Formula 1: Fast cars, celebrities, and B2B software (Audio)

I was just listening to the F1 theme. song to get pumped up. >> Me too. Were you really? >> Yes. It's so good. >> I just got new speakers here in Acquired. HQ North and actually thanks to a. recommendation from a listener in the. Acquired Slack and yeah, it was bumping. >> amazing. >> All right, let's do this. >> Let's do this. >> Who got the truth? Is it you? Is it? Is it you? Who got the. truth? Is it.

me down? Another story on the way. >> Welcome to the spring 2026 season of. Acquired, the podcast about great. companies and the stories and playbooks. behind them. I'm Ben Gilbert. >> I'm David Rosenthal. >> And we are your hosts. Today we dive. into a sport that started in the 1930s. that began for the pure love of. autoracing. extremely dangerous auto. racing. Then after World War II, the.

British Air Force veterans and. mechanical engineers joined the sport to. push the limits of technology and. physics. It eventually became the sport. of rich guys who want to own teams to. gallivant around Europe, losing colossal. sums of money along the way. And in. fact, David, since the sport began, over. 100 separate teams have entered and. exited the competition, mostly because. they went bankrupt. And today, the sport. has been dragged kicking and screaming. into being professionally managed and is. now owned by the publicly traded US.

company that has owned the Atlanta. Braves, SiriusXM, and Live Nation. That. is Liberty Media. And against all odds, Liberty has managed to turn the sport, the teams, and the drivers into real. viable businesses. Today's episode, listeners, is on Formula 1, the world's. premier motorsport series. Woo. I was. going to save this for um later in the. episode, but do you know what else among. the many other like hundreds of. companies that Liberty has owned? Do you.

know what else they owned? You won't. guess it because there's so many. Excite. at home. >> No way. >> From our Google series. >> throwback. That's awesome. Well, listeners, really what we're doing here. today with Formula 1, it's three sports. in one. It is, of course, the world's. best race car drivers showcasing their. skills, but it's also the World Cup of. Engineering. These days, it's fair to. say that the races are more determined. by the design feats of the thousand plus. people that work on each car than the.

drivers. And Formula 1 is the only. motorsport in the world that requires a. team to design and build their own car. from scratch, which is an insane. engineering feat to enter the. competition. And as one listener put it. to us, it's also the World Cup of Office. Politics. Or as another one put it, it's. Real Housewives of the garage, which. that makes for a fantastic Netflix show. >> Oh, does it ever. We might talk about. that towards the end of the episode. here. >> Yes. The sport itself is completely. insane. It is a grid of 20 drivers.

competing at over 200 mph in races that. last 190 miles. And they do this every. week or two in a different city around. the world. They load the entire circus, the cars, the teams, the hospitality. onto a fleet of seven Boeing 7s between. races and they set up shop in 24. different cities from Monaco to Bahrain. to Melbourne, Australia. Each car costs. $20 million to make and hundreds of. millions of dollars to develop. The cars. have three to 600 sensors on them. And.

shockingly to me as an American, David, I don't know if you knew this before we. started researching. It's actually the. world's most popular annual sporting. series with over 827. million viewers. >> Yeah, I had no idea until we started. researching because we're Americans. >> and you know the Olympics and the World. Cup don't count because they're every. two and four years. So pretty crazy. Listeners, starting in just 5 days, a. season will kick off that's going to see. some of the biggest changes in the sport. in decades. So, we've got new.

regulations, which means all new car. designs, an expansion to an 11th team. with Cadillac, Audi and Ford are also. entering the sport, and a brand new. broadcast partner in the US in Apple TV. And well, uh, everything got much more. professionalized. It's still owned by a. bunch of rich guys who love auto racing. >> They're just no longer money losing rich. guys. >> That's right. So listeners, just like. our NFL, NBA, and IPL cricket episodes, this show is about the business of F1. So, uh, we apologize in advance if we.

don't spend time on your favorite. rivalry or regulation detail or the V10. engine sound. You can join the email. list to get updates every time an. episode drops at acquired.fm/e. You get to vote on future episodes. And. the email list is just getting much, much better. So, we now have episode. summaries, our big takeaways, and. exclusive photos from our research. process. That's acquired.fm/email. Chat about this afterwards with us with. the whole acquired community in the.

Slack. Acquired.fm/slack. And before we dive in, we want to thank. our presenting sponsor JP Morgan. Payments. Yes. And just like how we say. every company has a story, every. company's story is powered by payments. and JP Morgan Payments is a part of so. many of their journeys from seed to IPO. and beyond. >> So with that, this show is not. investment advice. David and I may have. investments in the companies we discuss. and this show is forformational and. entertainment purposes only. David. Rosenthal, where do we dive in? Well,

first off, we owe a huge thank you to. Joshua Robinson and Jonathan Kle who are. the sports editors over at the Wall. Street Journal and just recently. published I think the best business. history book of Formula 1 called The. Formula. It was one of the main sources. for this episode and uh they both. actually helped us in the research. So, thank you guys. >> Yep. So, Ben, Formula 1 as we know it. really started after World War II in. 1950. But unlike a traditional company.

or even many of the sports leagues that. we've studied over the years, it doesn't. have a exact sort of founding moment. Its origins are really part and parcel. with the beginning of motor racing. itself. So, it didn't take long after. the invention of the modern automobile, which is generally agreed upon to be by. Carl Benz in Germany in the late 1800s, that people had the idea to start. >> racing racing. I mean, after all, like. people raced horses, why wouldn't they. race cars, too?

>> Y. >> So, throughout the first few decades of. the 1900s, various automobile clubs. popped up across Europe, and they would. host these races. They'd sell tickets. and advertising to fund prize purses and. drivers and manufacturers would travel. from all over the world to compete in. these races. 1906, the Automobile Club. of France, which was the largest in. Europe at the time, hosts an inaugural. race just to the southwest of Paris. called Lemon, Lan.

And this group of organizers, they. decide to call this Lemon race by a very. literal name in order to attract. spectators and participants. They call. it the Grand Prix de Lemon. Literally. translated as the big prize. >> It's great. Carries all the way forward. to this day. >> Yes. The names in this sport are very. literal. So the success of this Leong Grand Prix. causes a bunch of similar races to pop.

up across Europe all throughout the. teens and 20s copying the same rules or. formula as the Automobile Club of. France. You had Monza pop up in Italy. You had the Monte Carlo race in Monaco. You had the Nurburg Ring in Germany, etc., etc., etc. You've probably heard. of all these places. >> Yep. Eventually in the 1920s all the. major European automobile clubs get. together in Paris and they say why don't. we centralize oversight of this formula. into one international organization and.

that becomes after a series of name. changes over the years the Federas. International Delotmobile. or the FIA which still exists today and. still administers the rules of Formula. 1. And as Josh and Jonathan point out in. the book, the sport is literally named. after the rule book. >> There's a lot of fighting about the. rules in this sport, both when they're. setting the rules every few years and in. races when they're going up to yell at.

the race stewards, oh, this is illegal, this is not illegal. Anyone who is sort. of complaining that this sport is too. into the rules, needs to remember it is. named after them. >> It's named after the rule book. Yes. >> Yes. >> Okay. So at this point, you've got all. these Grand Prix and these famous. racetracks that you know today, and you. have the FIA as this sort of rules body. overseeing the common regulations. amongst them, but they're all. independent events. There's no. championship series. There's no league. There's one winner at the end of each.

race and then you go to the next race. >> Yeah. >> There a couple attempts before World War. II to create a championship series, but. they all fizzle and then of course the. war disrupts everything. After the war, however, there's renewed interest. Everybody wants to have a world drivers. championship. And so in 1949, the FIA. announces the inaugural Grand Prix World. Championship for Formula 1 drivers, a. global drivers competition of seven of. the most prestigious Grand Prix races.

set to begin the following May 13th with. the running of the British Grand Prix at. the Silverstone. Circuit in England. And that becomes the. first race of the first season. officially of F1. >> 1950. >> Now there really are three sort of. foundational pillars of this early era. of the sport. There's one in the UK, there's one in Monaco and there's one in. Italy. So taking them in turn first in.

the UK. Britain was and is the heart of. the sport both in the early days and all. the way through to today. So today 70%. of the F1 teams are based in the UK. Really the only notable exception is. Ferrari which of course is in Italy. >> Yes. All of these teams despite having. such different cultures and opinions and. rivalries a giant amount of their. employees at least on the technical side. work in a very small area in the English. Midlands within tens of miles of each.

other. >> Yes. It's like very you know seemingly. random. So why was the UK and this weird. part in the middle of the country like. the natural home of F1? If anything, given the proto history, it should have. been France or maybe Germany. Well, after World War II, Britain had been, as. you alluded to in the intro, absolutely. the right set of circumstances for this. all to come together. Yep. >> One, unlike Germany, they'd actually. just won the war, but the country was in.

bad shape and like in desperate need of. entertainment and redevelopment. And. then, unlike France, Britain had a ton. of empty airfields and lots and lots of. newly unemployed British fighter pilots. and mechanics. And what better way to, you know, redevelop the infrastructure. in the heart of the rural area of the. country than to put all of these people. and abandoned airfields to work racing.

fast cars. And much like the development. of Silicon Valley, which we talked about. in our Loheed Martin episode, there's. sort of this positive feedback loop that. keeps that area the main area for this. So there's universities that specialize. in aerodynamics and engine design and. mechanical engineering. It's still the. best place to source talent to build an. F1 team. >> Yeah. Even the teams that are owned and. nominally operated by companies in other. countries, most of them still base their. actual operations in the countryside in.

the UK for this reason. >> Yep. So, one of these newly unemployed. Royal Air Force pilots is a man named. Colin Chapman who also happened to be a. mechanical engineer in addition to a. former pilot and who along with Enzo. Ferrari probably did more than any. single person to shape the first era of. F1. So Chapman founded the Lotus Racing. Team in 1952 with 25 pounds as his.

initial startup capital in a set of. empty stables in North London. Even then. 25 British pounds was not enough to. build a car capable of racing an F1. So. he had to have another way of making. money. In parallel, he also started the. Lotus road car business, which quickly. became, you know, look, hey, it's not. Ferrari, but like decently successful. >> In fact, the first uh Tesla Roadster was. based on a Lotus Elise chassis. >> That's right. So, in 1958, Chapman.

finally has enough capital together to. build an F1 car. He enters his first car. in Formula 1, and he revolutionizes the. sport. I mean, today teams are super. professional operations with hundreds of. engineers and tons of equipment. Back. then, it was much more like the early. days of the NFL. You have like one or a. couple people who are team owners, managers, coaches, and sometimes also. players or drivers. >> Yes. And it says a lot that there.

actually was not a constructor's. championship when it first got started. That wasn't until 1958. >> Yes. It was just about the drivers, >> right? It was just the drivers. championship. >> because often these were the same. people, >> right? So for anybody who follows the. sport today, there's sort of two. different things you're competing for. Can the driver individually win the. season or can the team between its two. drivers win the constructor's. championship called constructor's. championship? Of course, because each of. these teams is required to construct. their own vehicle.

>> Yep. And enter two cars and thus two. drivers in the competition. So Chapman. was the first constructor to realize. that building a winning race car wasn't. just about adding more horsepower to the. engine, >> which was kind of the Ferrari prevailing. people at the time. >> That was Enzo's, you know, arguably till. he died, what he really cared about was. power. Chapman had a great quote on. this. He said, "Adding power makes you. faster in the streets. Subtracting. weight makes you faster everywhere." So.

he realized like a whole bunch of stuff. that like being lighter is better, having better handling is better because. it's not like these racetracks are like. NASCAR racetracks where the cars just go. around in a circle. There's all these. technical corners, there's hairpin. turns, there's chicanees, there's double. apexes. It's a very technical sport, not. just from the engineering for the cars, but also for the drivers. >> Yep. There's one other very important. element that Colin Chapman introduces to. the sport during his time in F1, which.

was sponsor logos on the cars. So, until. Chapman adds sponsorship to his cars, all the F1 cars had just been painted. whatever color the FIA assigned their. country. >> Yes. And that's how you have silver with. Mercedes and British racing green and of. course Ferrari red. >> And they stick to this day. So Chapman. when he goes out in the 60s and finds a. sponsor to, you know, finance his. building activities, he paints his. lotuses red and white in the corporate.

colors of his new sponsor, Gold Leaf. Tobacco. And this is the start of one of. the most important partnerships in F1. history, Fast Cars and Cigarette. Companies. >> Yes. And this was illegal for a long. time. The FIA did not allow you to have. sponsorship. And then they realized, okay, we're being too much a purist. about this. these teams are all going to. go out of business, but there are. companies lining up to try to pay them. to put the logo on it. Okay, this is the. way to make the sport viable. >> Yep. Ironic because then the EU would.

legislate tobacco advertising and. sponsorship out of existence in the. early 2000s once again. But it's. actually really weird. Go look at any of. the sports historical greats like Senna. or Michael Schumacher or Alan Pros. They. all had the Marbor logo all over them. >> or John Player Special. I mean, there. were these cigarette companies, some of. which I'd never even heard of, but. they're so dominant on the cars for a. long time there that you actually don't. see the team name. At least on the.

liveries now, you see the team name and. their big sponsors. This looked like it. was team Marlro Racing or team John. Player Special, not you know, McLaren or. >> Yeah. I mean, they actually painted the. cars to look like cigarette boxes going. down the track. Yep. >> Unfortunately, his story has a sort of. strange and sad ending. Did you find. this, Ben? >> Oh, yes. >> Yeah. So, in the uh late 70s and early. 80s, he gets tied up in an embezzlement. scheme with John Delorean. Chapman. designed the chassis for the DMC12, you.

know, like the Back to the Future car, >> which would be awesome if the car didn't. suck and the company didn't end in a. giant scandal. >> Totally. The company collapsed and. British prosecutors accused John. Delorean and Colin Chapman of each. embezzling $8 million in government. incentives that they supposedly were. going to use to build the factory. Chapman dies of a heart attack once this. comes out at age 54. Truly sadly. And. then Delorean goes on to be arrested by.

an FBI sting in LA attempting to buy 220. pounds of cocaine with the intent to. distribute to like pay off his debts for. Delorean. Man, you can't make this stuff. up. >> He was a man with a dream. David. >> Yeah. >> Through all of this though, the cowboy. nature of the teams, the individual. iconoclastic owner, mechanic. slashdesignerd drivers, the cigarette. money, the vague or not so vague whiff. of fraud that totally embodies the early.

era of F1. It was the wild west in. Europe. >> Yep. And just so people can really. picture it, I think you kind of know. what an F1 car looks like now. Uh an. open wheel car with a giant spoiler or. rear wing. It's got a front wing. When. we first started here in 1950 and really. even into the '60s, too, these cars. didn't look anything like that. >> They look like soapbox derby cars. >> That's exactly right. Almost like little. bullets. >> Yep. So the UK contribution and the.

Chapman story really reflects this wild. west aspect of F1. If that's all there. was in the beginnings of the sport, I. don't think we'd be doing this episode. today. Right around the same time that. Lotus is coming into the league, there's. another very different founding pillar. number two of F1 taking place in Monaco, which is that in 1956, the sovereign. Prince Reineer III of Monaco, as we.

talked about at great length in our. Hermes episode, married the American. movie actress Grace Kelly and brought. her to live in the Prince's Palace of. Monaco. This brings together all of the. oldw world luxury and heritage and. legitimacy of Europe with the glitz and. the glamour of Hollywood and the new. world in a way that's still very much. part of F1 today. I mean basically this. marriage was like the 20th century's. version of you know Travis and Taylor. the NFL and you know Swifty crossover.

like it was the crossover event of the. century. So, as we said a minute ago, there had been Grand Prix races on the. streets of Monaco for many years going. back to before World War II, and the. track and the location was already quite. prestigious. But when Princess Grace. comes to the party, things go to a whole. new level. So, all of her Hollywood. circles start coming out to the race to. visit her. And conveniently on the race. calendar, it, you know, just happens to. coincide with the Ken Film Festival.

right up the road in Ken in France. So. Frank Sinatra becomes a regular attendee. to the Monaco Grand Prix, the Beatles, the Rolling Stones, etc., etc. Eventually, many, not most of the F1. drivers start moving to Monaco and. becoming stars themselves. I mean, like. today, Lewis Hamilton, Max Verstoppen, Charleslair, Lando Norris, they all live. in Monaco. >> Well, it also has some tax benefits. >> Yeah, it also has some tax benefits. But. for anybody who has been to Monaco or.

seen pictures of Monaco or really any. towns sort of on the French Riviera in. that area, you might think, "Wait, but. it's like cliff side and the streets are. all really narrow and old and winding. These cars that we were talking about at. that time, it kind of made sense to race. those cars in these types of. environments. It makes a lot less sense. now. There's no chance they would add. Monaco, with the cars being the size. that they are today, to the race. calendar. Yep. But there's also no. chance that they would ever get rid of.

Monaco. This is what brings luxury into. the sport. And today, again, also this. doesn't seem that radical. It's part of. sports league setup playbook 101. Like. look at, you know, our episode on the. IPL. This was so far ahead of its time. back in the 1950s and also totally by. accident. Which leads us then to the. third Italian founding pillar of F1, Ferrari. Undeniably the most important. team, company and person of this first.

age of F1 was Enzo Ferrari. Enzo. actually founded the company before. World War II purely as a racing company. >> Yeah. Wasn't he racing Alfa Romeo cars? >> Yes, that was the purpose of the company. was to race Alfa Romeo cars. >> Also a red racing team because they were. Italian. >> Yes, indeed. Ferrari itself didn't start. making cars until after World War II. But of course, when the F1 championship. series starts in 1950, Enzo has to join.

This is the pinnacle of racing. And. Ferrari is the only team that's been. part of every single F1 season going all. the way back to the beginning. >> There's a funny thing here where you. might think, oh, Formula 1, that's the. big established series that legitimizes. an automaker by being a part of it. It. actually works the other way with. Ferrari. Ferrari participating in. Formula 1 legitimizes the series. Ferrari, if they ever decided to stop. racing in Formula 1, would make people.

go, "Oh, so what is the big racing. series?" Yes, totally. Formula 1 is. actually the marriage of two separate. things. The teams and the racetracks. Unlike just about every other sport out. there, these are separate entities. It'd. be like if the Seahawks, you know, were. a team that would play wherever, >> whenever they could get a game going. >> and they didn't have any relationship. with, you know, Lumenfield in Seattle. So, what Formula 1 the organization is.

doing is they are bringing this set of. teams and this set of racetracks on the. calendar, this set of Grand Prix. together. >> And in the early days, it was kind of a. different set of teams and drivers at. each of the Grand Prix. who can we get. to come race at this track when and it. would come together in a very haphazard. way. >> So, back to Enzo and Ferrari. Unlike. Chapman and Lotus and the Brits, Enzo. actually had business sense. He was an. entrepreneur and he was the first person.

who realized that there was an. absolutely incredible business. opportunity at the intersection of these. really fast cars, these sort of. legitimizing racing heritage and all the. glitz and the glamour and the wealth of. the celebrity that was represented by. Monaco. And that opportunity was selling. fast cars to the rich and famous. >> Yep. So Ferrari pretty quickly after. World War II becomes a legitimate luxury.

brand. I think you could maybe even. argue they are the only legitimate. luxury brand established in the second. half of the 20th century. >> Oh, that's interesting. Yeah. And it's. very impressive how fast it happened. >> Before the war, it was Enzo racing a. bunch of Alfa Romeos. >> and then suddenly it's Ferrari, >> right? because as he's participating in. F1, Enzo's also handmaking cars for all. the European royalty and all the.

American movie stars that are flowing. through F1. And so just like the. equestrian heritage kind of serves as. the like legitimizing soul of Hermes, motor racing in F1 serves as the. legitimizing soul of Ferrari. It's just. that they were co-developed together. here in the 50s and 60s after World War. II. H. >> So, we need to talk much more about. Ferrari on another episode of its own. >> Oh, yeah. We should do a Ferrari episode. >> for the purposes of F1. They really were. that unifying factor that pulled.

together the glitz and the glamour and. the luxury and the hardcore racing. because the Ferrari cars became this. tangible way that fans, even though they. couldn't afford to buy them, could. relate to what was happening on the. track by dreaming about buying these. road cars that they saw their favorite. celebrities or, you know, royal monarchs. driving around. Because a lot of these. other teams are building one or two or. three cars period and they're racing. them and then that's it.

>> Yep. Totally. Whereas with Ferrari, probably every boy growing up around the. world, you know, myself included, probably you too, like has had a poster. of a Ferrari or a model of a Ferrari in. their bedrooms. >> Okay. So, you might be wondering where. are the Germans in all of this? We've. talked about the Brits with Colin. Chapman. We talked about Monaco. We. talked about Ferrari. In the 50s, Mercedes actually was a major player in. Formula 1 and auto racing. But while. they were racing one of their cars in Le. Man, it actually crashed and killed 82.

people. >> Oh, yeah. It was one of the worst. disasters in motor racing history. >> They actually pulled out of I think all. racing and they didn't return to Formula. 1 for another 40 years. That accident. was so devastating that four of the. remaining Grand Prix were cancelled. Racing was just so dangerous in this. time. I mean, you had 14 deaths in F1. alone, not even counting other racing. series or audience attendees across this. first decade. >> Totally. Mortal danger was actually, I.

think, a core part of the appeal of the. sport in those early days. What better. to go along with all your glitz and. glamour than an element of mortal. danger? These guys were gladiators. They. were risking their life every time they. got in a car. In the 1950s, you had 14. deaths. So that's 1.4 a year. In the. 1960s, you also had 14 deaths plus 15. spectators. In the 1961 Italian Grand. Prix crash in the 1970s didn't get much.

better. You had another 12 deaths. And. then it starts to get safer from there, and we'll talk about all that later. But. the first three decades, you were on. about a one to two death per year rate. >> So that's five to 10% of the entire. racing field would die every year. Yep. And there were many, many more crashes. and many, many more injuries. These were. just fatalities. Famously, Nikki Laua's. head caught on fire and he was scarred. for the rest of his life. >> Yeah. And then he was back out racing. several weeks later. It's insane. >> It's unbelievable.

>> So, back to Ferrari, though. He's really. the entrepreneur that figures out how to. build a real big business at the. intersection of everything that's going. on here. He's just doing it through his. road car business. There's a great quote. from another team owner during this era. and it goes, "Formula 1 is Ferrari and. Ferrari is Formula 1. It's that simple.". This is another team owner that is. saying that like a competitive team to.

Ferrari. And you might know who the team. owner was who said that quote. >> Oh, it's Bernie. >> Yep. It was the person who quite. literally would replace Enzo in that. quote. Bernie Eckleston, the uh supremo. imprario. owner of F1. >> Owner of some part of F1, but controller. of all of F1. >> So Josh and Jonathan in the formula book.

have a great quote about Bernie and. Ferrari. As it turned out, no one would. get richer off the Ferrari mystique than. Bernie, a man who has never once. employed in Marinelo. >> Yep. >> And that will be our protagonist today. But before we begin Bernie's tale, now. is a great time to thank our presenting. partner, JP Morgan Payments. >> Yes, the modern sports fan experience.

extends far beyond just attending an. event. The entire customer journey from. tickets to concessions and merch, practically every touch point involves a. payment. And when they're fast and. frictionless, it makes the entire. experience better for fans and the. business behind it. As you've heard us. talk about, JP Morgan is always. investing in the latest technology and. hardware for seamless transactions and. ironically making the payment stage. effectively invisible. Take biometric. payments. Our live show at Chase Center. was one of the first events there to.

offer JP Morgan's pay by face experience. at concession kiosks. We tried it. ourselves. The technology is awesome. You enroll on your phone, you just scan. your face at the kiosk and then you've. paid. No phone or card or anything. needed so you can get back to your seat. faster. >> So flash forward to today. JP Morgan. Payments literally set the benchmark for. bringing this endto-end biometric. checkout solution to market. They just. earned best-in-class honors for it. And. David and I know that having the most. cutting edge payments technology like. biometrics might not be a top priority.

for your business today, but it doesn't. have to be. And that's the point. >> Exactly. JP Morgan is thinking about all. this and investing ahead so you don't. have to. Whether you're looking for next. generation hardware, payments APIs, or. you simply want more payment flexibility. and security, their all-in-one global. payments infrastructure is what sets. them apart. They help companies of all. sizes thrive in today's fastchanging. digital economy. You get what you need. now with the ability to scale as your. business grows and technology advances. So, if you want to learn about how JP.

Morgan Payments powers seamless. experiences for fans and businesses. across all industries, check out. jpmorggan.com/acquired. to discover what solutions can help. accelerate growth for your business. Okay, so David, enter Bernie Eccleston. >> Bernie Eckleston. So Bernie was born in 1930 and he was a. hard scrabble kid. He grew up in. Suffach, which is to the northeast of. London. His dad was a commercial.

fisherman and his mom was a. authoritarian homemaker according to. many biographies about him. You never. really know what the legends about. Bernie, but that's the story at least as. he wanted it told. >> Yep. After the war, Bernie ends up. getting into the uh wheeler dealer. business in London with surplus cars and. motorcycles from the war. He opens his. own showroom in the outskirts of London.

where he starts to specialize in selling. luxury automobiles to the newly rich and. famous. Basically, he becomes like the. London celebrities car guy. You know, you got your jewelry guy, your clothes. guy, you got your drugs guy in the 60s, you got your car guy. Birdie's the car. guy. >> People refer to him as a former used car. dealer, but that's not really right. >> Yeah. Well, I mean, it is right. He. started that way. >> It's like calling someone else's puzzle. dial Rolex a used watch, you know? It's.

not really used. >> No. No. It's like, you want a Ferrari or. you want a Bugatti? Hold the phone. Let. me make some calls and see if I can get. you one. >> Right. There's also always been plenty. of gossip over the years that Bernie was. involved in more um underground. activities, shall we say, at the time. And Bernie himself would encourage this. So, specifically, there was a. long-standing rumor that Bernie was the. mastermind behind the great train. robbery of 1963,

where 2.6 million pounds was stolen from. a British Royal Mail Train. This is like. one of the most famous train robberies. in history. Bernie loved this speculation. It's so. in 2005, a long time later, he finally. addressed it. >> when he's what, 70 years old or. something. >> Yeah, 75 years old. He gives a quote to. the media when asked about it. There. wasn't enough money on that train for me. to be involved. I could have done. something bigger.

