The expansion of Formula 1 in the US is in motion, now it needs an American star drivercoureur

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Formula 1 has finally landed a new racing venue in the United States after about five years of effort from owner Liberty Media.

Formula 1 will race in the Miami market for the next decade after securing a location and bringing in funders. And with the move, the American strategy of parent company Liberty Media is taking shape.

“Now things are coming together,” said Chris Lencheski, chairman of the private equity advisory firm Phenicia.

“It’s going to be huge for the series, especially here in the United States,” added the legendary motorsport driver Michael Andretti.

F1 agreed to a 10-year deal to bring a second race to the US this past weekend. The financial details of the deal were not released, but motorsport insiders estimate that F1 has netted between $17 million and $20 million a year under the pact. The Miami Grand Prix joins the US Grand Prix in Austin, bringing a total of four races to North America, while F1 also races in Canada and Mexico.

“The US is an important growth market for us and we are greatly encouraged by our growing reach in the US, which will be further supported by this exciting second race,” new F1 CEO Stefano Domenicali said in a statement.

Lencheski credited former F1 CEO Chase Carey “for getting through this sooner” specify the role and assuming the title of non-executive chairman. He added that Liberty Media would benefit as the race gives access to a prominent South Florida market that favors F1 car makers such as Ferrari and Aston Martin.

But the next step in F1’s American game could be vital.

“When I am the CEO of Formula 1, I will do everything I can to get an American driver in the seat and be successful,” Lencheski added.

F1 could use help in the US

Lencheski served as CEO from sports and entertainment marketing company SKI & Company before selling the agency in 2008. The company formulated F1 sponsorship.

He said that to effectively market F1 in the US, having a native driver would be critical in a sport fueled by nationalism as it travels globally.

Currently there are no American drivers at F1. Michael Andretti’s father, Mario Andretti, is the most successful American driver who dominated F1 and won the 1978 championship.

And Gene Haas’ F1 Teamteam is the only American team in F1 but has no American drivers, something that American drivers long for noted ago.

Lewis Hamilton, born in the United Kingdom, is the most popular driver in F1. But Hamilton is 36 and the chatter about retirement has begun. He only signed a one-year contract to drive for Mercedes, further fueling speculation about his future.

“I don’t feel like I’m at the end, but it won’t be until the next eight months or so that I’ll find out if I’m ready to quit or not. Personally, I don’t think I will, but you’ll never know ,” Hamilton told F1’s website in March.

As Hamilton nears the end, Lencheski nominated the American IndyCar driver Colton Herta as a driver who could convert as a future star and thrive in F1.

“He has already proven that he can win in IndyCar,” Lencheski said. “He has won on the Formula 1 circuit in Austin. He has trained in Europe and he is the right age.”

The Andrettis agreed.

Said Mario Andretti on Kyle Petty’s show: “As a young boy his father sent him to Europe, he did Formula 3, and he knows most of the circuits there, for starters, and he is trained. premium races like (in Austin) … beat two of the very best that Indy has to offer The whole race he held back Will Power and Scott Dixon This is a guy that I would love to see him get a break there because the US colors again – Formula 1 is like the Olympics in a way Play.”

Michael raced in the 1993 F1 World Championships. He also praised F1 for building on their brand, including a streaming series to educate and generate new fans in the US

“I think Liberty has done a lot of good things with the F1 series, including that Netflix show,” Andretti said. “That has done wonders for F1 and people understand more what it is about.”

Follow the F1 share

Liberty, which also owns the Atlanta Braves, bought F1 in 2016 for: $4.4 billion, gain access to a worldwide fan base of over 400 million. It trades F1 as a keep track of the inventory under the ticker “FWONA” on the Nasdaq. Tracking stocks are used by companies to track the success of a particular division in their portfolio.

With attendance being limited due to the pandemic, F1’s revenue fell from $523 million to $485 million in 2020, according to his fourth quarter earnings report. Liberty CEO Greg Maffei also linked F1 shares to a $575 million special purpose acquisition company, looking for companies including digital media properties to go public.

An important statistic in the report: there are an average of 87.4 million viewers per race. It’s a global statistic, because over the years, F1 has struggled in the US market. F1 did not race in the US from 2008 to 2011 before returning with the US Grand Prix in 2012 after a track was built in Austin. And part of Carey’s mission was to build on the American market; hence adding Miami and growing the media market.

ESPN brought F1 back to its lineup in 2018 and is paying the organization a rights fee, although Comcast’s Sky Group and F1 are producing the races. It is slowly growing on the viewership front.

The opening race of 2021, the Bahrain Grand Prix, saw an average of 879,000 viewers will tune in to the network’s ESPN2 channel on April 4. The second race in Italy attracted an average of 905,000 viewers, according to ESPN. And before the pandemic F1 was average 671,000 viewers in 2019 on ESPN channels, up from 554,000 viewers in 2018.

F1 could also expand in terms of media, and Amazon could play a role, according to the Financial times.

But the future of F1 at Austin’s Circuit of the America is up for debate. The deal will expire after the 2021 season. The track sold out the 2019 race, missed 2020 due to the pandemic and will host this year’s event in October, part of a 23-race schedule.

Should it stay in Texas and thrive in Florida, Lencheski predicted more expansion in the US.

“If they bring an event to Las Vegas or the Pacific Northwest, it will sell out there too,” he said.

F1 has not provided an official for this article following a CNBC request.

F1 can get more competitive

But whether the world’s largest motorsports company will benefit from the US market is unclear. Michael Andretti said the newly installed salary cap would help balance the sport.

F1 has a new one cost ceiling system, limiting team spending. Think of it like the salary cap of the National Football League or the National Basketball Association. For the 2021 season it is $145 million and fluctuates after the year. With a balanced field of participants, the teams of larger car brands can no longer spend to win.

Michael Andretti, who is himself part of a SPAC, Andretti Acquisition Corp., focused on the auto industry, likes the cost cap system because he believes smaller teams will benefit.

“They know how to handle a smaller budget so they don’t have to downsize, while the bigger teams have to learn how to downsize,” he said. “It will be very interesting to see what happens in a few years. I really believe the competition will get a lot better.”

“They should be very optimistic about their future,” Michael added, “especially here in the US”

Disclosure: Comcast is the parent company of NBCUniversal.

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