Las Vegas Hits the Jackpot With Formula 1’s Return

Why the U.S. should be glad that it now hosts more races than any other country

Drivers at the F1 Grand Prix of USA at Circuit of The Americas on November 03, 2019 in Austin, Texas.
By Trung Phan
April 06, 2022 | 11:06 AM

Bloomberg Opinion — Formula 1 is coming to Las Vegas in November 2023.

Starting at 10 p.m. and going past major landmarks like the Bellagio, the Venetian, Caesar’s Palace and the Las Vegas Strip, the race promises a spectacle. The sport is already a juggernaut: The last race of the 2021 season in Abu Dhabi was watched by 109 million global viewers (more than Super Bowl LVI). And adding Sin City to Miami and Austin means that the U.S. will host more F1 races than any other country.

Not everyone is happy about it. The most liked comment on last Wednesday’s official F1 announcement tweet asks “do we really need 3 races in the U.S.?” Yet unlike, say, the Olympics, this is one mega-sporting event that usually pays off for host cities and nations.

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Moreover, the comment reflects a theme in F1 fandom that the motorsport has become too Americanized. Why give the U.S. a third race when the continent of Africa has zero and South America only has Sao Paulo?

Even Europe — which hosts 10 of 23 races this year — has a big gap in its coverage: Germany (granted, there are ten tracks within 640 miles of the German border, whereas Las Vegas and Austin are 1,306 miles apart).

In fact, three races for the U.S. makes perfect sense. Ask Sean Kelly, the British statistician who is the only person to have worked on every F1 TV broadcast in the U.S. over the last 19 years. “This is not an ‘Americanizing’ of F1′,” Kelly tells me. “The sport has a long legacy in the United States.” It began with the Indianapolis 500 in the 1950s, the U.S. Grand Prix at Watkins Glen with the richest purse prizes during the 1960s, and on through the 1970s and 1980s in Long Beach.Things went off track in 1983 when Long Beach left F1 over a money dispute. While Phoenix held a new F1 race from 1989 to 1991, poor attendance on hot summer days led to its cancellation. No F1 races were held in the U.S. for the rest of the 1990s; a return to the U.S. circuit fizzled in 2005, when a controversy over tire failures led to seven of ten teams pulling out of a race in Indianapolis (it’s considered “F1′s darkest day in America”). Indy was nixed two years later.

The sport has bounced back in the U.S. in the past decade. In 2012, Austin became the new U.S. home for F1 with the Circuit of the Americas (COTA) racetrack. Then, in 2017, Liberty Media acquired F1 for $8 billion. A nitro infusion followed from the 2019 release of the Netflix documentary “F1: Drive to Survive.” Made in partnership with F1, the show gives unprecedented access to the teams and drivers. A huge success, it’s estimated to have added 73 million new fans globally.

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Joe Pompliano at the Huddle Up newsletter highlights how “F1: Drive to Survive” affected the U.S. audience:

  • TV viewership is exploding: Bahrain was “the first race of the 2022 Formula 1 season [and] averaged 1.3 million viewers on ESPN…the most viewed F1 race on cable television in more than 25 years.” The record was topped one week later when the Saudi Arabia Grand Prix saw an average of 1.45 million viewers.
  • So is in-person attendance: COTA hosted 400,000 people at its race last year (it’s the “most-attended race weekend in Formula 1 history — that covers more than 70 years.”)

While Netflix is the most visible reason for F1′s resurgence in America, Kelly points to two other reasons. First, ESPN coverage of F1 is commercial-free (a unique selling point for televised U.S. sports). Second, F1 races can finish in 90 minutes; NASCAR takes three or more hours.

Liberty Media and F1 are taking full advantage of the renewed interest. The Las Vegas announcement comes one month before Miami hosts its first F1 race (notably, all 3 U.S. races are in different time zones).

To make Las Vegas work, Liberty has to erase bad memories from when the city last hosted F1 in 1981 and 1982. “It was a poorly executed race,” Kelly explains of the previous iteration. The course was built in the parking lot of Caesar’s Palace and the race kicked off in the scorching afternoon heat. The 2023 version will include the famed Las Vegas Strip and take place at night.

Kelly believes that if done properly, Las Vegas “could rival Monaco in prestige.”

He’s not alone: F1 CEO Stefano Domenicali predicts that “[the Las Vegas GP] will be the iconic race, the flagship race, of F1 within a couple of years.”

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The sponsorship potential is so big that Liberty Media is atypically shouldering most of the risk. As Pompliano notes in Huddle Up:

The most significant part of this deal is the fact that Formula 1 is acting as the promoter of the event. Formula 1 is traditionally a very asset-light business for those who don’t already know. They own the IP, of course, but they don’t own any of the tracks and rarely take responsibility for selling tickets and arranging hospitality.

Instead, they sell the rights to operate a race to an entity that pays them between $10 million to $90 million (depending on the location) and let them handle all the logistics.

A 2017 Forbes piece estimates the cost of running an F1 street race — separate from hosting fee — at $57.5 million. If Liberty Media is foregoing the hosting fee and paying for the race (track build, promotion), it’s an incredible deal for the city of Las Vegas. And since it will be a street race, the city can capture that magic without having to build the potential white elephant structures that plague Olympic host cities.

The sport has been an economic engine. According to COTA, F1 has pumped $5 billion worth of jobs, visitor dollars and tax revenue into Austin since the race was announced in 2010. More broadly, it’s also been a source of innovation. Many of its advances have found their way into road cars (brakes, suspensions, push-button ignition) and consumer tech (data connectivity in smartphones). From 1967 to 2004, the Ford-built Cosworth engine won more F1 constructor titles than other car manufacturers outside of Ferrari and Renault.Lastly, F1′s competitors and audience span the globe, making it seem a little smaller, friendlier and more familiar as a result. But no matter how Las Vegas shakes out next year, don’t expect any other new U.S. races for a while. “Three will be enough,” Kelly says. “F1 is a world championship. We gotta do these other countries.”

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Trung Phan is the co-host of the Not Investment Advice podcast and writes the SatPost newsletter. He was formerly the lead writer for the Hustle, a tech newsletter.