You start to get a flavor of, you know, who Birdie is, >> which actually is correct given what he. would go on to do. >> Very correct. 2.6 million pounds. That's. jump change. So, criminal mastermind or. not, Bernie is smart. Once he gets into. hawking cars to the new money rich folks. in London, he doesn't just sell them the. cars. He also steers them into. financing, which I think is basically. how car dealers make money. They mark up.

the cars a little bit, but then they. really get you on the financing and the. servicing fees, etc., etc. And when. you're selling really expensive cars, the financing fees start to add up. So. this nets Bernie his first small. fortune. Now the deeper that he gets. into this luxury auto world, Bernie has. the same realization that Enzo Ferrari. had a decade or two earlier, which is. that motorsport and racing is the. legitimizing heritage of all of these.

fast luxury cars. So, just like Enzo. himself, Bernie wants to have his. dealership and his brand associated with. Formula 1. So, in the mid60s, Bernie. starts hanging around with F1 drivers. And being the Wheeler dealer that he is, he pretty quickly becomes the agent for. a few of his pals, negotiating better. deals for them with their teams for. their salaries, you know, for a small. fee, of course. >> Yes, of course. Eventually, he cooks up.

a scheme with one of his star clients. who actually drives for Lotus for Colin. Chapman, a driver named Yoken Rint to. leave Lotus and buy a team together for. themselves. They're going to become not. just the talent. Yoken's going to become. an owner. Yoken at the time, he's one of. the best drivers in the world. He's on. top of the standings in F1. He's blowing. away the field throughout the 1970. season. And then tragically during his. practice session at the fourth to last.

Grand Prix of the season crashes and is. killed and Rent and Chapman were. constantly fighting about the safety of. the Lotuses that he was driving. Rint. was so far ahead of the pack in the. standings when he was killed that he. would actually win the driver's. championship that year. >> Oh, he still won, right? >> Yeah. Postumously. He's the only driver. ever to um win a championship. So, he. got zero points in all of the races. after his death, but he was so far ahead. that he still won.

>> Bernie, as the story goes, is devastated. after Ren's death. And to honor the. memory of his friend, he decides that. he's going to carry through on the plan. that they had together, the dream they. had. And in 1972, Bernie buys the Brabom. F1 team for a h 100,000 British pounds, which would be about 2.3 million today. Today, I think every single F1 team is. worth at least one a half billion, I.

think, is the floor. >> That's exactly right. >> Uh Bernie doesn't make that much money. on the Bravom team, as we will see. But. >> he sells it for what, five million. later? >> Five million a couple years later. Yeah. So, uh, you know, a nice return, but. definitely the fact that team valuations. go from £100,000 to a floor of one and a. half billion is thanks to Bernie. >> Well, thanks to Bernie for part of it. and then specifically thanks to Bernie. leaving after that. >> Yes, for the other part of it as we will.

get into. So when Bernie buys the Brabom. team in 1972, along with it, he also gains membership. into the quote formula 1 constructors. association. Now this is a very loose. organization. Organization is being generous here of. all the team owners that Colin Chapman. had actually kind of taken the lead in. pulling together back in 1963 with the. original purpose. solely of coordinating.

joint travel and transport logistics to. getting their teams and cars to all the. various races around the world. It's. like, hey, you're my bitter rivals. I. never want to associate with you. I. battle to the death with you out on the. tracks. But. >> we are going to the same place. >> We're going to the same place. Why don't. we share a ride, so to speak? >> And today, actually, Formula 1. management does handle all this. And I. think they make a little bit of profit. on it. Like it's a service that they. sort of sell to teams. a tiny amount of. profit relative to the rest of it, but.

they handle the logistics of moving the. whole circus around the world. >> Yep. Well, one thing I can guarantee is. that once Bernie takes it over, he's. definitely making a profit on it. So, Bernie, when he joins this owner's. table, shall we say, pretty quickly. realizes a couple things. One, except. for Enzo Ferrari, none of these other. guys have a lick of business sense. All. they care about is fast cars and winning. races. Whatever money they have or don't.

have, it's all going down the tubes in. pursuit of victory. The second thing he realizes is that. except for Ferrari, and by this point in. time, Enzo has sold half the company to. Fiat, so he has major resources behind. him in Italy, none of these other guys. actually have any real money. I mean, for God's sakes, Colin Chapman is about. to nearly go to jail over a $8 million. embezzlement case with Delorean. $8. million went a lot farther back in the.

70s. But these cars are quickly becoming. very expensive, and the teams are. becoming very expensive to run. There is. not a sustainable way to run a team. I. think the average tenure over the entire. existence of Formula 1 is about six. years for a given team. Just to make. this exact point, here is the list of F1. teams in 1972, the year that Bernie buys. into the league. Lotus, Tyrell, McLaren, probably know that. Ferrari, you. definitely know that. Certis, March,

BRM, Matra, and Braum. >> So there's two that exist today. >> And at that point in time, only one of. them is a real business. So Bernie sees. this and he's like, "Dang, there's an. opportunity here. All these other guys are focused on. winning races. Yeah, I'd like to win, but I really care. about getting rich. And there's quite a. void of power here that I can insert. myself into. So, just to paint the. picture of the business state of F1 when.

Bernie came into the league, each. individual team negotiated their. appearance fees with each individual. Grand Prix separately. So, they're like. a whole bunch of Grand Prix, each with. their own race promoters and organizers. They're a whole bunch of teams, nine of. them to be exact, and they're all. negotiating separately with each other. >> Assuming there's, I don't know, 15 races. or something, that would be 135 distinct.

agreements between teams and local. races. >> Everybody's getting paid wildly. different amounts and usually not very. much. And these things sort of need to. depend on each other because how. valuable is a race to go to if the other. teams aren't going to show up to that. one, >> right? I mean, this is like the sports. business world's worst practice number. one. Not only is it bad for overall. revenue, you know, you have no. centralized leverage over the tracks if.

you're all negotiating separately. To. your point, Ben, it's just plain bad for. the sport. >> How are you supposed to sell tickets and. tell fans they should come if. >> right? You don't know if Ferrari's going. to show up or if McLaren's going to show. up. There's no way to know as a fan. until you actually showed up at the. racetrack who was going to be there. The other aspect of the sport that I say. would be in shambles, but wasn't even in. shambles because it didn't exist, was. broadcast and television and promotion.

There was none of it. >> Yeah. Thankfully, Bernie came along. before that became too big. I mean, can. you imagine if each of these racetracks. was trying to do their own media rights. deal? >> I mean, he came along at the perfect. time. It was already criminally too late. that F1 and the Grand Prix hadn't gotten. to television. I mean, we're talking. about the mid70s. If you look over at. the NFL in America, they're already. making like 50 million plus a year in. broadcast rights.

>> Yeah, it was 10 years into their I think. 1961 was their first national broadcast. deal. I mean, they had already launched. Monday Night Football in 1970. It's not. like there wasn't a playbook for this. out there. >> Yes. >> F1, meanwhile, is just as, if not more, popular, is a global sport, has great. demographics, and is making zero dollars. in meteorites. So Bernie shows up. He's. hardly a media professional here. But. even he can see that there's room for. improvement on both of these fronts.

>> Even before realizing, hey, media rights. are going to be super valuable. The. thing that he clearly sees is. centralizing these negotiations is going. to be the way to extract the most value. >> Yes, there's two opportunities here. The. near-term easy one is centralize the. negotiations with the racetracks, extract the most value, capture a bunch. of it for myself. And then there's a. longer term play of like, oo, what can I. do about these television deals? I think. it's actually worth one more quick pause. here to compare contrast Formula 1 in.

the NFL and Bernie and Pete Riselle. because these are sort of happening at. the same time. But Bernie is like the. anti- Pete Riselle. You know, Pete Riselle was this consmate. manager, professional media guy from Los. Angeles. He started as the LA Rams PR. guy and then he gets drafted by the. owners of the NFL to be an employee of. the league to serve them and their. interests as commissioner and the league.

is owned 32 ways by the owners of the. teams. >> Right? So Roselle's unifying vision to. the NFL owners was communist capitalism. as we talked about on that episode. Like. hey, this league first, we're all in. this together. Let's centralize our. negotiating and our media rights so that. we can all grow the pie and share the. spoils evenly. Bernie's MMO isn't league. first, it's me first. He does centralize things, but it's not. like Formula 1 becomes owned by all the.

teams equally. It's more like he says, "Okay, I'm going to start a company, and. that company is going to go sign. agreements with racetracks, and then. you're all open to do business with me. to figure out what it's going to be like. for you to race at those racetracks.". >> Yep. So, the way he does this, he. proposes to the other team owners, hey, obviously we need to centralize our. negotiations, and you know, I can tell.

that you guys don't want to do this, or. you would have already done it. Why. don't you just leave it to me? I'll take. care of everything. You give me your. rights for your team appearances and I. will go fight with these race promoters, many of whom are probably gangsters. themselves, and I will get us the best. collective deal. I'll tell you what, I. will even take all the risk and. guarantee to all of you other guys. upfront that you're going to get paid at.

least as much as you're making now. Um, and you must come to the races. That was. the teeth. No more of this like I might. show up, I might not. >> Yes, that was also part of the. motivation of we got to fix the sport. Nobody says, "So, I'll do all this and. I'll just take a small fee off the top. for my services." Supposedly, in the. meeting of the constructor's. association, he verbally says that he. will only take 2% of the total race fee. revenue off the top for his services. >> Really? But of course, nobody writes.

anything down because Bernie never. writes anything down. And when the dust. finally gets settled and many decades. later, all of the books and stuff become. public through whole series of court. cases. Turns out Bernie's actually. taking 8% off the top for his fees, which is, you know, a healthy amount. In. addition, he's also an owner of one of. the teams, so he's getting his owner. split. Honestly, 8% is not bad. If you. are massively increasing the amount that.

every team is getting paid by doing this. and you are sort of like organizing and. orchestrating the sport, taking 8% for. those services, it seems quite. reasonable. >> Absolutely great point and you are 100%. correct. Bernie is doing a great service. for all the F1 teams and owners. He is. instantly making the sport a lot more. valuable. >> and sustainable. >> And sustainable. Totally. >> Every single team would go bankrupt. except Ferrari otherwise.

>> Yep. So before Bernie gets there, the. average prize purses and payments that. teams would get from a Grand Prix. And. obviously they varied wildly, but on. average it was like $10,000 per team. So. like nothing. In Bernie's first year. running the show, he takes the average. prize and fee payment up to $40,000 a. year. So 4x in one year and then a. couple years later by the mid70s it's up.

to 150k per race. And then by the end of. the decade he's gotten it up to 200k. So. like massive massive improvements. >> per team per race. Yeah. So suddenly you. can start to actually fund your. operation if you know that every time. you show up to the track you're getting. 200k to do it. >> As Bernie would never fail to point out, all of the other team owners should be. massively grateful to him for. essentially saving their asses here at. funding their teams. Yep. And back to.

the original purpose of the. constructor's association of. coordinating travel costs, Bernie also. goes out and negotiates competitive. rates with freight providers and. massively improves travel costs on the. logistic side of the business for the. teams. Basically, Bernie's sort of first. act in F1 reminds me of one of my. favorite sayings that I heard earlier in. my career from a mentor. He may be a. thug, but at least he's our thug. Yes. So, it's worth taking a pause to.

say the FIA is still the governing body. of the sport of this racing series. And. so, Bernie takes over this thing called. the constructor's association, but. really the FIA and their set of rules is. still governing what happens between. these teams at the racetracks. He's just. the one sort of organizing the commerce. through the constructor's association. >> Yes. And importantly, the FIA is the one. who blesses each of the racetracks with.

being a Grand Prix part of Formula 1. >> So, what happens next? As you might. imagine, you know, these race promoters. are none too happy about this little guy. from England coming and beating them up, >> right? Someone's aggregating all this. power in the ecosystem and they're. negotiating with us and it doesn't feel. good because they've got all this. leverage now. >> Yep. They go to the FIA and say, "Hey, you got to do something about this. Eccleston guy. He thinks he's running F1." Yep. This.

results in a whole series of protracted. negotiations between Bernie and the. Constructor's Association. and the FIA that finally get hammered. out in 1981 with the first Concord. agreement, which is still the name of. the roughly every five-year agreements. that govern F1 to this day. Do you know. why they're called the Concord. agreements? >> I do. That is the physical location in.

Paris of where they were negotiated, right? >> Yes. Of the FIA headquarters at the. Plaster Concord, which gives you a sense. here, the Plaster Concord in Paris is. one of the ritziest, most famous parts. of Paris. It was a bunch of like uh. stuffy bureaucrats. >> And so what is the FIA? Is it a. nonprofit? Is it a government body? Is. it like an NGO? >> It is an an NGO. That's exactly what it. is. It is an international organization. that was formed by all of the respective.

European country motoring clubs. So the. FIA also regulates like rally sports, endurance racing, etc., etc. It's not. just Formula 1. It's just that Formula 1. is the pinnacle of racing. It's a. standards body. >> Yeah. Exactly. So in this first Concord. agreement, the two sides, Bernie and the. Constructors Association and the FIA and. Racetracks by proxy agree on four. things. One, the FIA will have full.

unilateral and unchallenged jurisdiction. over the rules of the sport going. forward. The Constructor's Association. and Bernie, they have no say over the. technical rules of the sport. Two, the. constructor's association teams will. commit to showing up and participating. in every official Grand Prix race. In. return, all of the race fees and prize. money now contractually must be paid. centrally to Bernie and the.

Constructor's Association. And two, Bernie and the Constructor's. Association. will control all rights and income from. any future televising. of F1 races for the next five seasons. >> No rights to the race organizers, no. rights to the FIA, all the TV money flowing through Bernie, >> which if you look today, that is the. single largest revenue stream of the.

whole thing. Of course. How could it not. be? >> Yep. So, what's interesting is both. sides here actually feel like they're. getting a pretty good deal. And to be. fair, the reason that they thought that. was the TV media rights weren't actually. worth anything yet. Well, did they put. in that the TV media rights when they do. happen, Bernie still only gets 8% and. the teams get the rest of the 92%. Or is. that yet to be negotiated? >> Gray area.

>> Okay. Bernie thrives in the gray zone. So at the time, European and British. television was a mostly statec. controlled with organizations like the. BBC and its peers all across Europe and. bh. behind the US in terms of monetization. and sophistication of televising. sports especially, but any kind of. media. Again, these are mostly like the. equivalent of PBS in the US. They're. public broadcasters. There's not a.

competitive ecosystem. There's really. one party to go to. >> Yep. So, the teams and the FIA and the. tracks. Yeah. Even though they're giving. up all the TV rights to Bernie, they. don't look that valuable to them. They're like, "All right, you want to go. have a boondoggle and see if you can. figure this out? Good luck to you.". >> Right. And to be honest, it sounds hard. to film. You got these racetracks with. 15 turns and cars that whiz by real fast. and crappy technology at the time to try. to film them. and you want to go do.

business with the government to try to. get them to broadcast. Okay. >> Yep. >> Have fun. >> So Bernie unclear if he had a vision for. this all along or if he was like, "Oo, here's something I can grab. Let me go. see what I can do with it." Either way, he basically executes it perfectly. So. once he gets the TV rights, he goes to. an umbrella group of all the public. broadcasters all across Europe called. the European Broadcasting Union and it.

represents 92 different countries, national public broadcasters, including. the BBC in the UK, and says, "Hey, you. have a lot of F1 fans in your respective. countries. That's a big sport in Europe. I now have the rights to broadcast this. sport. How about I'll sell them to you. for super super super cheap. A couple. million a year for all 92 countries. So.

like amvertised in aggregate basically. nothing. >> for any individual broadcaster to take. these rights. The only thing I want them all to do is. promise to show every single race on the. calendar, not just the ones that are in. their home country. >> So, seems like a pretty good deal, right? >> So, he's in grow the sport mode, right? Not capture value right here. This is a. growth opportunity. >> Yep. This is a long game. So, they all.

say yes. And then Ben, as you were. saying a minute ago, it pretty quickly. becomes clear, hey, all 92 public. broadcasting entities don't really have. the expertise or the interest in. figuring out how to televise this sport. Seems hard. >> It's still true today. The way that most. of the broadcasters around the world. take F1 is they take one main feed that. is produced and then they do more stuff. on top of it. >> So this is when that starts. Bernie. says, "All right, no problem. I'll take.

the risk. I'll fund the investment. upfront personally to create a central. single television feed for each race. that Formula 1 quote unquote slashme. Bernie.". >> Yeah. What is Formula 1 at this point? >> Yeah. What is Formula 1? So, we should. say Bernie loved to operate without. contracts. Here's his exact quote. I. carry out my business in a very unusual. way. I don't like contracts. I like.

being able to look someone in the eye. and then shake them by the hand rather. than do it the American way with 92page. contracts that no one reads or. understands. If I say I'll do something, I'll do it. If I say I won't, I won't. >> Yeah. >> And who owns these things? I don't know. I'm making sure it happens. So Bernie. goes and sets up a new company, Formula. 1 Promotions and Administration or FOPA, >> not to be confused with FOA, FOCA, which.

was the constructor's association that, you know, just did that deal with the. FIA, >> right? That Bernie is now de facto head. of, but doesn't have any legal ownership. of, >> right? The first thing that he has Phopa. do is create this centrally produced TV. feed from England and then distribute it. out to all the various broadcasters all. across Europe. >> He just keeps running this playbook over. and over again of, okay, cool. I'll. centralize something. I'll aggregate. something and now I have leverage to go. and do business with the rest of the.

ecosystem. >> Yep. And his plan has been like you. identified, I'm going to get all these. public broadcasters across Europe to. basically go develop the market for me, >> right? They're making the next. negotiation much more favorable to me. They're out there right now. Sure, we. didn't really exchange much money, but. they're out there building the brand, getting people are excited, and then as. soon as that agreement period is up, then I'll go to them and say, "Okay, it's really expensive and I am the one. who you have to pay.". >> Yes. I'm going to be sitting in the. middle as the choke point for what will.

now be a hugely in- demand television. product, which is exactly what happens. Now Bernie also gets really lucky here. because in the intervening years the pay. TV ecosystem in Europe finally comes. online. >> So one of the reasons why America was. farther ahead in developing the. television market is that cable and pay. TV had become a thing earlier in. America. And so there's just a lot more. biders for content out there in America.

When Bernie started this adventure, it. wasn't clear that the same thing was. going to happen in Europe, but it did. >> Yeah. And there was one other element. that developed in all this, too. In. addition to these agreements that Bernie. was having everyone sign, race. organizers were required to surrender. income from trackside advertising and. corporate hospitality to Formula 1 owned. entities. So this now means that the. race organizer, the track business model. is really just ticket sales.

>> Yep. So as it's becoming clear that TV. rights are now going to be really. valuable, the original 1981 Concord. agreement term comes up and Bernie now. needs to go negotiate a new deal. >> Oh. Because FOHA and the TV rights were. actually not a party to the previous. Concord agreement. >> Right. Exactly. It didn't exist yet. Bernie created it in the inter.

TV rights a thing. We're pretty sure. they're going to be valuable going. forward. We deserve a cut. No teams, no. tracks, no races. We want in on this. >> Yep. >> So Bernie says, "Okay, okay." He starts. with, "Why don't we just divide it all. up a third? A third, a third. FOCA and. the teams, you'll get a third. FIA, you. guys can get a third. But then a third. really should officially go to FHOPA. I'm the one that created this and we're.

producing the broadcast. So after a. whole bunch of negotiation, it ends up. splitting out that the FIA gets 30%. FOCA and the teams get 47%. And FOA, Bernie's company, gets 23%. >> FOHA is just a guy. You're just saying. and 23% of it goes to me, a thing I. fully own. >> Yes, this company that I created. Bernie. is a master at playing everyone off. here. This split gets negotiated before.

Bernie really ramps up running bidding. processes in each country for the TV. rights. So, he actually renews the. European Broadcasting Union deal for. another three-year term to sort of keep. growing the sport and not value maximize. just yet because he doesn't want a lot. of money to start going to the other. organizations. >> So, that was the second Concord.

agreement. When the third Concord. agreement comes up for negotiation in. 1992, Bernie goes to the FIA and he's. like, "You guys, you're getting the TV. money, but you can't be happy because. it's really not that much, you know, and. there's a lot of complexity here. You're. a international organization. What if I just make this easy for you? I'll pay you a flat fee. Rather than you taking 30%, I'll pay you.

$5 million a year going up by 1 million. every year up to 9 million at the end of. this term in exchange for your. percentage of the TV rights. This will. be way easier for you. And the FIA is. like, great, that sounds like a great. deal. Let's do that. So Bernie now has the 23% he originally. had plus another 30% that used to belong. to the FIA for which he has to pay 5 to9.

million a year. >> And you can actually imagine if you're. an international regulatory standards. body, the fact that a guaranteed payment. is being made available to you so you're. not taking risk anymore might actually. be great. >> Of course, and this is the justification. that they all give to the press when the. deals are done. So deal gets done. Bernie's now got 53% plus all of his. cuts that he's taking from the. constructor's association for his. services plus his team ownership etc.

etc. Deal gets signed he goes out runs. auctions across Europe and really across. the globe with any TV provider who's. interested in showing F1. All of a sudden, TV rights go from small. singledigit millions in aggregate to F1. to over 25 million a year just flowing. into FHA and Bernie from the TV rights. >> Oh wow. >> But call it 40 to 50 million a year. So. a big big step up.

>> Okay. So how do the teams feel about. this? I mean that suddenly there's this. guy that's getting halfish. the revenue from the broadcast of their. sport. That is the key question. You. would think that the other owners would. be pretty pissed and some of them were. to be fair. One of the other owners, Ken. Tyrell of Tyrell, which fun fact is. actually the forerunner of the Mercedes. team today, >> publicly accuses Bernie of quote. stealing F1 from the teams. But that's.

kind of a minority opinion. By and. large, they're all still pretty grateful. to Bernie at this point because turning. F1 into this major TV sport meant that. all of a sudden all of their individual. team sponsorship deals just got way, way, way more valuable. >> Ah, that makes sense. Before F1 was. televised,

all that sponsors were getting when they. got their logos on the cars was just. exposure to whoever happened to show up. at uh any given track for any given. race. And really, it wasn't even the. totality of the fan base that showed up. It really was only fans that were. sitting close enough or at the right. angles where they could actually read. the logos on the cars. >> It's interesting because at this point. in time, the more valuable real estate.

would have probably been the trackside. advertising, whereas today the trackside. advertising is not nearly as valuable as. the space on the car because the cameras. stay fixed on the cars and on the. drivers. That's the valuable space that. people are after. And unless you're. televising it, the cars are the thing in. motion whizzing by, >> right? Yeah. There's no way you're going. to be able to read what's on an F1 car. when it's whizzing by live. >> Right. >> So, this is when sponsorship money and.

in particular tobacco money really. starts funneling into the sport. In. aggregate until it finally gets banned. by the EU in 2006, tobacco company. advertising poured $4.5. billion. into team sponsorships in F1 over the. years. That is a lot of money. And that. was just one category. And in. particular, part of the reason why. tobacco is so interested in here is.

there was sort of a loophole that as. there was all this pressure to ban. tobacco advertising on TV and on radio. and on billboards and in newspapers, putting it on a car that happened to. show up in a TV broadcast. Oh, that was. a sponsorship of a team. It's sort of. this way that the tobacco companies got. to stay on TV and it was heavily. associated with a brand image that they. wanted to cultivate. It's glamorous. There's speed. It's risk-taking. They. get to do these full takeovers of the. liveries of the cars. I mean, it is a.

full screen ad. It's just not classified. as a TV advertisement. Okay. So, finally, thanks to tobacco companies and. TV meteorites and Bernie, there's all. this money flowing into Formula 1 to. fund these ever increasingly expensive. operations. And of course, the question. then is what do they do with all this. money? You know, these teams want to. just go out and beat each other. And so. they're going to spend into an infinite. limit to attempt to do so. >> Oh, yes. And of course, they come up. with some pretty clever ways to uh.

invest slash burn that money and make. the cars go faster on the grid. >> Yes. But first, listeners, now is a. great time to thank longtime friend of. the show, Service Now, the platform that. puts AI to work for people. And. listeners, we're doing something fun and. special today. One of the main ways that. we did research for this episode was to. go to the Las Vegas Grand Prix with. Service Now, and we spent a ton of time. with their CMO and EVP, Colin Fleming.

