Business of Speed
The Money Behind the Motorsports Industry
By: Tim Frost
Date: April 2017

We are pleased to introduce a new feature to SPEED SPORT – “The Business of Speed”. This column will look at the financials aspects of the industry. Whether it’s on the track, passing through pit lane, worked on in the race shop, or negotiated in the board room, we will attempt to cover it all.

Liberty Media / Formula One Acquisition:

The most popular form of motorsport, Formula One has been on the finance pages during the off-season. Long known for its secretive type of business operations, recent developments appear to open up visibility as never seen before. Headed by Bernie Ecclestone for four decades, he grew the sport to global levels on par with the Olympics and World Cup. The past decade has brought interest from investment banks, hedge funds and sovereign wealth entities. Add in scandals, bribery, and litigation have made an intriguing story.

Last fall, Liberty Media Corporation entered into an agreement to purchase Formula One from it owners, led by CVC Capital. Based in Denver, Colorado Liberty Media owns a broad range of media and entertainment properties including interest in Sirius XM, Atlanta Braves, and Live Nation Entertainment.

The buyout required and received anti-trust approval from several countries. The European Union has also been discussing a review of the competitive and financial aspects of Formula One. Existing shareholder approval was necessary. A one percent interest was held by the FIA, they were in a unique position as a shareholder and regulator of the sport. They held a special meeting and approved the transaction. There was discussions of a conflict of interest, in which the FIA issued a press release clarifying its decision and decision making process. It is not uncommon for related management and ownership to occur in sports. It can even be subject to and receive anti-trust review, such as the NASCAR / International Speedway Corporation relationship during the Kentucky Speedway case in 2009.

The deal was valued at $8.0 billion. This was a complicated transaction involving existing and new shareholders. They received a mix of stock, cash, and debt. Liberty Media took a private company and made it public. Stock exchanges create transparency with required filings and disclosure announcements. Management makes appearances at conferences and their words are monitored by stock analysts and the media.
Nascar Team Values:

Prior to Daytona, Forbes Magazine presents their annual list of Nascar team values. Highly anticipated within the garage, the numbers create early season dialogue. Twelve months into the Charter System, what effect would they have they have on the financial aspects of team owners pocket. Initial observation – mixed at best.

The creation of the charters, led by Race Team Alliance was the industry’s version of the other sports franchise model. Create value and stability for key industry stakeholders. Details were specified on the sale, lease, transferability and operation of charters by the owners.

The current economic environment for motorsports is challenged on many fronts – admissions revenue, television ratings and sponsorship. When the numbers were tallied, Forbes estimated a decline of 7%, with an average value of $137 million for the top ten teams.

Forbes Magazine – Nascar Team Values

Number Team Value ($Millions)
1 Hendrick Motorsports $ 350.0
2 Joe Gibbs Racing $ 225.0
3 Stewart-Haas Racing $ 180.0
4 Richard Childress Racing $ 170.0
5 Roush Fenway Racing $ 150.0
6 Penske Racing $ 135.0
7 Chip Ganassi Racing $ 65.0
8 Richard Petty Motorsports $ 48.0
9 Furniture Row Racing $ 24.0
10 Front Row Motorsports $ 22.0

Source: Forbes Magazine