In today’s Finshots, we explain the cycle of Formula 1 racing.
And here’s a sneak peek for you: A Netflix show boosts F1 ratings -> F1 makes money -> They add more races in a year -> a new city gets an opportunity to host a race -> that city benefits from F1 tourism.
Alright? Let’s hear the story then.
This was the premise when the streaming giant Netflix decided to create the “Drive to Survive” series in 2019 — a show based on Formula 1 racing. The idea was to elevate the drama within the sport. Elevate it to a whole new level.
When an F1 fan sees their favourite drivers zoom past tight corners, with sparks flying off the asphalt roads, they’re seeing the most obvious bits — the drivers and the race cars. However, there’s so much drama going on behind the scenes. You have the racers, the team bosses, their egos, politics, the competition, intense rivalry and the subjective interpretation of rules.
Netflix focused on this latter bit. They offered a sneak peek behind the scenes and people loved it.
By the time Season 3 rolled out in 2021, the show secured pole position on the streaming platform. In fact, it was outperforming Season 1 — something that happens very rarely. Entertainment executives will tell you how hard this is. 99 times out of 100, new seasons fail to beat expectations set by their predecessors. So the continued success of Drive to Survive was an outlier in a sea of mediocrity.
Netflix had struck gold with the show!
But it wasn’t just about Netflix. The benefits trickled down to the F1 Racing organisation too. How’s that, you ask?
Well, the sport is witnessing renewed interest from all corners of the world. But more specifically, from an untapped market with huge potential — the USA.
See, the country hasn’t been big on F1 racing for a while now. In fact, they didn’t host a single race between 2007 and 2012. And the reasons were obvious. F1 isn’t an American pastime and the timing didn’t work out. The races were mostly held in Europe during nighttime and Americans had to wake up at the crack of dawn to keep up with developments. So you can see why the organization wasn’t able to drum up interest.
But things have been changing since Drive to Survive debuted on Netflix. The drama was so compelling that people were tuning in during the wee hours to watch the races in real-time. In the meantime, TV viewership soared — from 547,000 hits per race in 2018 to a whopping 928,000 hits in 2021. In fact, the season opener in 2022 was the most viewed race since 1995!
And it’s not just television. In-person attendance has also seen an uptick. Take the 2021 race in Texas for instance. It drew a massive crowd of 400,000 people. It was an F1 record!
So last week, F1 decided to capitalize on this renewed interest. It announced a new race in the US. That’s right! In 2023, American cities will host not 1, not 2, but 3 races altogether!!!!
It’s safe to say F1 is betting its chips on the US.
And the lucky new host city? The gambling den of Las Vegas! Come November 2023, F1 cars will be tearing around the glitzy streets of Las Vegas at over 300kmph. And Liberty Media, the American owners of F1, will be hoping that some of the $56 billion that Americans spend on sporting events annually will flow into F1’s coffers too.
And it’s not just us saying this. You just have to look at Liberty Media’s stock performance to see how this is playing out. The company’s share price has soared by nearly 120% in the past 3.5 years. People are betting on this too.
And finally, we have to talk about one other benefactor here — Las Vegas. The city is anticipating 170,000 visitors. That would equal 400,000 “room nights” in hotels. The direct economic impact? About $500 million. There’s also an indirect economic impact. Think — need for security services, drivers to ferry people around, and restaurants that will be serving these people. Put all this together and you get another $1 billion.
Now, these are the obvious impacts. Sometimes the benefits may not even be apparent at first sight. Take for instance Singapore.
The country has hosted a race every year since 2008 (barring the 2 pandemic year). And a poll by the Boston Consulting Group had found that foreign companies were more inclined to invest in the island nation just because of this one aspect. Imagine, business decisions being made because a bunch of fast cars raced around the city once a year. It’s bizarre, but it happens.
And this leaves us with one final thing. What about India? Why hasn’t India tried to capitalize on all this?
Well, there was a time when we had Narain Karthikeyan (an F1 racer), our own F1 team — Force India, courtesy of Vijay Mallya. And by 2011, we even had our very own Grand Prix — an event scheduled at the infamous Buddh International Circuit in Greater Noida. But it all fizzled out due to a host of reasons including F1’s tax dispute with the government.
So yeah, F1 might be all the rage these days, but for India, it's still a non-starter.