Colin also happens to be a former Red. Bull test driver. So, it was amazing to. hear a lot of research directly from him. and just grill him with questions all. weekend. We have him here with us today. Hello, Colin. >> Thanks for having me, guys. So, we. thought a fun thing to do this segment. would be to share one of the F1 tidbits. that you shared with us when we were in. the paddock club together. So, what is. one of the things that you think most. people don't know about the sport? >> Everyone talks about the technology and. speed, but the underdisussed component.

is the human side. An F1 driver is. operating at fighter pilotike cognitive. load for 90 minutes straight. 6G's under. pressure, which means their head weighs. like 80 pounds at that moment. Their. heart rate is 180 beats a minute or more. and they've lost 5% of their body weight. during the course of the race. They're. doing this making micro decisions of. thousands of times with no timeouts, no. commercial breaks, and I don't think. there's another sport like it. >> We're talking a lot this episode about. the specific technologies that were. leaps forward in different F1 eras. What.

do you think was the most significant. over the years? >> For me, it was the hybrid introduction. I think it was 2014. It moved the sport. from being about pure horsepower to. being about energy management. And as a. result, the drivers lives got way. busier. Now they're managing battery. deployment, harvest modes, engine maps, and they're doing this at unreal speeds. And Mercedes cracked it first. They won. eight straight championships. >> Okay. Now, from the Service Now angle, I'm very curious why you decided to uh. sponsor an F1 team in Aston Martin. What. is the business case?

>> Three things that are really critical. for us. Storytelling, hospitality, and. brand. It's a super complex sport and as. we know logistics uh technology. everywhere and that is the life that our. customers live every single day. So we. didn't just slap a logo on it. We deeply. embedded our technology into the. organization to help them really find. that onetenth of performance they're all. looking for. The hospitality gives us. the opportunity to tell that story and. the brand is truly a lead. We're. thrilled to be part of it. >> Okay, last question while we have you. What's the latest in the world of. Service Now? >> Well, anybody that's deploying AI today.

knows it's absolute chaos. Companies. don't know what's running, what's. working, what's not. And that's why. we've built the AI control tower. It. helps companies turn that chaos into. control, giving them visibility, governance, orchestration, and to really. understand what value it's bringing. together. So, we think the answer is. ultimately this incredible probabilistic. intelligence with deterministic controls. and that orchestration layer from. Service Now. And in May, we're going to. show it all off at Knowledge. >> We'll be there. >> Amazing. We hope all of your listeners. will join us. Well, a huge thanks to.

Colin for joining us today and to our. friends at Service Now. You can go to. serenow.com/acquired. to learn more. Okay, so we're in this. era now where team owners have a lot. more resources at their disposal and boy. are they deploying it? Ben, what are. some of the crazy things that they start. doing during this time? So, in 1968, Colin Chapman from Lotus had become a. really big believer that the way that. his drivers could go faster in the turns. was applying more downforce so they'd.

have better traction on the road. And. they put the first air foils or wings on. the car. And in ' 68, that was just. really small wings. They almost look. like early Formula 1, the cars that were. just these like long tubes, but with. like little hints of what Formula 1. would become on them. It's this kind of. amazing transitional period. We'll link. to it in the show notes. >> And then don't they go to like big wings. before the FIA regulates those out of. existence? Right.

>> There is a lot of experimentation. Yeah. That happens in this period. It's really. fun. In the email, we'll put a bunch of. pictures of crazy F1 cars that were. technically within regulation when they. were first tried before all these. tactics were made illegal. But it's. probably time to stop and do a little. physics lesson here. I never really. understood this. So, this is listeners. education for me. Lighter cars are. faster. So, why would you want to put a. spoiler on a car that pushes it into the.

ground harder? You don't want a heavier. car. And so, you sort of have to. separate this idea of downforce pushing. down on the ground from just weight. There are ways to get downforce, which. can be good that is different than a. heavy car. >> Yeah. It's funny. Before doing this. episode and learning all this alongside. you, I always just sort of assume that. like at least road car manufacturers put. this stuff on cars to make them look. cool, not to actually do anything, >> right? But you want downforce to make it.

stick to the road better on turns. But. the issue, of course, is that with a big. spoiler, yeah, you're creating. downforce, but you're actually creating. a ton of drag also. So the car is facing. resistance to going forward as a. byproduct of what you're attempting to. really do is force the car down. So if. you focus too much on optimizing for. downforce on the turns, you end up. slowing yourself down in the. straightaways. So the takeaway from. lesson number one here is downforce. good, drag bad.

>> Yep. So let's flash forward 9 years from. that 1968 initial aerodynamics. experiment. So we're now here in the. late 1970s. Lotus is still working on. this issue. They were trying to figure. out a way to produce downforce that. doesn't produce a lot of drag. And what. followed is the stuff of F1 lore. You. will hear racing nerds talk about the. Lotus 78 and the Lotus 79 as if these. are like gilded vehicles, >> mythical beasts. >> Yes. >> Yeah. >> So, the first breakthrough is, well,

wait, what if we can turn the whole car. into a wing? I mean, rather than our. traditional shaped car with a wing. slapped on top, what if we made it. actually part of the body style itself? So, the whole thing gets pushed down. And when you look at the Lotus 78, it. really does look like one big wing. I. mean, Google it. We'll put it in the. email. It's really cool. The second. breakthrough is a fun one from the world. of fluid dynamics. Everyone listening is. probably familiar with how airplanes. generate lift. The wing is shaped in a.

special way such that when the plane. moves forward, you generate high air. pressure underneath the wings, low air. pressure over the wings, and thus the. airplane is pushed up into the air. Well, what if you did the opposite? That. is what the Lotus team did. They shaped. a car like an upside down airplane wing. So, the bottom of the car had a special. skirt on it that shaped air flow to. speed up under the car, squeezing air. into a very small space since it's super. close to the road. as the air molecules.

move along at high speed under the car, which creates that low air pressure zone. and then carefully control the air with. a gradual UPS slope and a diffuser to. guide how the air comes out from. underneath the car in the back. The. effect this had was to create low air. pressure under the car, high air. pressure over the car, and essentially. suck the car onto the ground. And in. physics, this is called the venturi. effect. So the areas under the car are. called venturi tunnels. >> Ah, that's why it is funny. When you and.

I were at the Vegas Grand Prix and we. kept saying, "Oh my god, these are like. fighter jets on the ground." They. actually are like fighter jets on the. ground. >> Yes, they really are like upside down. fighter jets. So did it work? Absolutely. Mario Andredy upon driving. it said that it cornered as if it was. painted to the road and he won both the. drivers championship and Lotus won the. constructor's championship in 1978. Interestingly, by the 1980s, it was. producing so much downforce that the.

drivers could take these corners at. super fast speeds, and it actually. became a safety hazard, especially. because if the car would go up on a curb. or the skirt slipped in any way, the. cars were then going way faster than. they otherwise could have without that. sort of uh sucking to the ground, the. ground effect to cause the traction. So, in 1983, these ground effects were. outlawed and regulations were updated to. say that you must have a flat bottomed. car. >> Interesting.

>> Yes. But for fans of ground effects, they would make their way back for the. 2022 to 2025 regulations, which that's. what we saw in Vegas. David, it was. crazy cool to watch because I think 70%. of the downforce from those cars is. created by the ground effects, not from. the pushing down of the spoiler, but the. sucking of the car onto the track. And. so it was kicking up all that dirt, especially during qualifying cuz it's. driving around on these Las Vegas roads.

that just have sand and dirt and silt. that sort of builds up and creates these. just like huge clouds of dust in the air. from all the sucking. And then. qualifying in the rain was insane. Seeing like all the rain water just. shooting up off of these cars. >> Yeah. The rooster tails as they call it. And I think it was 2 years before we. went in Las Vegas, one of the cars even. sucked up a drain cover that had been. welded shut and basically wrecked the. car. But these cars produce so much.

downforce that if you drive over even a. welded shut manhole cover, junk, it. sucks it right up. >> Wild. Yeah. So ground effects very very. powerful. There are a few other just. giant leaps forward that would happen in. areas other than aerodynamics also. So. engines over the years have gotten way. more fuel efficient with only 50% of. energy in an F1 engine lost to heat. compared to 70 or 80% in a road car. being lost to heat. So this obviously is. something that F1 teams care a lot about.

because if it's more efficient, you can. carry less fuel, have a lighter car, go. faster. So huge, huge advantage. They've. also gotten a massive increase in. horsepower, tripling from 300 something. horsepower engines when we first started. in the ' 50s to a,000ish horsepower. coming out of these engines today. >> Insane. In cars that are light enough. that you could basically pick them up, a. half to a third as heavy as like an. average road sports car.

>> The F1 cars were that light because of. all the carbon body work. >> Yeah. So, a 1000 horsepower in something. that's basically light as a feather as. far as cars go. >> And then, of course, there's. turbochargers, which are an insane. invention. This harnesses the unused. energy from the exhaust gases to spin a. turbine and then use that to compress. the air that is going into the engine, which ultimately means then there's more. oxygen in each engine cycle. So you can. have a more powerful combustion every.

single engine cycle and thus more power. again in the car. >> Which actually raises a important point. too. It's not like any of these teams, even the ones that were backed by actual. car manufacturers were doing this with. the goal of advancing technology for. consumer road cars. But as a byproduct, a lot of this technology over the years. did make its way into the consumer. landscape. Yes. And it did become an. intentional strategy over time and it.

provided a air cover for a lot of spend. especially for these constructors that. were also consumer car makers if they. could say, "Oh, this is R&D and stuff's. going to go into cars." And it did. I. mean, you had paddle shifters and carbon. >> or even just turbos. I mean, so many. cars, even like not sports cars are. turbos these days, and a lot of that. technology got perfected in F1. >> Yeah. I think people sort of overstate. this when they say there's all this. technology that came from F1 cars, but I. think it's more like the technology was.

sort of iterated and perfected or they. would explore new material science or. something in F1 cars that would. eventually go into road cars. >> Yep. >> So that's engines on top of. aerodynamics. Then there's this whole. third category where they really had a. breakthrough in electronics. So all the. cars we've been talking about at this. point were very very manual and analog. And in the early '9s, the Williams team. comes along and realizes, oh, this. technology is finally good enough for us. to try to automate some of the systems. in the car in real time.

>> Let's add software, baby. >> This is the early '9s. I mean, this is. pre- internet. So, they come up with. this whole crazy broad set of ideas and. remarkably they implement basically all. of them and they work very very well. So, the systems are traction control, anti-lock brakes, active suspension, semi-automatic transmission. Speaking of. road relevance, David, and. transferability to consumer cars. >> Yeah, totally. >> All of these worked together, and the.

car even automatically adjusted its ride. height, customized to each corner on. each racetrack. So, competitors saw this. and got so mad and accused Williams of. making a car that drove itself. Uh but. for a couple of years this was legal and. they won both drivers and constructors. championships in 1992 and 1993 with. Nigel Manel and Alan Prost. In fact, the. car was so dominant that Pro's old. teammate and rival from McLaren, the.

great Ayton Senna, who we have not yet. talked about in this episode, the. three-time world champion, wanted to. jump ship from McLaren to join Williams. And Pro was actually retiring after that. 93 season. So, a spot did open up for. Senna to join Williams in '94. Uh, but. then the FIA made it illegal to do all. this software stuff, >> change the rules as soon as he gets. there and says, "Hey, you can't have all. these electronic driving aids." I mean,

I know it makes the car really. desirable, but no, this is not the same. sport anymore because it actually. decreases the amount that the driver. matters so much that we aren't really. willing to go there. So Senna is then. left on a new team with a car that's. just on par or quite possibly behind the. quality of the whole rest of the grid. when they had to take out all these. electronic innovations. And sadly early. in that 1994 season, the racing world. would witness its most infamous and.

fatal crash in that Williams car. >> Yeah. which was obviously Senna's death. in 1994. which becomes this global moment. I. believe still to this day Santa's. funeral in Brazil is the largest. attended public funeral in history. >> I think three million people showed up. in the streets. >> That's right. >> For his funeral. >> It's this horrible tragedy. He had just. sort of gone from rising star to clearly.

the best race car driver in the world. Just this natural talent. There's a. beautiful documentary released in 2010. for anybody who's interested to go learn. about his life and this crash. >> I mean, one, it shined this light on. just the sport in general in a way that. hadn't happened since the modern. television era began. >> Yeah. >> Two, it specifically shined a light on. how unsafe it still was. >> Yeah. So it's interesting because by. this time the fatalities had really.

dropped off. So we mentioned I'll just. go through the counts here by decade. 1950s there were 14. In the60s there was. another 14. In the 70s there were 12. >> Yeah. You know more than one a season. >> Yes. So then they start implementing a. bunch of obvious stuff. The FIA has to. inspect every track and make sure it is. complying to all the rules before every. race. You can't have straw bales. anymore. >> That's right. The barriers used to be. straw bales. Yes. Now you need these. guardrails. They have to be double.

reinforced. You need separation on the. pit walls. There was a lot of stuff. going on sort of near the pits that. drivers were going too fast or. accelerating too fast. Finally, you get. fireproof overalls in the 1970s. You get. fuel safety cells, mandatory seat belts, multi-point harnesses. So big steps in. the 70s. Yeah, this is one of the. craziest things to me in doing the. research was for a long period of time, F1 drivers actually refused to wear. their seat belts because they wanted to.

get thrown out of the car so they didn't. catch fire after it crashed, >> right? >> Insane. >> They didn't want to limit their options. in a dangerous situation. So, after all. that, then in the 1980s, you have four. deaths, a lot better than 14 or 12. And. in the 90s, the only two deaths were. this one weekend, Roland and Senna. And. so it did kind of come as a shock. because I think people felt like, oh, we're through this era, things are a lot.

safer, but obviously they still have a. long way to go. So what happened after. Santa's death from a safety perspective? And what impact did it have? The biggest. one is they just slowed down the cars, right? I mean, all this R&D and sticking. to the road and getting crazy traction. and taking high-speed turns, the faster. you go, the more dangerous it is. And. so, interestingly, F1 racing today is. not that much faster than it was in. 1950. The top speed is like 40 mph.

faster than the old top speed. I would. have thought, oh, all this R&D, these. cars are probably 2, three, four times. faster. No, they're not. And so right. after Senna's death, they limited the. aerodynamics of the cars. You couldn't. use as big of wings. You couldn't use as. big of diffusers. In 1998, a few years. later, they groove the tires to reduce. cornering speed. So they actually looked. a little bit more like the tires we use. on the roads instead of the flats or the. slicks that you see real race car tires.

There were also some structural things. they put into the cars. So deformable. crash structures, survival cells, front. impact testing, higher sides on the. cockpits, and they changed the tracks. too. A lot of corners were given larger. runoffs and upgraded barriers. So that. all did help. But in the 2010s, there. were also two fatalities. And so this is. when the really big noticeable change. happened. >> The halo. >> The halo. So in 2018, in response to the.

2014 crashes, the FIA says enough is. enough. We are gonna mandate that every. car has this really, really rigid, robust, heavy thing that you put right. on top of the driver. And there's a. giant bar directly in the center of the. driver's field of view. So, there's a. giant compromise here, but it has saved. at least three people's lives since then. because it can protect a driver even.

when a car is upside down and skidding. These innovations have made it so we. have had zero fatalities since 2014. It's, I think, the longest stretch in F1. history without a fatal accident. >> Yep. It certainly seems like this board. is a lot safer these days. Yeah, it's. still dicey, but over the last 70 years, they've observed all the lowest hanging. fruit of ways that they can protect the. driver. >> Yep. So, bring it back to the business. narrative here, one of the kind of great.

ironies here of the obvious right. decision to focus on safety and slow the. cars down. Is it just further fuels this. sort of spending spiral amongst the. teams? Because the harder you make it to. go fast, the more they're going to be. incentivized to spend every last dollar. and look in every last little corner and. find every last little loophole to get. an advantage. >> Yeah. I mean, when the sport first. started, there were giant gains to pick. up left and right, and you could sort of.

do all sorts of crazy stuff. And we were. talking about all the different car. designs with spoilers that are up on. giant poles. And I mean, truly wacky. ideas. There was a six-w wheeled car at. one point, right? Cuz it wasn't in the. rules that you only had to have four. wheels. And over time, as they start. adding more and more guidelines for. safety and for all these other reasons, the way to succeed in Formula 1 shifted. from making a more powerful engine or. figuring out the very best arrow to. figuring out how to exploit the rules.

>> Yeah. And do more and more exotic stuff. >> Yes. what is left unclear in the rules. where I can see a little bit of daylight. between what they intended to write and. what they did write and what can I catch. that the other teams won't catch and how. do I sink $50 million of R&D into uh. achieving some speed outcome with that. >> it's really funny I hadn't thought about. this till now but actually the right. analogy is the semiconductor industry. and Moore's law it's like a different. set of rules it's like the rules of. physics instead of the rules of the FIA.

but. >> as you progress like TSMC and ASML and. they got to spend incrementally more and. more capex and more R&D every year to. push the boundaries farther and farther. and all the lowh hanging fruit is gone. and they get more and more exotic with. lasers melting tin just in time, you. know, etc., etc. >> Good point. Yeah, I had thought about. that way. Meanwhile, while the teams are spending themselves. into unprofitable oblivion, Bernie, starting in 1993, becomes the highest.

paid corporate executive in Britain, taking home in 1993. $44.5. million in cash, and that's only what's. reported to her majesty the crown in. that year, as we'll get into. He's also. getting older by this point in time. He's in his late 60s. He's on his second. marriage. He has two young daughters. with his second wife, Slavica. And he. starts to think about estate planning.

and maybe some liquidity for his family. and his estate. But in doing so, he just. about causes the whole thing to fall. apart. Because even though he was the. highest paid corporate executive in. Britain, that didn't necessarily mean. that he was running FHA and F1 like any. kind of professional organization. He. did everything himself and intentionally. didn't keep any records. He minimized. the number of contracts that he would.

sign intentionally. He kind of operated. F1 like a sole proprietorship, shall we. say? The whole corporate operation was. run out of a building in London that was. also his house. Seriously, like the. bottom four floors of the building were. F1 offices and then he had the floors. above and supposedly he had all the. rooms in the offices bugged so he could. listen to what everybody was saying at. every point in time. And famously he. would kick everyone out at 6:00 p.m.

He'd be like, "All right, leave my house. now. It's time for y'all to go home.". Yeah. >> Wow. This continued until Liberty takes. over in 2017. He had a few lawyers and. finance people to make it all function. But there was no marketing department. for F1. There was no research or data. department. There was no sales. department besides Bernie. Well, there. weren't actually that many things to. sell. They weren't selling a lot of. sponsorship at the league level at that. time. That was pretty much all teams. I. guess TV rights you have to sell.

>> Exactly. like uh yes on the sponsorship. side, but TV rights, you know, they're. in 90 soon 100, 120, 130 countries, all. with different contracts and different. providers. Bernie's just out there doing. this more or less all by himself, though, we should say he also had a. right-hand man and essentially number. two in the business. a former Formula 2. driver and also owner of another team in. the league, the March team, a man named.

Max Mosley, who happened also to be a. lawyer. Very useful for Bernie's. activities. There's this great quote. that Bernie recalls saying to him when. they first start working together. Your. problem, Max, is you always want things. absolutely clear, and sometimes it's. better if things are not clear. So he gets with the program and uh they. pretty quickly become two P's in a pod. In 1993, that same year that Bernie. becomes the highest paid executive in.

the UK, he kind of shadow arranges to. get Max installed as the new president. of the FIA. Meanwhile, he had already. somehow connived to get himself Bernie. already an official role at the FIA as. the vice president in charge of. promotional affairs. In addition to all. this, at one point along the way, he. also took over as the promoter of the. Belgian Grand Prix at Spa.

>> Oh, so he was paying a race fee to. himself. >> Yes. So at various times, Bernie was. serving in a principal role in all of. the major F1 stakeholder categories. Team owner, race promoter, official FIA representative, and of. course CEO and owner of FHA and de facto. the league itself. And I think at every point in time, he.

was always in at least two, if not three. or four of those roles simultaneously. >> Unbelievable. >> He really takes the, you know, no. conflict, no interest phrase, to new. heights. >> Absolutely unbelievable. There's a great. quote from Eddie Jordan, who is a. Formula 1 legend. Do you know this. quote? >> Uh, no. No, no. He said that Bernie. Ecklestone was someone who sold Formula. 1 four times, has never bought it back, has never lost its control, and still. owns it. And do you know the most. important thing? He never effing owned.

it in the first place. >> Yes. So, let's tell that story about how. he sells it four times, never buys it. back, and still owns it and never owned. it in the first place. That is such a. great quote. I hadn't found that. I love. it. I love it. Yes. But listeners, before we do that, now is a great time. to tell you about one of our favorite. companies, Verscell. And funny enough, as we were preparing for this episode, I. was in the pit lane at the Las Vegas.

Grand Prix, and I ran into none other. than Verscell founder and CEO, Guiermo. Roush. >> Of course you did. >> Which is very fitting since Verscell is. uh known for speed. >> Yep. Yep. Yep. >> Yes. They are known for lightning fast. performance and the insane iteration. velocity that they enable for. developers. So it's no surprise that. they are emerging as the ideal. production layer for AI agents. >> Yeah, I mean gosh, all signs are. pointing to 2026 as the year that AI. moves into actual agents that do actual.

work. But building an agent is the easy. part. Operating a whole fleet of agents. at scale, that's hard. and doing it with. governance, isolation, enforcement. really hard. >> So that's where Verscell comes in. They've already built the modern. platform for the web that is trusted by. companies from Notion to Door Dash to. Stripe. And that makes them uniquely. positioned for the agentic web because. they already power the plumbing. underneath many of the world's biggest. applications. >> Yep. If you're building with AI right.

now, you're almost certainly already. touching Versel's infrastructure. Their. AI gateway and sandbox are used by. everyone from one-person startups to the. biggest global enterprises. And their AI. SDK is the toolkit to build AI powered. products. And it's downloaded 7 million. times each week. They recently launched. Verscell agent, a suite of AI powered. developer tools that they are calling. self-driving infrastructure for. building, deploying, and operating. agents. It's the first step toward a. fully autonomous cloud operation.

Verscell is your one-stop shop for. everything you need to build for this AI. era. Agents, apps, sites, dashboards, whatever. With Verscell, you can just. ship. >> So, you can visit verscell.com/acquired. to get started. That's. veral.com/acquired. and just tell them that Ben and David. sent you. >> Okay. So, Bernie's many sales and. monetization opportunities. Here in the. mid 90s, he starts exploring liquidity. options for himself. And in particular,

he wants to funnel that liquidity into a. new set of offshore vehicles to avoid. British estate taxes for his family. after he dies. And you know, this is. like a natural activity for somebody. approaching their 70th birthday. What. Bernie didn't foresee or anybody else is. >> he had another 25 years at least in him. at least cuz he's still alive in 2026. >> Yep. Now, also to be somewhat fair here, protecting his estate from the heavy.

British inheritance taxes is a. legitimate concern because otherwise. there would be no way that his family. could keep control of F1 after his. death. It would have to be broken up and. sold just purely to fund the estate. taxes. So if you actually are a team, this is. starting to become kind of an. existential risk of what if Bernie dies. suddenly and then they have to sell F1. off into different parts with different. owners. >> And you say, you know, if you're a team.

owner, it's not just if you're a team. owner. If you're a team owner or a race. promoter, you want to play on here. So. it just so happens here in the mid to. late 90s that we're in the height of the. dot era. >> Wait, that plays into this? >> Oh, yeah. So, what's the natural thing. to do? Bernie's gonna IPO. F1. >> Oh, I've totally missed this. >> Oh, yeah. Oh, there is so much delicious. chaos that gets unleashed here. By this. point in time, Bernie's various.

companies, and there are even many more. than we have talked about on this. episode, just for simplicity. Collectively, they're earning about 250. million British pounds a year in. revenue. and they have 50% plus EBITD. dot margins. And remember this is at a. time when the British pound is worth. call it 60 to 70% more than the US. dollar. This is a very IPOable business.

if it were a you know regular business. >> Yes. Nonetheless, times are so crazy. that Bernie hatches a plan with his. bankers at Solomon Brothers to. consolidate all the various F1 companies. that he owns into a single holding. company called Sleek Holdings, SLEC. Holdings. And he's going to transfer his. ownership of that new company to his. then second wife, Slavica, for tax.

reasons. So SLC was short for Slavica. Eckleston. >> and float it in a duallisted IPO in the. US and England with an anticipated. valuation of around $4 billion. H we should also note here too, we've. being a a little glib in this episode. In 2023, Bernie ultimately pleaded. guilty to tax fraud as a result of all.

the machinations we're about to talk. about and had to pay a 653 million pound. payment to the crown in back taxes and. fines. And he also received a I think. 17-month jail sentence which was then. suspended probably in large part to his. advanced age. >> Crazy. All of this lurking in the. background may have been part of the. reason that famously he turned down. several offers of knighthood throughout. his life. >> Yeah. >> Although you'd think it would actually.

bode better for you if you're a knight. going into some lawsuit with the. government over owing the government. money. >> Good point. Yeah. Does the crown sue one. of their own? I don't know. >> Anyway, as he starts formulating all. these plans with Solomon Brothers, they're like, "Well, I see your revenue. I see your EBITDA. >> And what were those again? >> 250 million British pounds of revenue. and call it uh 50 plus percent margins. on that. >> Good business.

