the second U.S. race to join the F1 calendar, following the current GP in Austin, Texas.
“It's long overdue as half of the motorsports market in the world [is here],” Laurent Rossi, CEO of Alpine F1 (RNO.PA) says about the addition of Miami to the schedule during an interview with Yahoo Finance. “It's the reason why Formula 1 gets stronger, again because of Netflix, and Netflix obviously [had a] big year in terms of viewership. So it's only normal when you think about the economic weight of the U.S. that having more than just one grand prix makes sense.“
Alpine’s rival on and off the track, Aston Martin (AML.L), agrees with the importance of the U.S. market and Miami’s special place.
“This is a city that is alive, it's alive with design, it's alive with creativity,” Marek Reichman, Aston Martin’s chief creative officer said in an interview from the team’s hospitality center at the race. “America is vitally important; Miami within that is huge. If you then take into consideration next year, America will have three races — Austin, Miami, Las Vegas — as a marketing platform — that the Netflix effect, which has brought consumers into this.”
With the U.S. being Aston Martin’s number one market, it’s not surprising the brand was happy to see another race in the states. (Aston’s rivals McLaren and Ferrari also count the U.S. as their top markets.)
“So why do I come [to Miami]?” Reichman rhetorically asked. ”Because last night [at the Aston DBX 707 reveal], there were at least 200 customers. We sell just over 6,000 cars [a year]. If I can meet 200 customers at every race weekend throughout the world, 23 times 200 is pretty close to over 50% of our customer base.”
And it is that face time at glitzy tracks like Miami that lead to more customer goodwill — and sales. “I’ve never seen a paddock club this big, with 300 Aston Martin guests,” Aston Martin U.S. President Adam Chamberlain said on race day. “Miami and Formula 1 together, people want to be at the race … One of our customers literally ordered another car last night, and said, ‘You guys have done such a good job [at the event], I feel like I need to buy a car!’ And that’s what you want.”
Big brands and big fees
Around 13 years ago following the great financial crisis, teams like BMW, Honda, and Toyota exited the series, as did numerous sponsors. The Brawn F1 car, which won the championship in 2009, started the year with an all-white car with nary a sponsor on its livery.
As popularity of the sport rose, it was only a matter of time before big, global brands came knocking on the door to not only enter the sport but to also sponsor the 10 teams that make up the F1 championship.
Cut to 2022, in which tech giant Oracle just inked a five-year, $500 million deal to be the title sponsor of the Red Bull F1 team, a deal considered to be the largest sponsorship one in F1 history.
“F1 is the fastest growing sport that we’re seeing in terms of an excitement here and around the world and for technology companies,” Oracle (ORCL) CMO Ariel Kelman said during a media call. “It’s just such a perfect fit because it’s the most high-tech sport, the most data-driven sport. So it just provides an amazing showcase for all the amazing technology.”
Among the big tech names with sponsorship deals in the sport include Dell Technologies (DELL), Alphabet's Google (GOOGL), Microsoft (MSFT), Amazon (AMZN), Cisco (CSCO), and AMD (AMD). Yahoo Finance’s parent Yahoo is also a sponsor of the Alpine F1 team.
But it’s not just the eyeballs big tech companies covet. It’s the association with a data-driven, win-at-all-costs sport that leverages technology and R&D to the maximum in order to extract performance from every inch of the car.
Take for example data and connectivity. F1 teams rely on their data partners and sponsors to not only help the race team, but also the road car business as well.
“The connectivity of these cars is incredible. If the rules allowed, these cars could probably drive themselves around, because they can adjust [via] the telemetry,” Aston’s Reichman said about the reams of data collected from the race cars. “But it's when you then consider the amount of data you're collecting —how do we transfer that knowledge? And what do we do in our road cars, which are all going to be connected in the future with electrification. It's a very, very important factor.”
Besides the natural attraction of the sport to tech companies, more traditional companies like Walmart (WMT), UPS (UPS), Unilever (UL), Stanley Black & Decker (SWK), and Monster Beverage (MNST) have also taken interest.
With F1’s global audience close to around 70 million viewers every race weekend, the reach of the sport allows for these large brands is likely unmatched anywhere in the sporting world on a week-to-week basis. Especially for brands that sign on with top teams, which tend to garner more on-air time during the race weekend coverage.
F1 teams famously keep their “rate card,” or what they charge for the real estate on their cars for sponsors, close to the vest, but it’s believed the tiniest portion on car for a logo could go for a couple hundred thousand dollars to upwards of tens of millions for locations on the sidepods, rear wing, or on the center air intake.
And just seeing that logo or car on screen can actually translate into tangible interest. Take for example Aston Martin’s sponsorship of the safety car and medical car, a deal that uses Aston vehicles for half the races and Mercedes cars for the other half.
“When we have our pace car and our medical car on the circuit, we see a 40% uplift in internet inquiries on that weekend,” Aston U.S. president Chamberlain said. “It’s a huge uplift and we absolutely see that translate [into customer interest].”
Leave it to the data-hungry and crafty F1 teams to figure out how quantifiable something as staid as the F1 medical car can be to the team’s bottom line.
Pras Subramanian is a senior autos reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.
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