>> Yeah, great business. What they don't. see is any sort of formal legal control. or document that he has from anybody. giving him the actual rights to a lot of. this. you know, he's got the actual. rights to the TV stuff, but the promoter. fee stuff, the transportation, uh, we haven't even mentioned the. Paddock Club that gets set up along the. way here, there's a lot of money flowing. through that. And to be clear, these are.

all income streams to Bernie. I mean, so. of course we've talked about the meteor. rights, but what a race promoter does is. if F1 is thinking about going to a. racetrack, the person who owns the. racetrack or a company affiliated with. the racetrack or a government affiliated. with the racetrack pays a giant amount. of money to Bernie for the privilege of. having a race there. That's a promoter. fee. >> Yep. So conveniently, right at this same. time as they're doing IPO preparations, it comes time to negotiate the fourth.

conquered agreement with the teams and. the FIA. In this new agreement, Bernie swaps in a. new entity called Formula One. Constructors Association. Administration Limited, a new company. owned by Bernie Fa, for the original FOA, >> so that he can now legally have all the.

rights to everything he's doing. And. remember who the new president of FIA is. that just got installed. >> Max Mosley. >> Yeah. >> So he's just gonna rubber stamp it, >> of course. >> Or that's at least the belief. >> Yeah. Well, it passes. Let's just say. that the path is now paved to IPO. Except there's one snag that comes up. News of the plans as well as Bernie's. recent sort of consolidation of legal. power gets leaked to the press. And this.

causes the European Union antirust. investigators. to start poking around. >> You don't say. >> Bernie is doing so much self-deing here. that there's no way he's going to. survive an investigation. >> So Bernie shelves the IPO idea and also. resigns from his official role as a vice. president at the FIA. And the. combination of those two things is. enough to at least get the EU off his. back for the moment. But he needs. another plan for getting liquidity. So.

he switches banks to Morgan Stanley and. convinces them that instead of IPOing, they should issue debt on F1 and use the. proceeds from the debt to pay himself. and his new offshore entities a special. $1.4 billion dividend. >> What? secured by the future TV right. streams by the revenue streams from the. future TV rights. >> This deal actually happens. It's called.

the burning bonds. >> It is always something you should be a. little bit worried about if a company is. raising a giant amount of debt. principally to pay out its primary. shareholder a special dividend. >> Yes. Especially if it's Bernie. >> Why would you buy that debt? >> That's a really good question. The. offering, I believe, was intended to. be$2 billion dollars. Ah, >> but there was not enough demand and that. Morgan Stanley could only rustle up 1.4. billion worth of money that was willing.

to do this deal. >> Either way, the deal happens on a. Friday. All gets done. Debts issued. Bernie gets his dividend. Money gets. transferred to the offshore entities. On. the following Monday, Bernie calls up. his bankers and says, "Oh, there was. something else that I didn't tell you. I'm having triple bypass heart surgery. today.". >> Today. So, they just did the debt deal,

just issued the special dividend, took. $1.4 billion out. Three days later, Bernie is having triple bypass heart. surgery. The entire future success of. this thing is heavily dependent on. Bernie being in the seat. >> Yes. Fortunately for him and everybody. else, he survives the surgery, gives a. quote to the press from the hospital. room, I have disappointed so many. people, which uh later one of his principal. bankers would recall her response being,

"If you make it out alive, I'm gonna. come kill you myself.". Oh man. Well, Bernie survives. Later. that year, we're in 1989 now. His wife. Slavica, i.e. really Bernie starts. selling off equity stakes in select. holdings to various private equity firms. including cannot make this up in. February of 2000 they sell a 37% stake.

in F1 to Helman and Freriedman the giant. private equity firm based in San. Francisco H&F then goes and buys out. some of the other minority owners ers. that Slavica/Bernie had been selling. stakes to and Helman and Freeman. collectively gets a 50% ownership stake. in F1 and then they go negotiate with. Slavica and Bernie an option to buy.

another 25% from them for 600 million. pounds and gain 75% majority ownership. of F1. So they get the option, the. option's papered. one month later in March of 2000. >> This was in March of 2000, right when. the dot crash happened. >> The.com crash is about to happen, but it. gets crazier before the bubble pressur. >> Really? >> In March, H&F gets an unsolicited.

over-the-top bid from a German new media. company called EM.tv. TV. to buy their entire stake in selectf. immediately right away. This is the. height of dot craziness right before the. crash. So this German company em.tv, they had just previously bought the Jim.

Henson company in the US, which of. course makes the Muppets. and they were. just trying to roll up all of these. media properties and they were going to. bring them into the digital era or. something some sort of do fever dream. H&F hits the bid. They sell out. >> So, how long did H&F own Formula 1? >> One month. >> H&F owns Formula 1 for one month. They. make an immediate 241 million pound.

profit in one month. on how much. invested? >> 1.1 1.2 billion invested. >> Oh my god. >> So, you know, a 20% return, but like. >> in a month. >> I got more. So, 50% of F1 is now in the. hands of em.tv. They want to exercise the 25% option. that H&F had negotiated, but they don't. have any more cash. They blew it all on. the first transaction.

>> And the Muppets. >> The Muppets. So, em.tv. goes out and does another 1.6 billion. euro debt deal to raise the money. So, they take 600 million from JP Morgan and. Lehman Brothers and they take a billion. from a local German bank called Bayern. LB. They use this debt. They exercise. the option. They now own 75% of F1 and.

Bernie and Slavica hold the last 25%. >> Wow. >> And then the bubble burst. >> and Wow. So all that was done like in. days, weeks, >> like right up to the end times. The. music is ending as this is all. happening. Bernie, meanwhile, is just. getting tons of money into his bank. accounts. >> The bubble bursts. EMTV. misses their interest payments. Shocking. Shocking.

>> Another German media mogul named Leo. Kersh comes in and saves the company. His company, Kersh Media, takes over. EMTV. They now assume F1 ownership. 18. months later, they go bankrupt. >> So 2002, the net result of which is that. ownership of the 75% stake in F1. transfers to the debt holders, >> which is who? >> Bayer and LB. the German bank, JP. Morgan, and Lehman Brothers.

With Bernie and Slavica still owning the. 25% minority share. >> Oh my god. >> Crazy. >> Okay, so it all comes to a head in 2004. when the banks are super frustrated. because Bernie's still running the thing. as he always did, paying himself. everything. The banks keep trying to. tell Bernie what to do. They're like. issuing him directions as if he's their. employee. and Bernie just keeps ignoring. them. So, the bank consortion sues.

Bernie for control of the sport. The judge rules in favor of the banks. However, Bernie addresses the media. after the court proceedings and says. that the verdict would mean quote. nothing at all and he's planning to. continue business as usual. because he's got an ace up his sleeve. separately. He has been negotiating with. CVC Capital Partners, the large European. private equity firm. The deal gets done.

with CVC. They buy out the banks. They. also buy out Bernie and Slavic's 25%. So, more money going to Bernie now here. >> Whoa. But Bernie will remain CEO. >> He's just an employee. He's hired by CBC. to continue being Bernie. and he gets. the opportunity to use some of his. proceeds to invest with CVC alongside. them in the deal. >> Amazing. >> All told, CVC.

and Bernie for his portion, spend about. $2 billion acquiring 100% ownership. They finance 1.1 billion of it with. another set of debt. So, they put 900. million of cash equity. >> into the deal. compared to I believe over three billion. that Bernie and his trust had pulled out. of the company through all the debt and. equity machinations that we discussed. earlier. >> Unbelievable.

>> Oh my goodness. >> This is important to know. The. CBC/Bernie. buyin to this new F1 entity is about 900. million of equity. >> Yes. >> $2 billion total purchase price. including the debt. Bernie resumes his. job with renewed vigor now that he is. newly incentivized to uh grow revenue. and profits again. So the first thing. that he does after CBC cleans up the.

ownership is he kind of goes right back. to his original bag of tricks which is. extracting more money from race. promoters. So by this point in time, 2005ish, there are basically three types of Grand. Prix races. You have the prestigious. historic ones like Monaco and Monza and. Silverstone. They're not going anywhere. >> The European heritage tracks, if you. will. >> Exactly. They don't pay nearly as much. in race fees to F1, but they're sort of.

there to build and maintain the brand. >> Yep. Then you have a new set of races. like Bahrain and China that had just. come on, >> the flyaway races. >> They are paying huge fees to F1 in order. to have their races on the calendar. >> We're talking 2 to 3x. >> Yes. 30 40 50 million a yearish. >> and today even into the 60 millions. >> Yes. The problem opportunity at this.

point in time is you had a whole bunch. of races in the middle. Canada, Australia, Spain, Belgium, the second. race in Germany that wasn't the Nurburg. Ring, the second race in Italy that. wasn't Monza, etc., etc., etc. Those. other races actually made up most of the. calendar, but they neither brought in a. lot of revenue, nor were they any sort. of strategic value. Like, nobody got. excited, >> right? They weren't an expansion. opportunity for the sport. They weren't. a way to find new audience.

>> Yep. So Bernie goes out and he courts. Abu Dhabi, Singapore, and India to come. in and displace some of those middle. races and be new Grand Pris. And just. like Bahrain and China, these are big. money deals. So India is 40 million a. year just in race fees to F1. Abu Dhabi. is the biggest. They commit to a billion. dollar total F1 investment over the.

coming years, including constructing a. whole new track from scratch in the. desert outside the city. So Bernie's on. a roll with these new races. So then in. the early 2010s, Bernie lands the big. one, Russia. He'd been trying to get a. Russian Grand Prix for a long time. Russia had just won the 2014 Winter. Olympic bid for Sochi. Yep. And put $50. billion dollars into the ground in.

infrastructure at Sochi for the. Olympics. Bernie in F1 goes and. convinces them that the best way to sort. of amortize the cost of this investment. in Sochi is to put a race there after. the Olympics. Probably not wrong. Totally not wrong. So they sign a deal. with Russia and of course it's a deal. with the state. You know, anytime you're. negotiating with Russia, you're. negotiating with the state. >> Increasingly, a lot of these flyaway. races are. >> Yes. This is not unique to Russia here.

>> It's not a local entrepreneur race. promoter with a racetrack. These are. sovereign deals. >> Yes. to construct a new $270 million F1. track around the Olympic Park and pay F1. $50 million a year for seven years to. host the race. There's an amazing Bernie. and Putin story. As they're in final negotiations for the. deal, the Russian contingent asks Bernie. to fly over to Sochi and sit down with.

Putin to finalize the deal. To which Bernie responds, "Do I look. stupid? If they think I'm going to go. negotiate this contract with Putin, no. way. If they want me to go, they can. send back the contract first." Signed, which they do. And then Bernie goes to Sochi and sits. down with Putin and do a press. conference and announce the whole thing. >> Wow. >> I guess that's how you negotiate with. Putin is you you don't negotiate with.

Putin. So ultimately the Russian Grand. Prix would get canned early in 2022. after Russia invaded Ukraine. >> I was going to say it's not on the. calendar I saw. >> No. No. Bernie would get asked on a. British morning TV show after the. Ukraine invasion what he thinks about. all this and he famously says that Putin. is a quote first class person and that. he Bernie would take a bullet for him. >> Wow. Okay. >> Yeah. Okay. I did hear from some folks. that I talked to and I'd always ask the.

question, "What was it like working with. Bernie?" overwhelmingly people said. delightful. >> I could believe that. >> that like when all the dust settled like. the term you kind of look at the terms. and go oh whoa there's actually not much. here for me. >> Yeah. >> But just delightful to work with. >> He's a very loyal partner. >> Yeah. So anyway, that's the racetrack. side of things under the reinvigorated. Bernie and CVC. The other big piece, of. course, is the team relations side of.

things. We previewed this earlier, but. at this point, the whole stick of, "Hey, I'm getting rich, but you're getting. rich, too," has way worn out its. welcome. M. >> there's also the fact too that now it's. not just Bernie getting rich, it's the. private equity firm that's also getting. rich on the backs of the teams and all. the investments that they're making into. the cars and R&D. And by this era in the. kind of mid late 2000s, it's truly.

gotten out of control. The top teams are. spending like4 to500 million a year on. their cars. And the race calendar is. insane because you know it started in. the 50s60s of hey we'll go wherever we. can get enough teams to race and then it. turned into we'll go wherever anybody. will write a $40 million or larger. check. >> Let's put this circus on a plane to. Russia in China. >> And now the like by this point in. history we're talking about here the mid. late 2000s the broadcast calendar makes.

no sense. You've only optimized for who. will pay us the biggest race promotion. fees. These races are being run at all. hours of the day and night. >> Yes. >> So, team relations are pretty bad. And. then 2008 hits. The biggest teams with. the biggest budgets, yes, they're. spending themselves way into the red, but at least they were sort of. backstopped by actual consumer car. manufacturers that own them and were. investing into them for all sorts of,

you know, strategic or R&D or brand. marketing purposes. So, you know, you. had Honda in the sport, Toyota, BMW, obviously Ferrari, >> Renault. >> Yeah. As we hit 2008 in the financial. crisis, the consumer car businesses for. all of these guys except Ferrari just. fall off the cliff. So, all of a sudden, it becomes no longer tenable either. financially or just public perception. wise for Honda or BMW, etc. to keep.

operating these money sinkhole F1 teams. >> Yep. >> So, as they get into 2008, Bernie, CBC, and the FIA all team up and they float a. solution, a lifeline to the teams. We. are going to help you guys institute a. cost cap on manufacturing. and we'll help you design it. Let's get. it approved by all the teams. This will. save you. Basically, what they're. proposing is the F1 equivalent of a.

salary cap in other sports like the NFL. or the NBA, except instead of on the. players, the salary cap is going to be. on the investments into the cars. >> Yes. And there are some teams that are a. fan of this. And there are other teams. who hate this more than anything they. could possibly imagine. >> Yes. Specifically Ferrari and McLaren. Ferrari would like nothing more than to. lose half a billion dollars a year. making their F1 cars as long as they get. to win. They do not care. It pays back.

infinitely in brand marketing if they. are just a winning F1 team for their. particular line of business. >> You know what car manufacturer is. basically unaffected by a global. financial recession? Ferrari. >> Yes. their customers are staying on the wait. list no matter what the financial. climate is out there. So Ferrari and. McLaren has a lot of the same dynamics. They threaten to pull out of the sport.

and ultimately they bully all the other. teams into joining them in opposition to. the cost cap. There's also all of this. pent up bad will against Bernie, all. these deals that have happened, CBC, the. FIA, etc. In 2009, eight of the 10 teams threatened to pull. out of the sport and start a rival. breakaway league called FOD, the Formula.

One Teams Association. >> Yeah. and they announced that they're. doing it and they're creating their own. series starting in 2010. >> Yeah. So, the Formula 1 Teams. Association or FOD was really two things. in one. One, it's can we band together. as a team to negotiate as one to get. leverage in whatever we're negotiating. over. And in this instance, it's we. don't want a cost cap. The other thing. is it is a legitimate breakaway series. >> Y. >> which it would be a really hard thing to.

start. I mean to go figure out how to. sign all these new deals with the best. tracks in the world and media rights. deals. There's a lot of value in what. Bernie and the series are actually. doing. >> Y so it works. The cost caps didn't. happen. They did impose a 10-year freeze. on engine development. And so in the. short term, this is kind of how these. negotiations go. The teams got what they. wanted without actually having to leave.

by having a credible threat to leave. >> Yep. And specifically. what they got was Max Mosley's. resignation from the FIA or at least. agreement not to stand for reelection. >> It's hard for them to actually link arms. for too long because kind of two. reasons. One, Bernie and Max could offer. different things to different teams to. get them to individually cave. So, like. they can go to the Braun team, and we'll. talk about the Braun team in a minute, but there was this shoestring budget.

team, scrappy upstart. Bernie had been. withholding their payments from the. previous year when they had raced as. Honda because Bernie's opinion was, "Well, you're not the same team, so you. don't deserve your payout." And so, >> save it. >> Braun really needs the cash. So, it's. very easy to go and get them to. capitulate when you owe them a few. million bucks. And you're going to wire. the money immediately as long as they. break ranks with the other team. It's a. great way to bust a strike. But the. biggest thing is it's just this kind of. misaligned incentives where all these.

constructors actually have very. different reasons for racing and. different incentives and so it's hard. for them to be unified on anything given. the wildly different incentive set. >> Yep. So, I don't know if you knew this, David, I talked to Zack Brown, the CEO. of McLaren Racing to prep for this. episode, and I specifically asked him. why teams don't form a breakaway series. now. And we'll talk about the economics. of what the business looks like today. And he had a great answer. So, he said, "Prior to Liberty's acquisition of F1,

there had been many discussions and even. attempts at a breakaway series. Of. course, the teams would unite around the. sport themselves, but it always fell. down when the teams had to discuss how. to share the pie. And you know, it's one. of these things where Ferrari is gonna. say, "We're entitled to this and our. heritage for the sport." And McLaren and. Mercedes, they're gonna say, "Oh, we're. really good, so we deserve more." So, yeah, they just never would agree on how. to divide up the pie. >> Yeah. The net of this is that team and. league relations in F1 are at a all-time.

low. >> Yes. >> Here at the end of the 2000s. >> Yeah. And we didn't even talk about, if. you're a fan of F1 during this time. period, you know about uh Spygate and. CrashGate. both of these uh McLaren. magically wound up with a giant binder. full of the complete specification of. Ferrari's car for that year and there. was this all giant hullaloo and case. court hearings and everything about the. these stolen documents and did they use.

them to win? Uh at the same time you. have crashgate. >> Yeah, this is bad. where it ended up. looking pretty conclusive that a team. intentionally had one of their drivers. crash in order to get a safety car to. come out which would advantage their. other driver to do better in that race. putting one of their drivers life at. risk. >> Not just one of their drivers, like. other drivers, too could be involved in. the crash. Yeah. and and they're.

covering it up and they're. >> these are major sports integrity issues. >> public trust is at an all-time low. >> Yeah. Yeah. Yeah. Yeah. So, ironically, miraculously, and certainly despite all of Bernie's. best efforts to the contrary, pretty. much this whole situation. gets fixed. by two new teams. that enter Formula 1 who nobody saw.

coming. One of which was a auto manufacturer and. uh dark horse re-entrant into the sport. >> Yep. >> The other was a Well, I was going to say. energy drink manufacturer, but I don't. think we can say manufacturer because. they don't actually make the drink. >> An energy drink company. >> An energy drink marketing company named. Red Bull. But before we tell their.

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evolving your existing core product, go. to statsig.com/acquired. to get started. >> All right. So David, uh, you mentioned. an energy drink company. >> Yes. So let's start with Red Bull. The. Red Bull company story itself like. absolutely deserves its own acquired. episode someday because it is truly. insane. So briefly, Dietrich Matitz was.

an Austrian. toothpaste salesman for Unilever and PNG. who goes on a business trip to Thailand. in 1984, decides to radically change his life and. brings back a local Thai energy tonic to. start bottling and selling or or again I. can't even really say that because he. outsources. manufacturing. starting bottling and. selling it and turns it all into a. company that now does over $10 billion a.

year in annual sales. Like astonishing. The key pillar of what Red Bull the. company actually does. is of course marketing. And one of the. main pillars of its marketing strategy. has always been extreme sports. Red. Bull, their entire business model is, "Yeah, we sell these drinks, but really. you're buying the drinks to associate. with a lifestyle, and we need to uh. educate you about the lifestyle that you. are uh, you know, associating yourself.

with.". >> So, in 1989, like I mean, actually five. years, pretty quickly after Dietrich. starts the company, Red Bull sponsors. its first F1 driver. And then they. steadily grow their investment in the. sport until ultimately they become the. title sponsor of the Saur team in 1995. >> Is that the team that's now Audi? >> Yes. >> Saur steak. >> Sour steak. Yep. Yep. Yep. Yep. This is. where Red Bull starts. >> Huh. The Red Bull entrance into F1.

was so perfectly timed because this is. right as the EU regulation is coming. online, forcing tobacco finally out of. the sport. >> And so the great irony is that it's. actually like an energy drink company. that replaces the the cigarettes. There's a great quote that Josh and. Jonathan have in the formula. Two. decades after Marborl execs looked at F1. drivers and saw the heirs to the. American cowboy, Matishitz recognized.

them for what they really were. Overcaffeinated adrenaline junkies with. scant regard for their personal safety. It was a match made in marketing heaven. >> Perfect. >> Perfect. So Red Bull totally breaks the. mold of what an F1 sponsor should be. doing. Previously, the sponsors were all. leaning into like the prestige aspect of. the sport, you know, the the the luxury,

the aristocraticness of it, you know, all the Monaco stuff, the oil companies, the watch companies, none of these. sponsors are rocking the boat, right? And importantly, just like F1 and Bernie itself, none of. these sponsors except maybe the. cigarette companies are interested in. younger audiences. Bernie has a great. quote about this when he's asked about. the challenges F1 faces of its aging. demographic. He says that younger. audiences are not a priority because.

they quote don't buy Rolexes. >> Yet. >> yet that is the key thing Bernie yet. Yet. >> y. >> anyway Red Bull though of course is the. opposite of this. They are all about. young people the extreme lifestyle. They. don't just sponsor F1. They sponsor all. these extreme. sports like jumping out of planes in the. stratosphere, you know, >> balloons. >> Yeah, they are uh unique among the F1. sponsor set. The problem though for Red.

Bull is that Saur isn't very good. So there's another great quote from. Mattis in in the formula. If an. insurance company sponsors a team and. that team loses, people don't change. their insurance company. But when the. Red Bulls lose, people get a new drink. >> Yeah. >> In 2004, Red Bull dumps Saur and makes the. radical decision that rather than. sponsoring another team, they are going.

to directly get into the business. and. Matt Shitz and Red Bull buy the failing. Jaguar racing team which was at this. point in time owned by Ford because Ford. had acquired Jaguar and with it came the. F1 racing team. Jaguar was going through. all sorts of trouble as was Ford during. the financial crisis and the leadup to. it. Things are so bad for the team that. Ford is willing to sell the whole team.

to Red Bull for one British pound. >> Really? I didn't realize that. >> Yep. The purchase price that Red Bull. paid was one British pound to establish. Red Bull Racing. >> Now, the problem is they still got to. make the team good. But. >> can we talk about the like amazing full. circle moment of this year now that Ford. is. >> Yes. the partnering with Red Bull on. their power units. >> Yes. Yes. It's so full circle. It's. amazing.

>> Also, Ford actually did make engines for. F1 for a long time. So, it's interesting. that like their exit from the sport was. they were no longer an engine. manufacturer. Then they had this weird. team with Jaguar. They divested that and. then they're dormant in the sport for 20. years. Yeah. Back to Red Bull taking. over. Yes. They need to make the team. good. Obviously, that's not going to. happen overnight, but they start, you. know, putting steps in place. What they. can do now that they actually own a team. instead of just being a title sponsor.

is they can act however they want within. the paddic. So when Red Bull rolls up to. the paddic the next year in 2005, which. remember is the first year of CBC's. ownership and the new Bernie regime, they bring, no joke, a mobile nightclub. named the energy station as their team. paddock facility to all the Grand Prix. around the world. And they have a.

radical open door policy. So previously. the paddock was like the you know sacred. place corporate sponsors and high. rollers could spend for paddock club. access was very limited. Red Bull rolls. in and we're like the door is open all. the time. Anybody who is in the paddic. can come in to our energy station. Uh. you could be from any other team, you. could be any other sponsor, you could be. a guest. Just come on in and party with. us. So they have DJs at all hours. Uh.

they have uh a a team of girls, the the. Red Bull Formula Una's team of you know. hostesses. who are there. They have a swimming pool. on the roof. >> Do you know what they did in Monaco? >> I read about this but I can't remember. >> They there's not room for the Red Bull. energy station because it's Monaco and. there's not room for anything. Right. And so they constructed a temporary. building that they put on pontoons and. they have it out in the harbor.

>> Amazing. Amazing. Yeah. They're just. like giant middle finger to the whole. establishment. >> Yes. >> Uh there's alcohol everywhere. Drinks. are flowing. And of course there is Red. Bull free for I mean it's genius. It's. absolutely genius. So, all of this is. masterminded by Dietrich and the young. team principal that he hires takes a. chance on to run the team. Christian. her.

>> Yep. >> Who uh you know, if you watch Drive to. Survive, uh you probably know all about. Christian her. >> Yes. >> The other team owners and principles and. Bernie hates this. Like hate it. They. hate it so much. You know, they're. trying to control everything. This is a. serious sport. This is a serious. enterprise. And here's Red Bull just. partying. >> And Red Bull got much better as a racing. team. But the essence of the strategy is. basically still the same. They generate. zero profit despite being one of the. best teams and the highest revenue teams.

or near zero profit, very thin to create. the biggest marketing spectacle that. they can to sell energy drinks. It's a. just a super different business model. than anyone else in the. >> It's almost like uh like Amazon and. streaming, you know, like Prime Video, which we'll talk about later. Like the. business model is not the streaming, it's. >> the retailer. >> Anyway, obviously all the other team. owners hate it, but the drivers and the. staffs love it. You know, these are all.

young people mostly who are driving the. cars, working on the engineering as. mechanics, etc. All of a sudden, there's. like a 247 party following them around. the world. Like, hell yeah. >> Y. >> So, McLaren goes so far, they even. forbid all members of their team from. entering the energy station. Like, it's. like a fireable offense if you're. caught. >> No fun. And honestly, like you're gonna. go have drinks, you're probably gonna. share team secrets. It's probably a good.

policy. >> Exactly. Exactly. So, one night, back to. Christian her and the strategy of like, how do we actually start building a. winning team here? He clandestinely. invites McLaren's. legendary technical director over to the. energy station for a chat late at night. against rules. And that technical. director just happened to be a man named. Adrien Newi, the single most legendary.

>> car designer probably in history. >> The way people talk about Adrien Newui. is basically the same way that they talk. about Kelly Johnson from Skunk Works. from our Loheed Martin episode. And I've. I've heard the comment from more than. one person. It's like he can see air. Yes, he is a savant of aerodynamic. design. >> and Adrien's book is great talking about. sort of his career in F1 and what he's.

learned. Uh he still draws by hand. >> Yeah. Yeah. In the age of CAD and AI and. everything. >> He just sort of like envisions. physical forms of cars, how air will. flow around them and then draws with a. pencil. >> Yep. So her and Dietrich. lure Newi into joining Red Bull. And. this is how they build a winning team. It takes a couple years to ramp, but.

starting in 2010, so what's that? Five. seasons after they enter the league, uh, Red Bull starts a run of four. consecutive drivers and constructor's. titles. >> from 2010 to 2013. and importantly for. the product on the field. Up until this. point, the racing had gotten pretty boring. because Ferrari had been on this huge.

run where Michael Schumacher was just. dominating the sport and like blowing. away all competition. >> Well, I mean, there were some years. where it really came down to the wire or. didn't go shoe marker's way. But if you. were an F1 fan in the '9s and early. 2000s, it is totally fair to say there. was Schumacher and then there was. everyone else. >> Yeah. And that had started to fade, as. we'll get into in a minute. >> And was this Sebastian Viddlele in 2010. that kicked off the Red Bull run? >> Yep. This starts a new dynasty within F1.

of an energy drink company. >> I know. And it's so fun watching. I. mean, it's they they are truly a central. figure of the drive to survive. narrative. Uh, starting with Sebastian. all the way through, you know, Max is. arguably the best driver in the sport. today. And so, it's so fascinating that. he's on an energy drink team, >> right? The most insane thing about Red. Bull, I think, is. I used to think they were like a.

sponsor, like, oh, this energy drink. company uses F1 for marketing, but they. have developed so much competency in. actually being a constructor that. >> they're building a car, right? Like a. like a road car. >> Yeah. They're like a real car company. now. >> Yeah. >> Not technically road, but track. So, they're building a super car. limited. production and all that, but like a car. that you can go buy and race on a. racetrack. I think it's the RB17. It's the last thing Adrian Newui did.

when he was there is design this car. And I mean, you look around like what. does a car company do? It makes the. body. It makes the power units. Red Bull. has Red Bull power trains, which is a. lot of former Honda people that they've. sort of hired and now they're working. with Ford. But like they they do a lot. of the things that a car company does. >> Yep. It's an incredible story. And as. you start to think about dragging this. sport kicking and screaming into the. 21st century and positioning for the.

social media era, you could imagine that. uh this is a really good thing. So. meanwhile during this era, as we alluded. to earlier, there is another hugely. successful team that builds its own. dynasty. >> that comes out of nowhere, >> also gets purchased for one British. pound. And uh listeners, I suspect unless you.

are a hardcore F1 fan, you probably will. not be able to guess what team this is, but see if you can figure it out as we. go along. >> But who is it in 2006, David? What is. what does the team start as? >> So, we talked a second ago about Michael. Schumacher's dominance of the league in. the late 90s and early 2000s at Ferrari. Side note, did you know he is one of the. first athletes to pass a billion dollar. in career earnings? It was apparently.

right around the same time as Tiger. Woods. >> No way. I didn't know that. >> Yes. >> How? >> Michael Schumacher was getting paid $60. million a year. >> Wow. >> In that era. Like that's what Max and. Lewis make today. >> Today. >> And and with all the inflation that's. happened with the growth of the sport. I. mean, this illustrates just how much. Ferrari is perfectly willing to burn. money to win. Like they they will. generate an infinite amount of losses in. order to win in Formula 1. You had the.

driver of his generation, sort of the. the person who took the torch post Senna. and is so obviously the best driver. >> And obviously, you know, most athletes. that you would think of who be have. become billionaires didn't become. billionaires because of their sport. salaries, right? It was off the field, but. >> and Shoemarker had a lot of off the-. field stuff, too. Interesting. Interesting. Huh. All right. Well, so. one thing we didn't talk about in. Shoemarker's dominance at Ferrari was. like, yes, it was him. He was the driver.

of his generation, but it was also the engineering team. behind him. and specifically the. engineering team led by technical. director at Ferrari at the time, Ross. Braun. >> Okay. And the whole tires thing. We got. to talk about that. >> Okay. Well, well, I'm going to get into. it. So, so what Braun realized, maybe. not first, but I think better than. anybody, was the dynamic we talked about. earlier, that after the FAA started.

clamping down so much on the rules, the. way to win was to exploit loopholes. So. Braraw figured out a whole bunch of. stuff together with Schumacher. >> and Schumacher's work ethic was. unbelievable. I mean there's another. great documentary that people should. watch, Schumacher on Netflix, but he was. like a driver and an engineer or like a. driver and a mechanic. He's always in. the garage. He's there at all hours. He's getting as many test laps in as he. can. And this is an era where you could.

do that. He's spending, you know, if. he's not on the track and he's not in. the garage, then he's working out and. he's his work ethic is just like. unbelievable. >> Yeah. He's an animal. He's like he's the. Max Verstoppen of his era, >> but he's got a wrench in his hand and. he's like, he's also ultimate. collaborator for the engineers. >> Yes. So, they figure out that there's a. loophole with the way tires work in F1. So for a brief period of time, you could. pick between one of two tire.

manufacturers. Bridgestone had a big. issue. So almost everyone said, "Oh, we're going to move away from. Bridgestone to Michelin." And Ferrari. and Ross Bronn in particular realized, "Well, wait a minute. If we're the only. ones that stick with Bridgestone, like. yeah, it's counterintuitive to do that. because like these tires apparently have. a big problem, but like if we send a. bunch of engineers over there, they send. a bunch of over engineers over here, we. can effectively have custommade tires. just for our car and just for Michael's.

driving style. And so they spent a year. working together basically getting to. develop their own custom tires whereas. everyone else who were on the Michelins. had to use this sort of like common. denominator tire that worked with all. the cars and all the driving styles. >> Yep. It's important we should note here. for folks who are not deep F1 fans. The one I think maybe the only part of. F1 cars that commonmandated across the. whole league. >> tires in the halo.

>> Tires in the halo. Yep. Yep. Whereas if. you look at like NASCAR or like other. motorsports out there, a lot of stuff is. mandated to be common and like the. degrees of freedom of parts of the car. that you can actually engineer is like. much much much narrower. It's part of. what makes F1 unique is and and so. expensive is that every car truly is. custom engineered except for the halo. and the tires. >> Yeah. Teams are designing their own. bolts. >> Yes. Yes. So here, Bronn and Schumacher. and Ferrari are like, "Oh, wow. We just.

found a way to custom engineer our own. tires." Like, "Hell yeah." So that was a. big part of Schumacher and Ferrari's. dynasty. >> So the FIA eventually closes the tire. loophole. Braun leaves Ferrari and. becomes the team principal of Honda, which he joins in 2007 ahead of the 2008. season. Now, remember we said a minute. ago that in 2008 with the financial. crisis, Honda exits the sport.

>> Yep. >> So, Braun is one year into the job and. they come to him and they're like, "Ah, sorry, we're going to shut the team. down. We got to get out of the sport. Like, this is untenable in this. environment. We can't be operating an F1. team. Braun is scrambling. He just went. from like top of the world at Ferrari to. getting to be team principal at Honda. and now he's out of a job with, as good. as he is, no real prospects for another.

one because this is bad times for the. sport. >> And there are very limited chairs in. this world. >> Yes. So, he's scrambling and he's like, "Wait, wait, wait, wait a minute, Honda, you're worried about looking bad to the. public and shareholders by continuing to. operate an F1 team in this climate. You. know what's going to make you look even. worse? If you lay off the like thousand. people that are part of this team. So,

how about instead instead. >> you just give me some time. Yeah, you. don't I understand you might need to lay. everyone off. Look, that business. reality. Give me a few months and I will. find a buyer for the team. I just need. you to keep everyone employed so that. there's something to sell. >> Yes. Yes. >> Looks around, can't find anything as you. would expect. Come. >> 2008, the world's falling apart. >> Back to Honda and says, "Look, I know we. have very limited time left. We're not. going to find another buyer.

>> What about a management buyout?". >> Yeah, I'll take it off your hands. And. when I say buyout, I'm also not really. going to give you any money. >> Yeah. >> But what if what if. there's some period of time where you. agree to keep funding people's salaries, I'll give you one British pound. Yep. >> You give me the team and then at some. point you're fully out, but we have some. sort of consulting agreement in the. meantime. some some contract. >> you know run way down to you know do a.

soft landing here for the team and these. people. >> but you get to tell your board and the. shareholders that like you are no longer. wasting money on this extraneous thing. >> and you're not going to lay off you know. a thousand people in England. >> y. >> y. >> so apparently I don't know if you read. this Bernie of course gets wind of. what's going on. >> oh Bernie does not like Ross Bron. >> he does no no no he doesn't like Braraw. anyway he definitely doesn't like. somebody else buying a team for one. pound. He tries to swoop in and convince.

the Honda board that they should sell it. to him instead. >> Oh, I didn't realize that. >> Yes. Yes. Yes. Never mind that he's like. head of F1. >> Yeah. Well, >> he's still willing to buy the team. >> He just generally doesn't like the idea. that there's a transaction that doesn't. go through him. >> Yes. Or or that there's a good deal to. be had and he's not getting in on it. Great drama. If only this drama could be. televised. >> In fact, there is a great Keanu Reeves. documentary. >> Yes. Yes. It's called Braun. >> called Braun on this team. It's awesome. >> Anyway, back to the story at hand.

Amazingly, Honda doesn't go with Bernie. The board decides, you know what? We're. going to stick with who br us. We'll. sell the team to you, Ross, for one. pound. But when we say we're out, we'll. fund you for the year, but we're really. out. We're not going to give you an. engine anymore. >> Right. That's So Ross is like, "But. surely I can just like enter into a. commercial agreement and pay you like. $15 million or, you know, whatever it is. to be the engine supplier and and you'll.

give me an engine. Like you've already. made the engines in the years past. They're going to be the same or similar. >> This used to be your team, >> right?". >> Nope. They're like, "This is where we. draw the line. We can't be putting any. more money besides the salaries of these. people into F1.". >> So quick pause. Uh it is worth noting. every team makes their own engines. There's only at any given time a handful. of engine suppliers. And so like. Mercedes today makes the engine for the. Mercedes car, but McLaren also goes and.

buys the engine from Mercedes. So this. is like a reasonably common. >> Yeah. Ferrari will supply engines to. other teams. >> Cadillac is racing in a a Ferrari. engine. >> Yep. Yep. Yep. Exactly. So Ross is. desperate. He goes and chats with. Mercedes who, as you said, Ben, have. been out of the sport since I think 1955. or whatever we said earlier. >> Yeah, they at this point in time do not. have a team and since that horrific. crash all those decades before, y.

>> not in F1. >> Not in F1, but they had been supplying. engines to McLaren. So, Mercedes says, "Okay, Ross Braun. We have our McLaren relationship that's. very important to us, but we respect you. and your body of work at Ferrari, and we. respect what you're trying to do here. We will supply you an engine for 2009. You know, we're we're still loyal to. McLaren, but like we will give you an. engine so that you can compete with your. team this season and not shut it down.". >> And it like it sort of doesn't fit in.

the chassis that Honda had developed. They had to like do some real. aftermarket janky stuff. So, everyone. thinks this car is going to absolutely. suck. >> Suck. Yes. Suck. >> Oh, by the way, the team is called Brawn. GP. It's not even like a real company. They The team just looked at Ross Braraw. and they were like, "You're a leader, so. how about calling it Braun?" Like the. whole. >> Yeah. They couldn't even line up a title. sponsor. >> And they're even landing sponsors for. like individual races because they can't. actually land for. >> the financial crisis. Nobody wants to.

Yeah, exactly. >> The whole thing. Nobody expects anything. performance-wise. >> out of this team. >> Yes. >> Well, it turns out that before the Honda. engineers. got pulled away back to Japan. They had come up with a new aerodynamic. innovation called the double diffuser. >> Oh yes. >> I have no idea how this thing works. I. just know that it performs like a beast. And most things you read about it really.

don't explain how it works either. In. general, what diffusers do is they. direct the air flow that is coming out. from the bottom of the car uh up and. sort of out of the way to ideally shape. the aerodynamics as the air escapes the. back of the car. >> Somehow they came up with a double. version of it. >> But everyone's challenging it at the. beginning of the season going, "Wait, wait, wait. This isn't legal. It. performs so well that by mid-season.

everyone else has adopted double. diffuser too. >> Yeah. I mean you're burying the lead. which is first race of the season in. Australia in Melbourne. These two Braraw. GP Franken cars roll out and they win. first and second place. >> Like they blow away the field. Uh Jensen. Button who was the the first driver on. the team. He wins six of the first seven. races of the season. Uh, it's like. sending the sport into chaos. >> Yes. And I I wish I had known this,

David. We had just started our research. on F1. >> And we met Jensen. >> We met Jensen. We went to the Las Vegas. Grand Prix with Service Now. And part of. the whole weekend of festivities they. had planned for us was a lunchon with. Jensen Button. He was telling the. stories of the Bron GP. I did not. appreciate this is the outlier of. outliers. No, no team has been on this. shoestring of a budget with this type of. Franken car uh and this real. underdogness and performed in such.

spectacular success the way they did. >> Yeah. Usually it's like either you're. Ferrari and you invest hundreds and. hundreds of millions of dollars or. you're Red Bull, you hire away Adrian. Newui and even then it takes several. years to develop a winning car. This. just doesn't happen in F1. >> No. And so David, how does the season. end? So by like a hair's width, Jensen. and Braun had accumulated enough of a. lead in the first half of the season.

that even though they don't win a single. race in the second half of the season. after everybody else also figures out. the double diffusers, they still end up. winning both the constructors and the. drivers championships. So, in one year, this team and Ross. Braun went from like new Honda team. principal to nearly out of the sport to. owner of his own team for one pound to. world champion. >> This is what makes F1 great. It's It's.

really not watching the races. The The. races are fine. There's not that much. passing. Once you get through the first. turn, you know, you kind of know who's. most likely to win. and it's probably. from one of the top four teams anyways. It's not any given Sunday the way that. that NFL game is. >> But this act of heroics and teamwork and. personality and perseverance. >> and engineering. >> and engineering like this is what makes. F1 great.

>> So there's just one problem for the you. know new world champions. They don't. have funding for the next year. Uh, there's no way, as cool as it would be. to continue the Cinderella story. Braun GP and its current financial state. and ownership can't continue for the. 2010 season. >> Yeah, >> there's just not enough money to invest. in developing the next car, etc., etc. So, Ross knows that he has to sell the. team. And of course, who's the logical.

buyer now? Mercedes. They don't currently have a motorsport. team. They clearly are interested. >> They make your engine. >> Make the engine. They've just had all of. this success with Brawn. Yeah, they have. the strategic partnership with McLaren, but like, hey, what's McLaren compared. to an opportunity to own their own team? So, they announce in the offseason that.

they're dumping McLaren. Mercedes is and. buying a 75% majority share in brawn for. $200 million and renaming the team to. Mercedes. the storied Mercedes team that. you know of today where Lewis Hamilton. won six drivers championships and the. team won eight straight constructors. championships is the team that rises out.

of the ashes of Braun GP. >> Incredible. Just incredible. The first. thing they do after they buy their team, they're so excited. They hire Michael. Schumacher to come out of retirement. Lewis Hamilton is still a young kid at. this point in time. They hire Schumacher. out of retirement to come reunite with. Braun, the dream team, and you know, drive this monster car. Yeah. Doesn't. work out. >> It's like Jordan on the Wizards. >> Yeah. This is the Jordan and the Wizards. era.

>> Although, I mean, I was going to say. it's like Tom Brady, but Tom Brady won a. Super Bowl with the Bucks. So, >> yeah. Yeah. No, Schumacher and Braun and. Mercedes do not win another Super Bowl. Everybody else had picked up the double. diffuser and that that really was the. advantage that they had. It wasn't any. more than that. >> And I think Mercedes thought they were. buying something that had somewhat of a. durable advantage. You know, oh maybe. you've started thinking about next year. The team really hadn't. And so there's.

sort of this realization at Mercedes of, oh crap, we bought a lemon. >> Yeah. we need to put hundreds of. millions of dollars into this on top of. that stake that we already bought. And. to Mercedes's credit, they did. I mean, they they could have cut their losses. and said, "Ah, this doesn't make sense. for us." And instead, they built. arguably the best Formula 1 team to ever. exist across multiple decades. >> Well, they bring on a partner.

>> Yes. So, after a couple years of Schumacher. and Braun, >> Braun, by the way, who bought the team. for a pound and then sold 75% of it for. $200 million. >> Yeah, he's doing just fine. But after a couple years, Mercedes. decides this isn't working. They fire. Braraw and Schumacher, which is crazy. Who fires Michael Schumacher, >> right? >> Mercedes F1. This is what happens. and. they make two key hires in each of their. places. As team principal, they bring in.

Austrian businessman who previously had. been an investor in the Williams F1 team. named Toto Wolf. And again, if you watch. Drive to Survive, you definitely know. Toto. >> Yep. >> Probably the best Formula 1 team. executive in history. Certainly by. valuation increase. >> Yes. Yeah. I've got some numbers for you. later on why. >> Yes. Okay. So, put a put a pin in that. Who could you possibly hire to replace.

Michael Schumacher as your number one. driver on the Mercedes team? Well, obviously you know the answer. A young. British racing driver, Lewis Hamilton. >> Yep. >> Yep. So, Toto Lewis and then the other. driver they bring on, Nico Rosberg, as. you said, Ben, would go on to win eight. constructors championships in a row. And. Nico won the drivers championship one of. those teammates Lewis. Yeah. >> So it's not even like, oh well, they had. Lewis Hamilton, so how good was the car.

really? It's like, no, >> no, no, it was the car. >> The one year that Lewis didn't win, Nico. won. >> Yep. Certainly the most dominant run in. the history of the sport. And this ended. Red Bull's own run. But what was so. great for the sport during this period. is it's not like the shoeer era where. the top team is just blowing away the. field. You now have this great drama of. the fight every season between Mercedes. and. >> is it Vettle? Is it Hamilton? Is it the.

young upand cominging Versappen? >> Yes. Yes. It's these epic dramas that. are playing out on the track and really. it's these two teams that create the. modern era for the teams and for the. sport. I mean Christian Horner at Red. Bull and and certainly Toto at Mercedes. They are a totally new breed of team. principles. These guys are CEOs and and. Zack Brown at McLaren is also he.

actually is the CEO. >> He's literally not the team principal. He is just the CEO. >> He's just the CEO. They're playing roles. that nobody at the team level had ever. played before except Enzo Ferrari and. Bernie. And Bernie, of course, had. greater aspirations. >> They're building these businesses. They're not just building race cars and. and race teams. >> Yep. So, just to quickly take the. Mercedes example, Ross Braun buys it in. 2008 2009 for one pound from Honda.

Mercedes buys it a year later or 75% of. it for200 million pounds. Today, Mercedes is worth6 billion under. Toto. Not not Mercedes, the car company. The Mercedes racing team alone. just did a minority transaction valuing. the team at $6 billion. >> Yes. That is what, twice as much as all. the cash that Bernie pulled out of F1 in.

its entirety during his heyday just for. one team. >> Yep. And speaking of valuations and. Bernie and cashing out. in 2016, as all this is taking place, F1 finally. lands in the right set of hands to. shepherd the sport going forward. Yep. So, starting a few years after CVC and.

Bernie reacquired. F1 the league, CBC starts reselling minority pieces of. F1 to other asset managers out there, including BlackRock, um the Norwegian. Sovereign Wealth Fund, Noris Bank at. increasing valuations. They also load F1 up with a bunch of. debt again and pull cash out. They. actually put $4 billion dollar of debt.

on the league. I mean, this is what. private equity does, but. >> and the cash flows are growing at F1, like thanks to the new races and the. increasing TV contracts, etc., etc. But. by 2016, CBC is now down to a 35%. ownership stake. They've pulled out a. total of $4.5 billion dollars of cash. through a combination of the debt and. equity sales. Remember, they and Bernie.

only put in 900 million to start. And. they still own the largest single stake. in 35% in the league. But it's time for. a transition of power, shall we say, a. full exit. >> And we've checked in a few different. times along the way. What is Formula 1. at this point? Cuz it was the weird. Bernie entities and then it was the. holding company in his wife's name. >> Yeah. >> At this point, it is a company that is.

owned by CBC. >> But interestingly, a thing to know is. that company doesn't actually own the. sport. >> But what it does have, did you find this. David? The 2001 deal. >> 100year uh management rights. Yeah. The. the key asset that this company owns is. in 2001, Bernie had secured the 100-year. commercial rights to Formula 1 from the. FIA. >> in a no bid process. >> In a no bid process for $360 million.

When you think what is the asset really, the asset is the right to run the. business of what FIA defines as Formula. 1. >> Yeah. So basically all the commercial. activities except team sponsorships. which are the providence of the teams. and race tickets which are the. providence of the promoters. >> And there's some other little things. that the teams make money on and that.

the promoters make money on but but. basically yes. So, in September of 2016, it finally gets announced that the. American media company Liberty Media is. acquiring F1. for $4.4 billion of equity value and. assuming all of the outstanding debt. that the company has for a combined. total enterprise value of $8 billion. Now, the way they do it is interesting. uh Liberty and John Malone and Greg.

Mafay. We've talked about Liberty many. times over the years. Unacquired. They. are masters of deals and financial. engineering. The way they do it, they. initially acquire a like 18 19% stake in. F1 from CVC. So enough to make them the. largest shareholder. And then they. actually changed the whole name of. Liberty Media, the company, the publicly. traded company into the Formula One.

group, create a new tracking stock to. track the value of F1 Group, >> FW. K or Funk as the investment community. refers to it. >> I know. It's so great. And then they. issue flunk shares to the remaining. equity holders including CBC and Bernie. etc. such that a 100% of the company is. now liquid and publicly traded. The. completely fascinating thing about. Liberty Media today is it sort of.

doesn't exist anymore. They bought F1, then they did enough other spin-offs. through the Atlanta Braves spin-off, through Liberty Live, the the Live. Nation spin-off. At this point, like 90%. of Liberty itself is Formula 1 and the. stock is actually Formula 1. It's like. they spun out everything else that was. left and so the holding company is. actually basically Formula 1 now. And so.

the plan that they announced is that. former Fox and News Corp executive Chase. Kerry, who had been president and COO of. News Corp, would become chairman of F1, but that Bernie would remain as CEO. Now, Chase Kerry had been a total legend. at Fox. I mean, I remember him when I. worked at News Corp and at Dow Jones. Chase helped Rupert launch Fox Sports.

and built the whole Fox NFL program. >> Like. that was Chase. So he's the right man. for the job. And he brings over a team. of like all the NFL OGs, Fox and NFL. OGs. So Sean Bratche who had been one of. the key people who had built ESPN during. its kind of parallel rise with Sports. Center and comes and joins the team and. the whole thesis is that Formula 1 is.

this incredible sport, incredible fan. base, incredible asset, and we can see with what's going on at. Red Bull and at Mercedes that like it's. going to crush in the modern era. it. just needs the right management to like. get out of the way and let this happen. >> and that Bernie had sort of. systematically underinvested which which. created opportunity. So. >> yes, >> there was almost no US market.

development. I mean they by this point. they had circuit of the Americas in. Austin uh but no other US races yet. There was very limited sort of. storytelling around the sport and. digital investment. There was no social. media presence. The property was mostly. behind like a closed pay wall with. restricted ass access especially in the. US and really it was about old white. guys with money as the demographic. So. is this like if you kind of like looked. at it with a modern media company.

approach you're like oh there's low. hanging fruit everywhere here. >> asset just waiting to be unlocked. >> Yes. So pretty quickly when Chase and. Liberty come in, um it becomes clear. that there's not enough room for two. bosses in F1 of Chase being chairman and. Bernie remaining as CEO. I mean really. there as long as Bernie's there, there's. not room for anyone else to run. anything. Mhm. >> So on January 23rd, 2017, after they had.

announced the acquisition the previous. fall, Liberty announces that Bernie is. stepping down as CEO. He will become. honorary chairman emeritus and an. advisor to the board of directors of F1, but not actually on the board. So in. other words, Liberty fires him. I mean, they had to. There's no way that they. could do what they wanted to do and and. what needed to be done as long as he was.

still there holding the reigns. >> This is a classic what got you here. won't get you there situation. >> Yeah. >> All that stuff that Bernie did no doubt. built the sport and created the sport. and the way in which it needed to go. from here. Bernie could do almost none. of those things and was probably holding. it back at this point. >> Yep. Yep. So, I was doing the math on. his run. What year did he sort of start. becoming the steward of Formula 1?

>> 1972. >> And he left in 2017. >> Long run, >> 45 year run. I can't think of a sport, a. sporting league in the world that was. basically controlled by a person for. almost half a century like that. The. closest that I can think of is Pete. Riselle, 30 years at the helm of the. NFL. >> Yep. >> Yeah. So, Chase takes over as CEO and he.

and Liberty know they have their work. cut out for them. So, they come up with. a fourpoint plan. Number one, most. importantly, they need to fix the. relationships with the teams. Thanks to. Red Bull and Mercedes, teams had started. to become more successful financially, more businessminded on their own, but. the relationship with Formula 1, the. league was still like highly contentious. through all of this. Arguably even more.

so as they were growing in power under. Bernie. >> So the cost cap is the obvious thing to. do. And like we said, really it it was. the indication of how broken things were. before that Bernie and the FIA couldn't. get it done and it resulted in the photo. breakaway attempt. Like. >> cuz if you don't have a cost cap, you. are just going to have teams that have. some either independent funding or some. other business that lets them go. hundreds of millions of dollars into the.

red, which basically means everyone. needs to to compete with them. Which. means that other than those 1 2 3 four. teams, you're just going to keep. churning your bottom six on the grid. over and over and over again because. they can't run a viable business. >> So number one priority is they got to. fix the teams, which they do in the. first Concord agreement that Liberty. negotiates. They get everyone to agree. to a cost cap of $145 million in.

expenses on the car. So, not including. driver salaries, that's separate. This is huge. >> And not including the three most. powerful executives or the highest paid. executives, not including marketing. spend. And power units are outside the. cost cap, too. So, it's a cost cap for. sure. And um you know, it it gets some. of the job done, but if you spit off a. lot of cash, there's still plenty of. ways to spend that cash to become more.

successful. Yes, that is definitely. true. But I think it really does end up. functioning kind of as intended, like a. salary cap in other sports. The Cowboys. can spend a lot more on marketing than. the other teams, >> but but they haven't been to the Super. Bowl in a while. >> Yeah. Right. Right. Right. You know, the. amount that they can spend on, you know, their equivalent of the car on the. field, in that case, the players is same. as everybody else. >> And they also implement wind tunnel. restrictions. You can only spend so much. time in the wind tunnel. We already have. the restrictions on testing in season.

So there really are at this point heavy. restrictions. It's gone from 145 million. down to 135, but then it got adjusted. now up to 170 with inflation and with. adding more races because you get to add. more to the cost cap for that. But you. know, they're they're now spending every. team under 170 million. Then there were. several teams that were spending four. 500 million before. >> This is huge. It instantly makes every. team at least close to break even. It.

doesn't make every team profitable, but. it makes a lot of teams profitable. And. for the top teams, this overnight makes. them like immensely profitable. So, when. we talked about Mercedes going from. being worth one pound to6 billion, this. is why the Mercedes team is a great. business now, like an NFL level. business. >> Yes. And Ferrari obviously hasn't. traded, but certainly is worth more than. that. And every team, as we talked about. at the top of the episode, is worth at.

least a billion and a half now. >> Yeah. So, the numbers on this now are. the average revenue per team today in. 2026 is about 430 million. About 60% of. that comes from sponsorship. And the. next highest comes from the sort of. distributions coming from Formula 1. Group. We'll talk about how those. distributions work later, but what's. their share of meteorites and. everything. Uh then they have kind of. five to 15% uh that come from selling.

merch or engines or licensing or garage. tours or what have you, but 60% is. sponsorship. Um, and so if your average. revenue team per team is around 430. million and the cost cap is only 170. million plus your driver plus your. marketing expenses plus your you can. kind of see how these become pretty. quickly at least break even or close to. break even businesses. >> Now there there are some outliers uh. toward the front of the grid like you. were saying Mercedes does 800 million in. revenue now.

>> Wow. Ferrari 670, McLaren somewhere. right in that neighborhood too around 6. 650 to 700 uh 420 for Red Bull Racing. 15 years ago all four of those teams. were operating at a loss and 10 years. ago most of them were operating at a. loss. >> Yeah, it's interesting back to your. point earlier about Red Bull strategy. They could be making much more I think. and they intentionally choose not to. >> That's exactly right. They they try to. keep their profit margin at their. operating margin at like 1% or less.

>> Yeah. >> So McLaren now does 70ish million uh in. profit. Ferrari does about 80 million. But the real outlier, Mercedes does an. estimated 200 million in operating. income from Formula 1 now. >> Wow. I mean that's like the level that. Bernie was making for the whole league a. couple decades ago, >> right? 25% operating income. >> Yeah. And on top of being phenomenally. profitable, Toto Wolf estimated in 2021. that Mercedes that he thinks Mercedes.

gets a billion dollars of advertising. equivalent value for being involved in. the sport. >> Yeah, easy. >> So on $600 million of total spend last. year, Mercedes generated a double bottom. line of over a billion dollars in. marketing equivalent value plus $200. million in actual profit. >> I mean, think back to 10, 20 years ago. Mercedes was just like luxury cruisers, you know, like yeah, they had AMG, you. could get more horsepower in your. S-Class, but like nobody thought these.

things were Ferraris. >> Yeah. >> Now they're a legitimate sports car. maker. >> Yep. >> We should say Total Wolf is just so. unbelievably impressive. So they're an. extreme outlier in doing 200 million a. year in operating income. And this isn't. like they're underinvesting. They are a. competitive team at the front of the. grid. So they're not holding back an R&D. investment. That $6 billion number that. you cited, David, is is real because.

that is a transaction that happened. where the CEO of Crowdstrike bought into. Toto's holding company to get a sort of. proxy ownership in the team. So why does. Toto have a. uh a little holding company of his own? Unlike all the other team principles, Toto is a major equity owner in the. team. So when he joined the team in. 2013, he negotiated to own almost a. third of the team, which at the time the.

whole team was worth about 165 million. and it's now 13 years later worth $6. billion. So he's now a billionaire from his team. ownership even though it's actually like. the the main owner is Mercedes. He just. managed to become a major equity owner. and that is really unique among team. principles. >> Yeah. So that's obviously priority. number one for Liberty is we got to fix. the teams to fix the sport. less. obviously.

priority number two was they had to fix. the relationships with the race. promoters with the tracks. Talk about a. stakeholder that Bernie had just been uh. extracting from. the whole calendar as we talked about a. minute ago was just designed to maximize. race fee payments to F1. There was zero. consideration or thought at the league. level about how to make the races.

themselves successful. Like how do you market each one and grow. the pie and you know avoid a situation. where you have this huge middle of the. pack of the races that nobody cares. about? That's not good for the sport. I. mean, when Liberty came in, there was so. much mistrust with the race promoters. that other than the just straight. economic fee payments, none of the races. shared anything.

with F1 the league. So, no data on fan. attendance, no marketing strategies, nothing. Well, think about just how. squeezed you were getting. You walk up. to F1 as a race promoter and say, "Hi, I'd like to have a race, please. is I. own a racetrack and they say, "Okay, well, >> send back this contract and a $50. million payment, >> right? Pay us $20 million if you're, you. know, one of the European tracks. Pay us. $40, $50 million if you're one of these. new US ones trying to come online. Pay. us $50 to $60 million if you're a Middle.

East sovereign wealth fund. Oh, and your. revenue streams, right? Well, the. Paddock Club, that's all going to belong. to us." Yeah. >> And um the sponsorships on the. racetrack, that's going to belong to us, too. Um, >> I guess you can sell tickets. >> You can sell tickets. Uh, you should set. up some hot dog stands. I think food and. bev that that you. >> Oh, yeah. But also food and bev for. paddic club. We're doing that. >> No cameras cuz of course we've already. sold the media rights and that. exclusively flows to us and you don't. get to participate in that.

>> So, you probably aren't going to be. profitable on this. And if you are, certainly not in the first few years. You might want to get your local. government to kick in. This is gonna be. great for the city, which it is. So, my. advice on getting profitable on this. thing would be go get some tax help. Find other people's money. Yeah. Exactly. Exactly. So, one of the first. things they do is they get all the race. promoters together, you know, in a room. and say.

>> they're business partners. They should. be. >> Yes. We're partners. We're partners. >> They're not competing with each other. >> We got to work together here and let's. share data. like, hey, there's a lot of. hardcore fans that like travel race to. race. Shouldn't we all be sharing data. and like marketing to those people and. getting them to come to more races in. more cities? Just no-brainer stuff. Ultimately, the vision here, which has. mostly been realized, I think, is this. is an opportunity for 22 Super Bowls. every year. >> in cities and countries around the.

world. when F1 comes to your country, comes to your city, it is an entire. weekend that should be treated just like. the Super Bowl. So like, let us help you. make that happen. Let us help you get. musical acts. Let us help you coordinate. the celebrity attendees. Let us help you. coordinate social media. >> Austin has been really smart about this. The Circuit of the Americas, they've. landed Taylor Swift, Ed Sheeran, Sting, Eminem, Gar Brooks. they really do turn.

it into this just giant festival. And it. all kind of stems from uh an admission. that the race might not be that good. So, you need to provide an experience. for everyone. Whether. >> I think they would argue that the whole. weekend needs to be great, >> right? There's one of four teams who are. going to be on the podium and after you. do the qualifying, whoever's in poll has. like a very good chance of winning. And. um after the first turn, if there's no.

crashes and after the first lap, then we. pretty much know. So I hope the rest of. the activities are fun. >> Yeah. So fix stakeholder relations with. the tracks. Number two. >> Number three, >> fix stakeholder relations with the fans. We've alluded to this a little bit, but. and Red Bull and Mercedes and Lewis. Hamilton were starting to push the. edges, but like F1 had a huge social.

media problem. Bernie and and F1 had been doing. everything they could to keep the sport. in sort of the heyday state for them of. the mid 90s where he controlled. everything. It all flowed through. Bernie. >> Control over growth. If you have to pick. between those two things, control. >> Yes, I control TV. I control the. presentation. I control the race fees. I. control the journalist access. I control. who gets to go where in the paddock club. and when, who gets to see what, etc.,

etc., etc., It was so bad that Lewis. Hamilton when he came into the sport as. this incredible star who, you know, had. global appeal, was the first real F1. driver to become a legit celebrity in. America, >> the first superstar black athlete in. Formula 1, like. >> first black athlete period. There were. no other black athletes before since all. the things that Lewis Hamilton is. He. being a native millennial wanted to have.

an Instagram account. >> and and that's underelling like being. one of the most fames savvy individuals. >> that too. >> And what he had that he brought into. Liberty's office was a stack of cease. and desist letters. >> that Bernie kept sending him to take. down posts on his Instagram because he. was quote illegally distributing F1's. intellectual property. That's how bad this was.

>> Nothing sums it up better than that. >> Yeah. So, Liberty immediately is like, "Yes, please, Lewis, post as much as you. want on your Instagram.". >> Yep. >> And then finally, and related, there was. also just a whole basket of lowhanging. fruit opportunities to grow the sport. So, one of these was esports and video. games. There had been an independent. video game studio in the UK that had. been making official F1 video games for.

several years. Shortly after Liberty. acquires F1, that studio gets acquired. by Electronic Arts, makers of Madden and. FIFA that do billions of dollars of. revenue for EA and their league partners. every year. Liberty works with them. Another initiative, again, remember. Chase and the whole crew, they're coming. from the NFL world. Among the many. things that the NFL has done so great. over the years is turning all the.

offseason content into exciting. marketable events like the NFL draft. Well, what's the equivalent of the NFL. draft for F1? The testing period. Let's. televise the testing period. Let's make. it an event. Let's generate revenue and. grow the sport. Can we generate. narrative out of it? I mean, all the. sports journalists who cover F1 right. now can't stop writing about how little. track time the Aston Martin team has. gotten because of the new crazy stuff.

that, by the way, Adrien Newi is now. designing for Aston Martin. >> He's team principal now. >> So, he's got some new crazy design that. uh isn't, I guess, super reliable yet. And so there's all these great, you. know, stories being talked about of how. are the drivers going to do when they've. had so little time to actually practice. with all the other drivers. This is. exactly what you want. >> Yep. And all that was just falling on. the floor before. No engagement, no. revenue, no utilization of that.

>> Yep. >> So then the last bucket is also pretty. obvious. We should probably go start. courting Hollywood. Uh, racing movies. seem to be pretty popular. >> Medium popular. >> People like them. I mean, especially for. the budgets that they've been made for. in the past. Uh, certainly this is a. sport that lends itself to visually. compelling narratives.

>> I think you're right that the initial. thing was, oh yeah, people like racing. and this is visually compelling. That. was actually wrong. That is not the. correct thesis, but it is the place to. start. >> Yep. Of course, what we're getting at is. they end up with. I think the most impactful. piece of sports media in history, >> ever across any sport. Absolutely. And. that is Netflix's Drive to Survive.

>> Oh, yeah. >> All right. So they go to Netflix, these. clever F1 guys, and they say, "Hey, I I. think you should do a series." And the. initial idea, David, like you're saying, is race cars are cool, visually. compelling, people like racing. >> Seems like a no-brainer. >> And what it would evolve to really, it's. a human drama. >> Yes. >> It's about when we said there's three. concurrent competitions. There's a. driving competition, there's the World.

Cup of Engineering, and there's the. World Cup of Office Politics. It turns. out the World Cup of Office Politics is. an amazing amazing thing for a uh. effectively a reality TV show, especially. >> the most compelling television product. >> when you then uh as secondary flare. elements layer in race cars going super. fast, >> occasionally crashing. >> Yes. attractive mid20s dudes in the most. extravagant amazing places on earth.

swimming and being on yachts and. partying the night before your big race. and it it's it's just perfect. >> It's incredible. But the human story, that is the killer unlock of Drive to. Survive. >> And it was so perfectly made for what. everybody in the sport needed at the. time because if you had made Drive to. Survive for, I don't know, let's take um. the NBA. Sure, it would have succeeded.

on a lot of the dimensions you just. mentioned, but the hardcore fans would. hate it because they'd say like, "This. isn't basketball. Come on." Right? This. is just fluff for attracting new. audiences. The thing about F1 at this moment is. everybody was so starved for access. Any. glimpse behind the curtain that even the. most hardcore petrol heads who would be. the first to say like, "Yeah, of course.

this isn't the sport. This isn't F1.". They loved it, too. They'd never gotten. to peek behind the curtain. >> All right. So, how did it come to be? So, Netflix and Liberty start talking. F1 was also pitching Amazon on doing. something, trying to get a little bit of. a bidding war here. Who's it going to. be? Netflix or Amazon or someone else. Amazon already had something in the. works with Mercedes and Lewis Hamilton. that was just focused on them. But. hilariously, F1 and Liberty control the actual track.

rights. So even though Amazon was going. to get the rights to Lewis and Mercedes, they couldn't film the documentary on. track. So it kind of ruins the whole thing. Ultimately, you do need F1 to play ball. So, Amazon. ends up bidding the most for the. leaguewide thing, the thing that would. become Drive to Survive. Liberty comes. back with that bid in hand to Netflix. and says, "Hey, can you guys match. this?" Rumors are that it was about. double the Netflix bid. >> This is the rights payment that Netflix.

or Amazon would pay to F1 for the right. to go make this series, >> which is the way it used to work. But. based on how successful Drive to Survive. has become, you don't have to pay the. sports leagues anything. >> Netflix doesn't pay those sports. leagues. Even the NFL, they don't pay. them anymore. >> It's such a giant giant spotlight on. your sport. Yeah. >> You know, they're small numbers. I think. it was the order of like 5 million. versus 10 million or something like. that. But Netflix comes back and says, you know what, we're at our ceiling, but.

we do think we're the best partner for. this. So, our offer remains the same. If. you guys are really focused and really. mean it about growing the sport is the. priority here. Our global audience is. gonna grow the sport. >> So Liberty goes for it. They say, "Yep, we're in for the lower price." And at. this point in time, Netflix's audience. in the US was something like 2x what. Amazon's. Once Netflix secures these. rights, they then start working down a. list of production companies. Boxtobox.

Films wins because they had done that. 2010 Senna documentary which is great. I. highly recommend folks find it and watch. it. BoxtoBox had already been working. with Red Bull Racing on a documentary. idea just focused on them. I had heard. rumors that the whole thing started as a. Red Bull documentary. Now it makes. sense. >> Yes. So ultimately the Red Bull idea. gets scrapped along with that Lewis and. Mercedes idea that that Amazon was. working on that gets scrapped. Although. listeners, we have heard rumors that.

that one is back in the works now with. with someone else. F1 takes a big leap. of faith and gives Netflix and boxto-box. films complete creative control and. Final Cut, which I also think is really. important that like that this this is a. highly opinionated version with full. access that is not controlled by the. sport. The other really interesting. nuance here is Netflix is like, "Yo, yo, we make highly produced content that.

doesn't come out right away. We can't. turn around a new episode every week. during the season.". >> Right? Drive to Survive comes out right. before the next season starts. Once. >> always, always a season behind. In fact, if you're listening to this episode, then like 3 days ago, the most recent. season of Drive to Survive will come. out. So, Mercedes, interestingly, declines to. participate probably partly because of. the documentary that they think they.

have in the works at the time with. Amazon, but also because they're. Mercedes, >> right? This seems like a risk. >> They've just won everything you could. possibly win like eight years in a row. They're very profitable or they're. getting very profitable at this point. Why would you take any risks? And then. Ferrari looks over and says, "Well, if. Mercedes is out, we're definitely out. We're Ferrari.". >> So things are actually looking kind of. dire. Netflix is left with the bottom. eight teams. >> And they ended up creating something.

really amazing out of Daniel Ricardo. I. mean, that first episode just hooked a. lot of people after the success of. seasons one and two, which we heard was. kind of a slow burn. People loved it if. they watched it, but the algorithm. wasn't surfacing it to that many people. And over time they sort of realized, oh. wow, this is actually applicable to many. more people than we thought. Young women. across America and the world are into. this. And we thought it was going to be. 50-year-old petrol head men or at least. we we feared that it might be. So we. sort of started in that narrow circle.

As it grows and grows and grows and. season 2 is doing well and season 3 was. this massive smash hit. Suddenly then. all the Mercedes and Ferrari partners. and sponsors are coming to them and. going why are we not in drive? not. getting these. >> And so then of course in the later. seasons all the teams are in it. >> Yeah. Amazing. >> So the other thing you may remember is. seasons one and two were fully filmed, released, and on Netflix when the.

pandemic hit. >> Yep. >> But it was sort of like the perfect. thing for everybody to get really into. just when they were starting to get. trapped at home. And F1 actually did a. pretty amazing job of reacting to the. pandemic. Within a few months, they were. back on the track racing. They were. doing these clever sort of double. headers where they would race twice in a. row at the same track. They were. creating bubbles just like other sports. were creating bubbles. But the pandemic.

was weirdly very successful for the. sport because they had drive to survive. ready to watch and the sport sort of. lent itself to their ability to recover. quickly. >> Remember when everyone was uh building. an F1 simulator and playing the esports. too? Yeah. >> Yes. >> So eventually it would become the number. one Netflix show in 93 countries at. peak. And when you try to walk through. some of the numbers trying to figure out. what actually was the impact of this in. the first week, and that this is an.

official reported number, there tend to. be over 500,000. accounts that view the new season just. in that first week. And with the Netflix. stuff, it's always reasonable to. multiply it by two or three because of. password sharing. So call it like a. million and a half people that watch. just in that first release week. We. heard elsewhere that in the fullness of. time a season of drive to survive is. viewed in the sort of low tens of. millions of accounts. So again with. password sharing you could generously.

assume call it 40 to 50 million unique. people would watch the show. >> which by the way that is a huge number. of people watching a single piece of you. know non-live event non-sporting event. content. >> In fact it's um here's a funny story. I. was watching Drive to Survive the most. recent season with my wife to prep for. this episode. And while we're watching. it and Christian her getting. interviewed, I made a comment of like, "Yeah, it's crazy. He like gets fired.

He's not with with Red Bull anymore.". And she's like, "Whoa, spoilers.". And I was like, "That happened six. months ago." Like that's it. Her mental. model is real life is irrelevant. Drive. to survive is canonical. That's the. really unique thing about this sport is. how many more people are fans of the. sport but don't watch races. >> Yeah. And this is where the modern. media business model that Liberty came. and embraced.

thrives and Bernie World never could. have realized or seen this. Everybody. still makes money even when fans only. watch Drive to Survive. Why did the. Mercedes and Ferrari sponsors pressure. them to participate? It's all the. impressions of the sponsor logos. >> Yeah. Okay. So, impact. Obviously, Drive. to Survive worked, but how do you slice. it? How how much? What stats did you. find, David? >> So, one part of the Liberty strategy.

that we hadn't hit yet because we were. saving it for Drive to Survive was bring. this sport to America. >> Yes. feels like it should have an audience. here in a way that it never had under. Bernie. And so Drive to Survive was a. big part of that strategy. So if you. look at F1 viewership in the US in 2018. before Drive to Survive launched, about. half a million Americans watched races. In 2021,

that has doubled in three years to over. a million Americans watching F1 Grand. Prix. I don't know what percentage of. that doubling is attributable to Drive. to Survive, but it's not 10%, it's. probably more like 80%. Yep. >> So then 3 years later on in 2024, once there are more US races on the. calendar, which we'll get to in a. second, viewership of the Miami Grand. Prix in 2024 was 3.1 million Americans.

Now granted, that's optimal like a US. time zone, a US race, so there's natural. interest, etc. But like the idea that. 3.1 million Americans would be watching. an F1 race before Drive to Survive, totally insane. >> It's more than most NBA games. >> So that's just in America. Globally, F1 added 73 million new fans between. 2020 and 2021 alone during the COVID.

period. That's a 20% increase in fans. during CO. >> Yeah. The stat on that in the US is that. the US now has 52 million American fans, which has doubled since Drive to Survive. came out. >> Most of those fans don't watch the. races, >> right? The average viewership of a Grand. Prix in the US is about 1.3 million. people today. Miami is a giant outlier. at 3.1 million US viewers.

>> But there's all sorts of other ways that. fans can engage with F1 beyond the. races. And then probably the most. obviously directly attributable stat to. drive to survive. The percentage of F1. audience that is women. went from 7% to there are reports out. there that it's like 40% today. >> of F1 fans or women. >> of F1 fans again not watching the races. necessarily but follow the sport are.

interested in what's happening. >> Yeah. One uh quote I heard in research. was that Liberty helped F1 move away. from the male stale and pale audience. >> Yes, that it certainly did. Thank you, Daniel Ricardo. >> Yes. >> So, staying on the America strategy for. Liberty and F1. Obviously, adding races. in the US is a big priority here. >> I think Austin went much better than. they thought it was going to. >> Yeah. And Austin obviously launched. before Liberty bought the sport, but.

>> they make it a priority. Uh, do you know. about the previous US track record with. >> Oh, it's awful. It's so bad. >> They raced in Long Beach at one point, right? >> Yeah. So, anyone who's familiar with F1. today probably doesn't realize there. were nine different races historically. that attempted to run in the US, all of. which are defunct and they typically. only lasted a year or a few at a time. >> So bad. The most successful one uh.

longunning one was in upstate New York. >> Yeah. Watkins Glenn, right? >> They held Grand Prix in Phoenix. They. did have one in Vegas before, but it was. confined to just the Caesar's Palace. property and it was just like all tight. turns back and forth and back and forth. and back and forth. They were in Detroit. and they were also at the Indianapolis. Motor Speedway where the Indy500 is, but. they they never really uh made a good. impression. >> Yeah. Well, there was a bad there was a. horrible thing where like half the teams.

refused to race one year there, right? And the fans revolted and threw stuff on. the track and like. >> Yeah, >> it was bad. >> Yeah. >> So, the US track record not good. And. and then they come in and do brand new. from scratch built track for Circuit of. the Americas in Austin and does quite. well. You now have that. You've got in. the similar time zone window in the. Americas, you've got Mexico City, you've. got the Canadian Grand Prix in Montreal,

and you've got the Sa Paulo race. So, you now have sort of four in this time. zone window. And Liberty and F1 really. go for it at this point. >> Yes. So, pretty quickly after Liberty. buys the league, they start working on. adding another race in the US. Uh and that becomes Miami which launches. in the 2022 season. >> And then uh just one year later they. launch the Vegas race. But this is a.

different type of race. There is no. promoter. Rather than charging a fee and. having someone else run the race, they. say, "Okay, we're going to forego the. promoter fee and we're just going to. operate this race oursel. We're going to. take all the risk and and get all the. reward." But it's a a pretty big bet. because they actually bought the real. estate to build the Paddock Club. So. after talking to a lot of the different. folks around F1, I would say it hasn't.

been an obvious win. I I don't think. they will pursue this model. >> elsewhere. If I'm reading the tea leaves. right now, these things take a long time. to pay back. And I think they've sunk. over half a billion dollars into. building this out. And they really shut. down the city for a long period of time. and block off a lot of stuff to to make. it happen. It's much easier to run a. business where you say, you know what, we're not going to keep every little bit.

of upside for ourselves. >> You guys handle that. We'll just take. the money. >> Yes. >> Bernie had some things, right? >> Yes. You got a lot of things, right? >> Yeah. But there are now six races in the. North American, South American time. zone, and the US is the biggest media. market in the world. So, they're leaning. in hard. >> Yep. Well, speaking of the Paddock Club. you mentioned, it has totally. transformed. since Liberty's acquisition of F1. You.

and I got to experience it with Service. Now in Vegas. We were just beginning our. F1 research at that phase and we left. for like weeks afterwards saying, "Oh, F1 is a corporate sport. The consumer. side must really not be big at all." But. man, it's the most B2B thing we've ever. seen. There's a strategy interview that. Ben Thompson did with Mike Cannon. Brooks, the Atlassian CEO last year. They're the title sponsor of Williams. And Mike says this. He says, "Hey, we.

view our Williams sponsorship and our F1. participation as we get to have a mobile. executive briefing center. >> that we can go around the globe. throughout the year and bring our. customers to this amazing event and have. an amazing customer example to show them. in Williams of how they use our. software." Like I don't think Atlassian. has a physical executive briefing. center. I think F1 and the Paddock Club.

is their executive briefing center. >> It's funny. Yeah. Since this was our. first experience with it, it it was. shocking to me realizing how large the. consumer element of the sport was. globally because in America it feels. like this like a little enterprise. software conference. >> Exactly. >> Okay. So, what are the economics of all. of this and how does that play into F1. as a business? So apparently the title. sponsorship at the front of the grid now. can be a $50 to hund00 million deal and.

Oracle's title sponsorship of exactly. per year of Red Bull Racing is. reportedly a hundred million. >> Uh other places site that the big title. sponsorships are are more around 50. million. >> But either way, I mean really big. numbers and right in line with the. biggest deals that F1 itself does. So. the LVMH deal is $und00 million per year. and that's the Louis Vuitton banners. everywhere, Tag Hoyer being the official. timekeeping sponsor, the LV trunk and of. course they spray Moette all over each.

other on the podiums. So you get sort of. um wrapped in a blanket of LVMH now when. you watch a a race. >> Yes. And back to the impact of Drive to. Survive for a minute. Oracle's CMO said, I believe on an earnings call. >> that Drive to Survive was the reason. that they decided to get into F1 and do. the big Red Bull sponsorship. >> Really? >> Yes. >> Fascinating. >> that they weren't engaged with the sport.

beforehand and then started to watch. Drive to Survive and that led to. >> Wow. ultimately, you know, multiund. million dollar investment over several. years. >> 500 over five years is the the rumored. value. So, thank you Netflix for that. gift. So, the cheapest deals you can. get, let's say you want to slap your. logo on a car somewhere, you know, a. little under a bumper or something. Uh, the cheapest deal is about a million. dollars and that's a back of the grid. car. The most valuable real estate, I.

thought this was interesting. There's an. airbox on the car that sort of sticks up. behind the driver's head that you can. see from the side. Those go for the sort. of six to seven million dollar range. And the logo placement on a driver's. chest is also very desirable. That's. about a million and a half, especially. toward the front of the grid. And this. really is the way that these teams make. money. It's about 60% of the revenue. comes from sponsorship. And the teams. are now averaging about $200 million of.

total sponsorship per team. But average. is kind of the wrong way to look at it. because it varies wildly from front of. the grid to back of the grid. >> Yeah. >> The other big thing is that hospitality. is rolled in. So if you're entertaining. a client at a football game, like let's. say you do a big sponsorship deal with. an NFL team and you get a suite, you get. three to four hours together. And most. of that is actually consumed by watching. football because you care about it. It's. an exciting game. Anything can happen. If you bring a client to an F1 race like.

Service Now brought us, you spend three. days together and the race is only like. two hours and actually in the race. there's not that much you need to pay. attention to most of the time that. there's some really exciting moments and. you pay a lot of attention then, but. there's plenty of time for a. conversation otherwise. So, it's much. more conducive to forming real. relationships versus a traditional 2. three-hour sports game. And you get to. do it in geographies where your business. operates all over the globe, not just a.

stadium near your office. And I even. heard some uh comments of sponsors. saying, "Oh, we didn't even bother with. a logo placement on the car. It's. actually more about the relationships. and hospitality.". >> Totally. So, I can totally see why if. your strategy is something like. Atlassian and this is our mobile. briefing center, it's really only F1. I. mean maybe like uh tennis or golf or. something like that that you could think. about as a alternative. >> Here's my last bullet point on this. Ultimately, this sport is a magnet for.

sponsors because it is a global reach. for brand. It's humans pushing the. limits both in physical competition and. engineering cleverness. It's bleeding. edge technology and the sport is premium. if not luxury in its positioning in. almost every market around the world. >> Yep. >> All right. Meteorites. >> Meteorites. Well, to put a bow on the. Liberty strategy, or at least the come. to America part of it, right after. Liberty takes over in 2017, they do a.

deal with ESPN, much like Bernie's original European. Broadcasting Union deal. Liberty says, "Will you please show all. of the F1 races on the calendar on ESPN? We will give it to you for zero dollars. >> Was it actually zero? >> It was actually zero dollars for the. 2018 season and I think maybe 2019 2020. as well. We just want to grow the sport. >> Yep.

>> Get something going, some traction in. America. >> And ESPN, despite being a cable company, not a broadcaster, does have huge reach. It's the most valuable channel in every. cable package. >> Yeah. If you're a sport and you want to. grow in the US, you need to be on ESPN. Previously. F1 had bounced around for a while. It. was on the Speed Channel. Yeah. Yeah. It. was on NBC for a while, but only certain. Grand Prix. They didn't show the whole. season. Anyway, after Drive to Survive. in COVID, uh those rights become a lot.

more valuable in America. So, ESPN comes. back in for another three-year round of. rights. In 2022, after the sport has. grown so much, ESPN does start paying. real money for the rights. Rumored 80 to. 90 million a year for a three-year deal. for the US TV rights, >> up from zero. That's huge. >> The ESPN contract ends in 2025. In the interim, Apple had their own F1 media success on.

their hands this past summer with the F1. movie with Brad Pit. >> F1 the movie to say the title precisely, David, >> which grossed $630. million worldwide at the box office. The. highest amount not only for a racing. film, for any sports movie ever. and the. highest grossing.

box office movie of Brad Pitt's entire. career. That's wild. And this massively. exceeded people's expectations. It It. kind of shouldn't like it was Brad Pitt. It was beautiful camera work. It was a. feel-good story. It had incredible. special effects. It was the same. director and producer of Top Gun. Like. people were calling it Top Gun on Land. >> Yeah. I mean, you can't go wrong, >> right? The only thing working against it. really is it was a racing movie and. racing movies other than Ford versus. Ferrari haven't ever really been like.

big box office smashes. >> Yeah. >> And even that was fine. >> Well, nobody had ever made a racing. movie like this before, >> right? So, if you do the quick math on. that 630 million and call it, I don't. know, $30 a ticket that you you come to. the number of 21 million tickets sold at. the box office. And depending on which. estimates you believe from our Drive to. Survive conversation earlier, there's a. chance that the movie actually reached. more people than Drive to Survive has.

>> Or at least it's kind of in the same. ballpark. >> Yes. >> Either way, both are home runs. So, on. the back of that, Apple comes in over. the top for the US media rights. negotiations with a five-year deal at. $150 million a year. >> Rumored. >> Rumored, >> but probably close. >> Probably close for the media rights. I. mean, on the one hand, sure, this is not. NFL dollars yet, but this is real money.

for again a geography that was zero when. Liberty took over. was a huge deal to. get ESPN up from zero to call it 80 to. 90. Now you're talking about almost. double that. And for Apple, this is probably just the tip of the. iceberg of what they can do with F1. >> Yeah. F. So if you think about the a. bullc case for F1 here, 33% of F1's. revenue comes from media rights. And. that 140 million is only 13% of the.

total meteor rights worldwide which is. 1.1 billion total. So this is you know. important to F1 but this is not the bulk. of their consumption and the bulk of. their media rights dollars are outside. the US. And hey, Apple's a global. company. Like, sure, they love their US. Apple TV subscribers and Apple. customers, but they love their European. Asian, Middle Eastern customers just as. much. They'd love. >> to show them, you could imagine,

>> F1 on Apple TV someday. And the the real. bullcase for I know we'll do Baron bull. casecase later, but just to pull this. one forward for F1 here is in a lot of. those markets like we were talking about. earlier they've got these vertically. integrated sort of the channel is the. broadcaster is the network thing and. they don't have a competitive bidder and. so with Apple with Netflix with uh more. likely Amazon I think than Netflix but. with streamers and with YouTube buying. meteorites now you have these tech.

companies as real viable biders against. the, you know, one or two broadcasters. in the country. So, you actually can. sort of more fully realize the media. rights when there's a a real market for. them. >> Yep. >> But I will say, just so listeners like. are really grounded in this, US. viewership is only 1.3 million people. actually watching any given race with a. peak of 3.1 million at the Miami Grand. Prix. That is half of what NASCAR. averages. Like, this is not even the.

number one motorsport in the US. and. actually quite far from the number one. motorsport in the US. International. viewership is 60 to 70 million people on. a race weekend. So there the US if if. they crack the code, man, the US has. running room ahead of it. >> Yep. And I mean, hell, clearly it's. working so far. >> Yes. All right. Before we catch up to. today, should we do the uh the quick. update on the teams that are hitting the. grid this year? >> Yeah, got some new teams coming in. So, we've got the return of consumer auto.

manufacturers. Stake has become Audi. Honda is partnering with Aston Martin. Ford has joined with Red Bull as an. engine partner. Honda used to be the. partner who would make Red Bull's. engines in around 2019. And then in. 2021, Honda left the sport. And Red. Bull, instead of picking another engine. supplier, they actually took it in-house. and started Red Bull powertrains with. Honda's technology and technical. support. And I think they hired a bunch.

of the people away from Honda. >> Yeah. This Ford partnership is actually. like a more of a partnership, right, with Red Bull and less of a straight. we're supplying you the engine. >> Oh, you Ford is very much not supplying. the engine to uh Red Bull. They are sort. of a uh engineering partner on Red Bull. power trains and I know there's. engineers sort of flying back and forth. and multiple uh Ford sites that are sort. of collaborating with Red Bull on. building their engines. A lot of shade.

has been thrown at Ford saying that this. is just a marketing exercise and hey, Red Bull was all prepared to take engine. manufacturing in house. So why do they. need Ford's help? Um, but speaking of a. marketing exercise, Cadillac is entering. the sport this year. And, uh, you might. say, well, that's a whole team. Like, that's that's not just marketing. They're really, you know, an equity. owner and and putting their best foot. forward. This is a team called Cadillac. that uses Ferrari engines and a lot of.

other components, too. The whole power. unit, the gearbox. I mean, it's like. still a major deal that it's a major. American manufacturer that is joining. the sport, but this is a Cadillac with a. Ferrari under the hood. And Cadillac is. shelling out $450 million in a like an. expansion fee effectively just to join. the grid. It's just great for the sport. that all of this is happening and just. really reflects how far things have come. with relations with the teams and it's.

so healthy that manufacturers are coming. back and the number of teams is. expanding. Dude, the the GM Cadillac. versus Ford kind of opposing case. studies are really interesting. >> I kind of love the rivalry though, right? >> Yeah, the rivalry is amazing. sniping at. each other. They're really getting in. the F1 spirit. >> and it's really unclear like what you. should do and what the better strategy. is. You pointed out some of the. downsides in both. You know, the upside. for GM and and choosing to use Cadillac. as the brand is they own the team. They.

can over time invest build this into a. powerhouse or if they can that would be. great. They're certainly going to start. in the back of the pack. It would be a a. real coup if they didn't. Whereas Ford. is coming in with Red Bull, one of the. top teams. Like they're gonna be on the. podium from season. >> I know. It's kind of genius. Yeah. Real. big blue oval on that car. They. announced and unveiled the car in. Michigan. I mean, it was like a Ford Red. Bull event. >> Yeah.

>> And uh. >> meanwhile, uh GM and Cadillac unveiled. theirs during the Super Bowl, right? >> They did with a Super Bowl commercial. and then with an activation in Times. Square. >> Yep. >> But I love it. I I love to see it. >> Yep. And the other big thing for this. year is there's a new Concord agreement. complete with a full rewriting of the. rule set by the FIA. >> So there's a resetting of the field. >> And people always say these things come. with a big reset. But. >> do I think Mercedes and Red Bull and. McLaren are not going to be, you know,

three of the top four teams? No. I think. that's going to stay. Have we seen. anything in preseason from any of the. teams at the back of the grid where they. have some magic car that they've. developed? Not really. I mean, the. biggest thing I think we've seen is. Ferrari, who is a front of grid team, uh, is doing something very clever to. create downforce with their exhaust, but. we'll have to see how that actually. plays out. Yeah, >> we should say there's some excitement. around this new rule set where it's.

going to enable more passing which make. should make for more dynamic races, which I've been ripping on the whole. time. I do like watching F1 races, but I. do also think they could learn something. from the NFL and figure out how to make. it more competitive and a better pure. sport, >> more exciting. Yeah, better product on. the field. >> On the cons, man, there's a lot of. graping about these hybrid engines. the. uh what Max Versappen called it like a. souped-up Formula E car or some which is. you know it's it's actually perfect. Formula 1 drama that he's out there you.

know making fun of the cars even before. the season starts but you know. everything from the the noise to the. Max's comment about how they drive to. the kind of confusing nature of watching. the sport and trying to on top of. everything else now understand the. strategy behind battery preservation. that that might be a little tough for. them to overcome in presenting to the. viewer, especially new viewers. >> Yep. One thing that we heard kind of. unanimously from folks who've been.

around the sport for a while, it's just. sort of a shame that no one can. experience the old cars. Yes. Anymore. Like you can watch videos, you can. listen to audio. >> Early 2000s V10. You just had to be. there. >> But everybody says Yeah. There's nothing. like having one of those old big engines. go by you and just the sound and the. power and the vibrations or something. you would never experience anywhere. else. Certainly kills any uh you know. sustainability angle that Formula 1 is.

trying to push these days. >> Okay, I have a major beef with this. So. there's two reasons why they switched to. hybrid engines. One is road relevance. because 10 years ago or whatever, everyone thought that electric cars were. going to take over the world or at least. hybrid cars were and it was good to. start investing in Formula 1 in these. technologies so they could trickle into. the cars that everyone's driving. Adoption has been much slower than we. expected there. The other reason is this. sustainability push, which look, I'm I'm. all for sustainability. The carbon.

footprint of Formula 1. It is absolutely. hilarious to me when people talk about. the sustainability of the power units. like the engines in the cars when they. are flying the whole circus around the. world every week on a fleet of seven. trip 7s. I mean, okay, the European. races everything goes by truck, which is. a little better, but it's still 300. trucks. If if you line these up, it. would form a convoy over five kilometers. long. And so I I was trying to like do.

some math of okay, how much of the. carbon footprint is actually from the. power units themselves when they're. driving on track. During the 2019. season, the logistics operation, moving. the these cars in the circus around. accounts for 64 times the emission of. the cars themselves, even when you. include practice, qualifying, and races. I mean, these F1 tanks have 30 gallons. of gas max, right? It's three 30-gallon.

tanks over the course of a weekend, and. there's only 22 cars. It's a rounding. error. This is a complete farce. >> I I think I'm hearing a passionate. argument from you to bring back the. V10s. >> Bring I've never heard one and I want to. hear one. I don't know. My my general. belief on this is let the sport be the. sport and do whatever is going to be the. best sort of fan and driver experience. And I think they are trying to cram too. many things into F1. Like let let it be.

a sport. Secondarily, let it be a innovation. playground for auto manufacturers, but. like don't die on the hill of. sustainable fuels. H how about just. putting two races really close to each. other and just rearranging the flight. calendar a little bit? That would that. would do so much more even if you just. change one race than any compromises. you're making on power units. >> Well, you know what would make a really. big impact to American viewership of F1.

races and adoption of the sport? If they. stopped going head-to-head with the NFL. on Sundays in the fall. >> Yes. In research, we heard some strong. and very compelling arguments for uh. creating sort of a a mini season in the. spring for US time zones. Yeah. And kind. of staying over here, so it's good for. carbon footprint. It's great for. viewership because you get six races. that all build on each other and. excitement. >> It great for US ratings, the biggest.

media market in the world. I'm. amendable. >> I I think it's a win-win. And bring back. the V10s. And you know, what do. Americans love more than loud engines? That's right. That's right. All right. The business today. >> Tell us about the business today. >> Yes. All right. So, Formula One Group. does $3.4 billion in revenue. And the. most recent numbers here are from 2024. The revenue mix is the media rights, which is broadcasting is exactly 33%.

about $1.1 billion. Race promotion is the next biggest. budget at 29% about a billion dollars. Those are the fees from the race. promoters. >> Exactly. Advertising and sponsorship is. the smaller bucket, 19%. That's $630. million. It is their fastest growing. >> And to be clear, that's advertising and. sponsorship to the league to squad, >> not to the individual teams, >> which you'll notice, uh, that 630. million is pretty small compared to the.

sum of all the teams. The teams earn. about $2 billion in total sponsorship. across all of them, which makes sense. because the teams actually have a lot. more to sell in the way of driver. access, hospitality packages, speaking. engagements, garage tours. Also, the. best sponsorship placements are on the. cars and the drivers, which the teams. own. So the the camera is actually. focused on those while the walls of the. track just kind of go whizzing by, which. is why they need to repeat the same logo. a thousand times on the wall of the.

track for you to to get an impression of. it. So the the best assets that are. sponsorable actually belong to the. teams. You know, this is one of the. really unique aspects of F1 as a sport. that actually allow it to operate in. this really weird way where the league. is not owned by the teams because so. much of the media rights value de facto. will go to the teams. Like as the media. reach grows, the value of the team. sponsorship grows and that's their.

primary revenue driver, >> right? Yeah. It's a funny way to think. about it. their exposure grows, therefore their own direct sponsorships. can grow. >> Yeah. >> So, back to the revenue mix we talked. about for the the parent company, 33%. broadcast, 29% raise promotion, 19%. advertising and sponsorship. Uh, and. then they've got this other bucket at. 19%. That's hospitality packages, merch, and licensing. So, that's on the revenue side, total. 3.4 billion. Now, let's look at costs.

The biggest cost is the distribution to. teams, which we haven't talked that much. about how this works yet. This couldn't. be more different than the way it works. in the NFL. The NFL splits the league. revenue exactly 32 ways, even no. questions asked. Communist capitalism is. delightful. The distribution to teams is. renegotiated in every Concord agreement. Both the split with Formula One group is.

renegotiated and the. >> distribution mechanisms amongst the. teams. Yeah, >> exactly. They currently distribute about. 37% of Formula 1 group's revenue out to. the teams which comes to 1.27 billion of. their 3.4 billion. There are three. components to how this formula works. The first is equal participation. The. second is the constructor's championship. allocation, which is kind of.

interesting. The driver's championship. has nothing to do with how prize money. is paid out. It's just about the. constructors. And then the third is uh. historical length in the sport. >> Ferrari. >> So for a long time, Ferrari was. guaranteed at least 5% of the total pool. just as like a thank you for being. Ferrari. You've been a part of the. series uh every year since its. inception. You help legitimize the. sport. You continue to help legitimize. the sport. >> Absolutely. >> This has gotten negotiated away a little.

bit over time, but when you look at the. the the rumored distributions because. this is the Concord agreements are not. public. There is definitely still a. large chunk as a thank you Ferrari for. being Ferrari. >> And you know what they're worth every. penny. So the stats that I've seen is. that even today in the Max vers stopen. Lewis Hamilton well I guess Lewis is now. with Ferrari but thinking. >> I know I still think I think it's. Mercedes. Yeah yeah yeah exactly even.

today 30% of all F1 fans their favorite. team is Ferrari. >> Wow. So when you blend those three. factors together, the participation. which is equal, the constructor's. championship allocation and the uh. historical length in sport, the. estimates are that the top team gets. around 14% of the pool and the bottom. team gets around 6%. So to keep the math. kind of simple, imagine it as the top.

team getting 140 millionish in prize. money and the bottom getting 60. millionish. This is a lot closer than it used to be. The the constructors used to wildly skew. the distribution and the Ferrari premium. was even higher. But like this is. holding the sport back in my opinion. You you get a positive feedback loop and. a negative feedback loop at the top and. the bottom. And so we're sort of stuck. in this world right now where the the.

teams on the front four or five of the. grid stay there and the back stay there. And you could make the argument that, hey, making another 20, 30, $40 million. from the back of the grid is not going. to make you magically competitive. But every little bit helps. And I think. these things are nonlinear. They sort of. spiral up or spiral down is maybe. another way to think about it. And for. every $10 million you get out of the.

constructor's championship, you probably. can go find 20 or 30 more million in. sponsor dollars. So, a few people have. tried to tell me, "Hey, I actually don't. think money is really the answer here.". It's certainly not helping to keep the. back of the pack penalized with less. dollars per year. >> Yep. People want to see the stars win. >> That's true. But the bottom five may as. well not even be racing. >> Well, you need you need them on the. grid. But. >> do you need some warm bodies there.

>> just to like clog it up. They risk. causing crashes and getting in, you. know, the top few guys's way. And I. guess that throws a race up in the air. and anything can happen. But yeah, the. back of the grid's just the back of the. grid. >> Yeah. But I can't imagine it being a. healthy state for the sport if there. were only five teams. >> True. Very true. All right. So, back to. Formula 1 itself. By the numbers, there's 830 million people who identify. as fans globally. This is different than.

viewers. There are 450 million Global TV. viewers. The last time that they broke. this out and reported it in 2021 seems. to have become like a state secret since. then where they no longer report this. information. Now, on to team valuations. So, as of 2025, Forbes estimates team. valuations at about $3.6 billion on. average. Average. This has been a huge, huge growth recently. It's an 89%.

increase in the last two years. >> Wow. Wow. >> It's completely night and day since they. put in this the the cost caps. I mean, these these teams used to be basically. worthless in the Bernie era and now have. an average value of $3.6 billion. >> Yes. >> Every team is now north of a billion. dollars with the least valuable team H. at 1.5 billion. Then at the top end, uh. we've got. $6.5 billion for Ferrari. Again, not the.

best business, but the most valuable. asset. Love Ferrari. Uh $6 billion for. Mercedes, 4.4 4 billion for McLaren and. 4.35 billion for Red Bull Racing. The. multiples on these things are very. silly. Like if you compare them because. again most of these teams except for the. top three produce very very little in. the way of profit. And so if you look at. an NFL team, they actually spit off a.

lot of cash. If you look at these teams, I mean even the most connected to their. intrinsic value, Mercedes is trading at. 30 times operating income. They trade at. values because they're scarce assets, not because they are cash generative. assets. >> Yes, >> people got very excited when they. started not being absolutely horrible. businesses. And when they started being. fine businesses, everyone sort of pulled. forward many, many years of growth and. potential profitability into their. valuations. Or they basically said, "I.

don't care what the valuations are at. all. I'm a sovereign wealth fund or deca. billionaire and this sounds fun.". >> Yes. And in defense of this, I can think. of a million reasons why being an owner. or part owner of an F1 team. >> makes sense. >> is a highly profitable trade for a. person or an entity. The funny thing is. a lot of these people if they're. currently cash flow negative if they. ever decided to sell the team would make. up all the cash that they lost in the. business ever from the asset. appreciation. >> Right? It's almost like you're loaning.

money to the team for a while and then. you get it back. >> So market cap of Formula 1 itself. Now. remember Liberty bought in 2017 the. company for 8 billion with 4.4 billion. of that being equity value. Today in. 2026, it has a market cap of 22 billion. with an enterprise value of 25 billion. So, Liberty has done quite well turning. 4.4 billion of equity in 2017 into 5x. that in 9 years. That's about a 22%. compound annual growth rate. So then on.

top of the series itself, Formula 1. Group being worth $25 billion of. enterprise value, you look at the teams, those if you sum them all up, are worth. another 36 billion or so, not including. Cadillac yet. And so there's a grand. total then of 61 billion of enterprise. value between the teams and Formula 1. itself. Interestingly skewed toward the. teams. >> Yeah. And that is valuing the races at.

zero, which I think the races probably. have value. What did you say? You think. that F1 invested in Vegas? Half a. billion. >> Half a billion. >> Okay. Let's say the Grand Prix are all. worth half a billion just as a swag. There are 22 of them. >> Yep. >> Is that right? So there's another 11. billion in value. >> You're assuming that's money well spent. Well, if if Formula 1 itself is willing to put. $500 million up to stand up a Grand.

Prix, then. >> yeah, >> that seems a reasonable proxy for the. value of a Grand Prix. >> Yeah, that's a great point. So, you you. say, "Okay, the whole sport inclusive of. of races then has 70ish billion of. enterprise value all told.". >> Kind of a fun that. >> seems reasonable. >> like mental gymnastics to go through to. think about how the value all breaks. down. Yep. >> So then my key question the and and the. one the one unfilledin puzzle piece in. all of your minds should be Ben and.

David are obsessed with the communist. capitalism of of the NFL and the fact. that the NFL, the NBA, MLB, NHL, these. are thin leagues. These leagues do not. retain earnings or or have their own. enterprise value. They are purely. distribution mechanisms where nothing's. left over at the end. They're like pass. through entities of of of a sort. This. is a fat league much like the UEFA. Champions League or IPL. It's a company. It has its own earnings. It generates.

profits. It has enterprise value. So the. key question you should all be thinking. about is are teams getting their share. of the overall dollars compared to what. Liberty gets? And how does it compare to. a league like the NFL where the teams. are entitled to all the profits? Well, on the one hand, we can look back at the. percent of F1 management revenue that. goes to teams, which was 50% back in. 2018 and has shrunk to about 37%. last year. So, something's going on.

there. F1 is actually getting leverage. over the teams. On the other hand, there's actually just not that much. operating income left over once Formula. 1 pays for all the other stuff. generated 492 million in operating. income on revenues of 3.4 billion. So even if we take all that operating. income and we say okay what if we were. to distribute that 490 million to the. teams that would only grow the team's.

distribution from 1.27 billion to 1.76. billion. >> Yeah. In other words, the teams are. already making 72% of what they would. make if they owned the league because. there's just not that much profit left. over after all the cost to run the. league, after selling all the. sponsorships at the league level, general overhead, administration, and of. course running the Las Vegas race. >> Yep. I suspect if we were to have access.

to all the books during the Bernie era, that would be a very different story. >> Yes. And I I think it's because what's. going on is Liberty is investing in the. sport. >> Yes. Certainly there would be more. operating income if if Vegas was on not. on their books. It has reached this very. interesting equilibrium where if the. teams were making significantly less. than this 72% of what they could make, I'd start going like, gosh, maybe they. should break away. Maybe the league is. keeping too much. But it somehow seems. like this 28%.

uh of of. what the teams are leaving on the table. is like just right, you know. >> Mhm. >> The racing series is complicated and. expensive and has to maintain this big. global footprint and run this logistics. operation and ultimately we are not. starting from whole cloth here. the F1. management exists and it's just a matter. of every time the Concord rolls around. uh how much leverage do the teams have.

in that particular year. >> Yep. So that leads us to I think maybe. the most interesting question of the. analysis section for this episode, which. is. did F1 require Bernie? >> Yes, that is the key question. >> Get to where it got to. Uh, obviously there is this incredible. counter example out there with the NFL. of. a similar dynamic, arguably a much more.

complicated dynamic because there were a. lot more teams in the NFL that needed to. be wrangled. >> Yep. >> It was heroes work by Pete Riselle to. get them all to buy into communist. capitalism. I think though you did need a Bernie to. get F1 to where it is today. for two reasons. One, doing this episode. and telling the Bernie story has made me.

appreciate much more how unique what. Pete Rosselle did at the NFL was. >> It's like Dehawk at Visa. >> Yes. He was an N of one person who did. an Nof of one job. Uh, you could rerun that experiment a. thousand times and almost assuredly not. end up with the NFL today. >> I mean, the other major US sports. haven't managed to do it. >> Nope. I mean, the NBA is inching closer, but still isn't there. Baseball's a long.

way away. >> Yep. At a minimum, I think you. absolutely needed a strong individual. personality to emerge at the right. moment in time. And for the NFL, that. was Pete Riselle in the 50s and 60s. And. for Formula 1, that was Bernie in the. 70s. And then you're kind of at the whim. of the personality of that person. Is. there something about the other parties.

you're dealing with and their. personalities. or something about the global nature of. the sport? >> So, here's where I was going with the. second reason why I think you needed a. Bernie. The global nature of the sport, uh, the insane logistics required to be. operating a global sport. You know, the. idea that an employee that that that the. teams, the F1 teams could have gotten. together and hired an employee like the. NFL did with Pete Riselle to go and.

create all this. There's no way you. could incentivize. >> Yeah, that's a good question. >> somebody in the right way? >> Why was the NFL able to do it? Could. Pete Riselle have developed the same. structure in F1? >> No, definitely not. >> Why? to go and negotiate. with all of these teams, all of these. tracks, uh, all of these broadcasters, the FIA and this crazy NGO rules regul. rules regulator. >> Because of the complex multi-partiness,

you have to have the incentives of like. being your own entrepreneur with a. company. Not just an entrepreneur. I think you. need somebody truly with Bernie's. background as a ruthlessness. Like you. need a street fighter to do this. Pete. Riselle was many great things, but he. was not a street fighter. >> Yeah. Hm. >> What do you think? >> I largely agree with you. >> You have uh nothing more to add in. Charlie's words here. >> Nothing more to add. All right. Power. >> Power. Yes. But actually first there's.

something interesting to think about. which is power between teams. >> So F1 has become about exploiting the. tiniest little advantages or cracks in. the rule book as we've talked about and. usually other teams can figure out what. you did and copy it very soon like. within a few races. There are some. advantages that last a whole season like. if you do something different in the. fundamental layout of the engine or. battery or gearbox that that will buy.

you a year of edge if it is the correct. decision. And there's real magic when. you can do something that lasts multiple. seasons, like what Mercedes did where, you know, I I I can't exactly explain to. you why, but something happened where. they were just better at designing the. car than anybody else and they won for. eight seasons or having a driver that. was just so much better than anyone else. in that era with Lewis Hamilton. >> But those things are more operational. excellence.

>> than strategy. I mean the drivers are. the ultimate definition of not a power. because anybody else can hire them, >> right? Not a power. I think they exist. entirely outside the world of strategy. It's it's uh competency. It's. operational excellence. And like being. good at aerodynamics and car design and. engine design is kind of that too. And. so the the thing that I would throw out. here is I think skill or operational. excellence is actually more important in.

building a successful F1 team than. strategy. Because a lot of these ways. that you can win via strategy have a. short window that closes when other. teams can sort of quickly arbitrage the. value away. And from what I can tell, almost all durable advantages. in F1 that last three, four seasons or. more come from operational excellence. H. yeah, I could probably make an argument.

for scale economies too in that even. with the cost caps, if you have more financial resources, you're going to be able to. >> certainly more loopholes. >> Hire the best driver. I mean, if you uh. have if if you have an extra hundred. million versus your nearest competitor, you pretty much should be able to go. sign the best driver of the world. >> Yeah. So at least there and like. >> you know that's I guess sort of more. like balance sheet financial scale.

economies but. >> there does seem to be persistence in the. top teams on the grid. >> that doesn't seem related to power to. me. >> Yeah. >> Like what what power do. >> Oh. So you're just saying that you think. the top teams on the grid grid just are. uh they're just operationally better. >> Yes. Competency. Skill competency. Operational excellence. not a strategy. they pursued that differentiated them on. on a durable basis. I think that exists. yeartoear but not for a eightyear.

winning streak. >> I could see that by your argument the. teams are all about operational. >> the teams are powerless. >> Yeah. Which I think is what you want. right a league. I think in sport, yes, you you always want the most talented. and highest performing team to be able. to win and you don't want structural. barriers or advantages the way that you. sort of uh do want if you're a.

capitalist investor. >> Yeah, let's narrow this at least to like. the front half of the grid. Put the. bottom teams that are kind of always the. bottom. There's there's definite. negative power spirals for the yeah the. the the bottom set of teams. But for the. top half of teams. >> over the arc of a couple seasons. there is transference. >> Yes. >> Among that set. >> Yes. >> Yeah. Okay. I buy it. I buy it. >> Exactly. >> And so thus there must not be real power.

there. >> Yes. >> Great. I like it. All right. So back to. the Formula One group. >> Yeah. Let's analyze the takeoff phase. different than the scale phase. Why did. it become the premier motor racing. series? Like why is it bigger than Lama. or Indie Car? >> I can think of a few reasons. I believe. Formula 1 is the only racing car series. where pretty much everything is custom.

engineered by the teams. >> There's very little stock elements y to. it. uh which inherently makes it more. interesting and exciting. >> Yep. >> Two, the prestige luxury oldw world. European royalty ties. >> Yep. >> Plus the crossover with Hollywood. >> Yep. And once you have that, you can. kind of like hold on to it. Like that's. sort of cornered resource. >> that no other racing series once you. have it can get it. >> Like rally racing may be cool. Grace.

Kelly was never going to go to a rally. race. Yeah. >> Or all the slew of celebrities who come. to F1 races these days. >> Probably most important though, I think, is the FIA's. explicit designation of Formula 1 as the. pinnacle. Yeah. >> You have the more or less global. regulating body for many other. motorsports, though obviously not all.

FIA doesn't regulate NASCAR or Indie Car. stuff like that, but for many other. sports explicitly saying this is the. pinnacle, >> right? So, you sort of have a like. regulatory granted monopoly. >> Yes. Yes. It's like the royal seal of. approval. >> Yes. Our normal capitalist forces aren't. really allowed to play out in the same. way because it's it's been declared it. is the number one motor racing series in. the world. >> It's right there in the name, Formula. One. >> Yeah. So that would be a cornered. resource in the power framework for. sure. >> So now let's ask like a more literal.

question uh which is just the the seven. powers framework applied to the Liberty. Media Formula 1 entity today. And the. framework for power is what is it that. enables your business to have persistent. differential returns or basically to be. more profitable than your closest. competitor on a sustainable durable. basis. >> Yep. And the seven are scale economies, network economies, counterpositioning, switching costs, branding, cornered. resource, and process power.

>> All right. So, what is stopping someone. from eating Formula 1's lunch today? >> What is stopping uh the teams from. breaking away and starting FOD? That's. the biggest thing is that your. suppliers, >> both at the track side and at the car. side, could build something and go. around you. It's expensive and annoying. to do that. >> Yeah, Formula 1 is pretty interesting as.

a sports league in that it has inherent. network economies within the boundaries. of the sport. Yeah. of the Grand Prix. and the teams. >> Yep. There's also real branding power. I. mean, people will tune in to watch F1 in. a way that they wouldn't tune in to. watch FOD. >> It is designated as the pinnacle of. motorsport. >> Yes. >> Yes. Uh and they've got that as a. cornered resource uh that has been. designated by the FIA. I think that.

that's what I would classify that as. >> There are switching costs certainly for. the teams. major switching costs for the. teams and the circuits, too. >> Yep. In fact, this is actually looking. like a very protected business the more. we analyze it that they're they're. pretty dug in with all their parties. >> Look, I mean, it really speaks to how. powerful. the F1 group is that despite all the. years of abuse from Bernie, the circuits.

and the teams never actually broke away. >> Yep. Certainly scale economies. This. type of racing series is so expensive to. operate that you kind of have to have. this scale. >> Yep. You have to amortize all the. overall costs of the league across a. series of 22 races. >> 22 races across the teams across all the. viewers such that you can generate the. billion dollars in in media rights. >> Yep. >> Actually, I'm coming away feeling like. this is very defensible. >> Very very defensible. Uh,

>> I guess the key to the whole thing is. fans continuing to care. All right, Baron Bull. >> Yep. Let's do it. >> Okay, so I have a a table setting. exercise for us getting into this. >> Great. Great. >> So, there are 830 million global F1 fans. for a league that does 3.4 billion and. teams that generate another two billion. or so on top of what the league pays. them. So that's about five and a half. billion dollars gross total revenue.

across the whole sport for 830 million. fans. >> Wow. Sure feels like there's a lot of. room to grow there. >> The NFL generates $23 billion of revenue. across just 180 million fans. So So. that's four times the revenue on. the number of fans. >> Yep. The NFL monetizes a fan at $127 per. year and Formula 1 monetizes a fan at $7.

per year. David, what is going on here? >> Well, one major thing that is an issue. for F1, similar to IPL on our IPL. episode, uh they just don't have. anywhere near as much inventory, right, as the NFL. 22 races a year and there. there's no path for them to get to a. hundred races a year. >> unless they start sending like just H. and Mercedes are going to head out to. this circuit on this day. >> and at the at the same weekend you're.

going to see Red Bull. It's not. happening. >> Yeah. So, they're just fundamentally. limited by inventory. Now that said, the. flip of that is they absolutely have the. opportunity, like Liberty identified, to. make those 22 races into 22 Super Bowls, which they're well on their way to. doing, >> right? They have to. So, there's that. The biggest thing is the US is the. biggest media market in the world with. the highest uh revenue per consumer and. the highest subscriber fee per media. broadcast. And you just don't you don't.

have penetration here yet. They're. working on it. So that I think is like. the easy answer. And then I think. inventory, you're right. There's sort of. a structural thing. >> Yeah. And then that, you know, leads to, hey, if you really care about growing. revenue and you really care about the US. strategy, you got to fix the race. calendar. >> Yes. >> You cannot be going up against the NFL. in the fall and especially not with two. of the three big US races in the fall. >> Yep. So that's a bull case. They figure.

that out. Another bull case is actually. around the European TV rights, the thing. we were talking about, they more fully. realize the value where you have actual. competition bidding for those rights. And since so many of the viewers are. there, moving the needle a little bit. actually is a giant amount of revenue. change for F1. >> Yep. >> The uh last bullcase that I had thought. of that we haven't really covered yet is. a US driver or US team becoming world. champion.

>> Yep. that could really kickstart fandom. here. >> Yep. I think there's a related bullc. case of a champion or champion level. female driver emerging in the coming. years. Feels like that's. >> going to happen, has to happen, should. happen. And given how much of the sports. fandom has already shifted. >> towards women thanks to Drive to Survive. and the movie, that feels like it could. be a further acceleration there. >> Yep. bare cases. The biggest one that I.

just keep hearing is that it is more of. a parade than a race. I mean, like. NASCAR, you have aggressive overtaking. lap after lap. It's just constantly. exciting. And F1 is this beautiful. competition, but so much of it is. strategy, engineering, stuff that. happens in qualifying, conserving. resources, pitting at the right time. It. takes away from the like natural. observability of the sport. And so the. bare case is that despite everything. they'll try to do in regulations to make.

it more competitive, you know, these are. really big cars because of safety that. it's just hard to pass and you're really. incentivized to conserve fuel, not burn. your tires when you don't need to, etc., etc. >> Yep. >> Which puts a natural ceiling on the. amount of fervor around it. >> Yep. One thing that I think you could. have argued a couple years ago was a. bare case, but I think has been put to. rest is.

this was a COVID driven fad. I think F1. has proven enough staying power postco. >> That's true. I probably would have bet. that actually it was a co fad in the US. one or two years after Drive to Survive, which would have been wrong. I mean, it. was really in that category with like. COVID tropes like you got your Pelaton, you got your F1 simulator, you're. watching Drive to Survive and Tiger. King. But of that set of activities, F1 feels like one of the few that has. persisted. >> Yep. If you're an investor, one reason.

why you might not give it the multiple. that it used to have, like Liberty. bought it for 18 or 20 times earnings, something like that. One reason you. might not be as generous in its future. growth is it's kind of optimized now. A. lot of the lowhanging fruit that was. available for Liberty to do is levers. that they have pulled. So everything. from here is going to be a little bit. more of like a multi-deade slog than. some easy quick fixes. Not that that's.

really a bare case, but it won't show up. right away. >> Yep. >> This last thing that I just keep. thinking about, I don't know if it's a. bull case, bare case. It really could be. either is the broadcast right now, at. least when I watched it last season, do. leave a lot to be desired if you are not. super into the sport. So there's this. bullcase of bringing drive to survive. storylines into the race. Like let us. see the drivers before the race more. After getting to know these people so. much on drive to survive, it felt weird. that I was watching a race and I like.

didn't get any of their human sense. >> Yeah, it's like a different. >> It's like are these the same people? It. says their names, but like I can't see. their face. I can barely hear their. voice. Like once or twice a race, I get. some little tiny amount of radio. chatter. So I think there there's more. you could do of like bringing the people. from drive to Survive into the race that. they're the same people, so you should. be able to do it. And second, uh data. visualization to make the dynamic. moments of the race like there are.

amazing moments in the race, but make. them more understandable to new fans. So, if we're likely to see an overtake. five laps from now when so and so has. the right tires and so and so else has. pitted, like exposing that, start. talking about it, building toward it, and help me visualize it. Like, why is. that going to happen in five laps and. not two laps? Like a sensible way to. show, hey, that person on our little. thing, it says they're in first, but. really they're not in first because they. haven't pitted yet. And those other four. people have. So, like some of that.

stuff. >> Yeah. Help me understand better what's. going on. Yep. This is actually a. opportunity or or maybe we could frame. it as part of the bullcase for Apple's. involvement in the sport. You know, they. already developed special cameras for. the F1 movie. Uh Apple did. >> Yep. >> And they're bringing those to their. coverage of the races. >> It's basically an iPhone and they. rearrange the components to fit in the. standard F1 camera package. >> Yep. And it's not that difficult to.

imagine some of the vision pro. technology being really gamecher on this. front for F1. I'm not even really. thinking about consumers wearing Vision. Pro and watching these things. But to. your point about seeing the drivers, experiencing the drivers more during the. race, like Apple absolutely has the. technological ability and resources to. invest in in helmet cams, driver facial. recognition.

>> Oh yeah, they should reconstruction. >> What do they call it in the Vision Pro. where uh I could take a video call. wearing the Vision Pro and it uses my. avatar. >> Do do that with the drivers. >> Totally. >> I don't know. It'd be hard though. Their. faces are so squeezed in those helmets. But you're right, there's technology. solutions to this. >> Acquired doesn't need to do product. development for Apple and F1 here, but. like uh this is a bullcase for Apple. becoming a major partner of F1. >> Yep. Anything else in Baron Bull? >> That's what I got. >> All right. Quintessence. >> Oh man.

>> Listeners, this is where we try to land. the plane. What is the thing that still. >> the F1 car? >> Yes. That uh to pit the car that we. still can't stop thinking about. >> Box. Box. >> Box. Box. Box. Box is left. All. right. So, here's mine. It won't come as. a shock to anyone, but I am so. astonished that this is a sport that. might be durably popular with a giant.

group of people who never watch the. sport. I can't think of another sport. where that is true, where someone would. say, "Oh, I'm a big football fan, but. I've watched zero NFL games this year.". But there are lots of people who say. they love F1, who can name people, who. will buy merch, who will associate and. purchase from sponsors of teams, and who. can tell you who won the championship. last year, but will never tune in live. And that might be like the majority of.

the US audience. >> Yep. I can't think of another one. either. >> Yep. My contestants, this is by far. the most complex sports business and. league certainly that we have studied. and it's hard to think of others at this. scale that might match it in complexity. >> It's more akin to boxing or UFC with.

this sort of a competition happens in a. place at a time. It's not anybody's sort. of home stadium. There's a promoter. >> Yeah. >> But this has 10 teams, not two fighters, and they have $300 million race cars. So, >> with a thousand person teams behind it. I was gonna make the point earlier in. the episode that it'd be like if the. equipment manager and an NFL team was.

the most important person on the team. >> and had 800 people who worked for him or. her. >> Yeah. >> Yeah. Uh I can't imagine any other sport. that is anywhere near as complex as. this. And so you've had this crazy. history as a result, but it's still been. durable because nobody else could pull. all of these disperate parties together. in the way that Formula 1 has managed.

to. >> The activation energy to do something. similar than this is prohibitively. insane. >> Yes. Yes. >> The next Formula 1 is not a direct thing. that looks like Formula 1. It's. something completely different that can. start small and grow organically from. here. >> To the point you made a few minutes ago, nobody would ever draw up a league that. looked like this on paper, >> right? It's it's like wonderfully. organic. >> Yes. Yes. And chaotic. >> And it's funny, even though it is a. thick league or a fat league just like.

IPL cricket is, that started out of. nowhere and was came out guns blazing. and burned hot and worked. >> Yep. >> And this is kind of the opposite. It. took 70 years. >> Yep. All right. That's my quintessence. What I got? >> Carveouts. >> Carveouts. Let's do it. >> So, for anyone new to the show, this is. where we highlight one or two things. that we have loved recently that are. totally unrelated to the episode that we. wanted to share with all of you. So, for. my wife's birthday, we went to Marymore. Park in Seattle where they have a I.

can't figure out it seems reasonably. permanent, but it's a tent with a cirle. show in it. And the show. >> told me about this. >> is called Echo and it is so awesome. Cirusle it blows me away every time. But. the performers are just otherworldly in. their talent. They're unlike many live. performances. It's not like oh we'll see. if this works and if not I can bail out. and I have a a fallback plan. There's no. fallback plans. They hit their marks. perfectly every time doing absolutely.

superhuman stuff in an awe inspiring. way. Go see it if you can or really any. Circus because it's just so so. impressive. I want to go see five more. Like I I'm I'm in. I'm super. >> Yeah, you make it sound like actually. really awesome. >> If you appreciate N of one performers. who are doing something that well you. you'd have to train your entire life for. it and you're the very best in the world. and you make no mistakes and it's. coupled with like unbelievably creative. clever things where you think like how. did they even think of this? That's.

Cirle. >> Awesome. My second one is super quick. The Seahawks just won the Super Bowl and. NFL Films released on YouTube a 40inute. cut of the game called Miked Up and you. get to hear a whole bunch of the players. talking to each other and it is awesome. Uh whether you're a Seahawks fan. >> and it actually makes the game. interesting. >> God, was that a boring Super Bowl and I. loved it. >> Oh man, we had a great time. >> God, that Super Bowl game was like an F1. race. >> Yeah, >> it was super super special doing the. innovation summit and then going to the.

game with you. That was. >> that was. >> that was a real life moment. >> Yeah. >> All right. My first carveout is Tonal, the exercise equipment. So, we have some. acquired listeners at Tonal and they. heard me on a previous carveout talking. about how I'd redone my home gym and uh. which I'm very happy about, but it is a. very small space is on my bottom floor. here in my San Francisco house and uh so. so space is at a premium. Before we.

redid the space, I had a full squat rack. in there. I had enough room for that and. kind of don't have enough room for it. anymore. And so the folks at Tonal. reached out. This thing is awesome. It. just mounts to the wall and it takes up. no space. It's perfect and it's better. than a squat rack because I can do a. infinite number of strength training. exercises on it. So, uh, very happy user. of Tonal now. Thank you for making my. home gym much better. My second carve. out is continuing my truly amazing and.

gratifying saga as a parent of my older. daughter discovering video games. Because I've been documenting this whole. saga via carveouts for the last several. months, listeners have been reaching out. and one of my old classmates from. college, Ryan, actually sent me an email. about a game called Princess Peach. Showtime. Nintendo finally got the. picture that like, hey, girls are a. growth audience for them. >> And they made a Princess Peach game.

where Peach is the heroine. Peach goes. to a magical theater. >> and an evil witch named Grape takes over. the theater and Peach has to dress up in. different costumes and go reenact all. the plays. to save the theater. My daughter loves. this thing and it's been so fun to watch. her like become an expert at this game. the way that I fell in love with Super. Mario 64 back in the day. Uh it is so so.

so cool. Uh so highly recommend to. anyone with little kids and a Nintendo. Switch, go get Princess Peach Showtime. And especially if you have a young. daughter, might be their gateway into. video games. >> Nice. Well, we have some thank yous and. lots of great people we spoke with this. episode. But first to our partners this. season. JP Morgan Payments, trusted, reliable payments infrastructure for. your business no matter the scale. That's jpmorggan.com/acquired. Verscell, the developer tools and cloud.

infrastructure to build and scale fast, secure applications on the web. Verscell.com/acquired. to Service Now, the platform that puts. AI to work for people. That's. serviceow.com/acquired. and to stats, bringing experimentation, feature flags, and product analytics. into one unified system for product. teams. stats.com/acquired. As always, you can click the links in. the show notes to learn more or see all. of our sources. And special thank you as. always to Arvin Navaratnam at Worldly.

Partners for his awesome, awesome. writeup on Formula 1 linked in the show. notes. >> Arvin really did a banger job. It's he. does a great job every time, but like. this was a bad. >> he's become a real indispensable part of. uh of research for acquired episodes. >> Similarly, on my end, thank you again to. Joshua Robinson and Jonathan Kle at the. Wall Street Journal, authors of the. formula. Truly the best business history. book on F1 out there. >> All right, and I've got a great list.

here. Big thank you to Zack Brown, the. CEO at McLaren Racing. Thanks so much. for your time and prepping. to Greg. Mafay, the former CEO of Liberty Media. when they of course bought Formula 1. from CBC. Thanks, Greg, for helping me. understand the whole company. To Brandon. Reg, who oversees non-fiction and sports. at Netflix, very helpful for. understanding Netflix's strategy with. Drive to Survive and the impacts it had. To James Gay Ree, the co-founder of. Boxtobox Films, the production company.

behind Drive to Survive. to Eddie Q at. Apple, longtime Formula 1 fan, and of. course who recently bought the US. broadcast rights to Pavangami, Alex. Knight, and Jimmy Fairbanks, who are. equity investors and analysts who really. helped me understand the investor. perspective on Formula 1 Group and. Liberty Media. To Sid Trevetti, partner. at Foundation Capital and lifelong F1. fan to John Nafi, the former vice. chairman of McLaren Racing. And from. Ford, Will Ford and Mark Rushbrook, who.

obviously did the big engine partnership. with Red Bull Racing. Thanks for your. time, guys. >> Yep. >> To Nathan Bashez, my good friend and. longtime F1 fan. To our friends at. Shopify, Toby Lutka and Male Paraken. Both total motorsports nuts. And uh Toby. actually races in another racing series, so kind of fun to get his uh his. perspective as a driver. >> Toby. to uh Andrew Craig, former chairman of. Indie Car and sports marketing. consultant. To Mike Miller, former Wall.

Street Journal editor, who helped us. think through a lot of the big beats on. the story on this one, to our friend. Dustin Sedwick, who has done. partnerships and sponsorships with teams. and races all over the course of his. career. To Colin Fleming and the whole. Service Now team for bringing us to the. Paddock Club for the Las Vegas Grand. Prix for some first party research. to. Bobby Epstein, CEO of the Austin track. circuit of the Americas and promoter of. the US Grand Prix. And lastly, to our. friends at DUPA for providing us with. some amazing financial models and.

spreadsheets of all the historical data. on Formula 1, just like they did for us. on Coca-Cola and Google. >> Yep. And just one more on my end to. Chase Carrie, uh, board member now of. Liberty and Fox, but obviously former. CEO of the F1 Group. Yep. >> Thanks for chatting with us. really uh quite the cast this time. David, these lists are getting a little. nuts. In addition to all the people that. we aren't even saying that that helped. us, too. So, thanks if if you didn't. hear your name. >> Yes.

>> All right. If you like this episode, go. check out our other sports episodes, the. NFL, NBA, IPL, Cricket. Some good ones. in there. And uh now, if you're fired up. about F1, the first race is just a few. days away. So, if you want to see any. images from this episode, you can join. our email list, acquired.fm/email. fm/email. We'll also share our big. takeaways from every episode, episode. summaries, uh where you're going to get. involved in helping us pick future. episodes. We we do polls and little. hints to that email list of what our.

next episode will be. So, sign up at. acquired.fm/e. and come talk about it in the Slack at. acquired.fm/slack. With that, listeners, we'll see you next. time. >> We'll see you next time. >> Who got the truth? Is it you? Is it you? Is it you who got. the truth now? Huh?