The valuation of Formula 1 teams has boomed in recent years, but the feeling inside the paddock is that there is still much more room for them to grow.
Teams that were valued in the hundreds of millions of dollars just a few years ago can now boast valuations in the billions, but Aston Martin‘s managing director of commercial and marketing, Jeff Slack, believes the 11 teams on the grid are still “undervalued”.
Speaking at an exclusive event in the Monaco harbour, hosted by The Race and Axios ahead of this weekend’s grand prix, Slack told host Darren Cox that F1 teams had much more room to grow.
“We’re still only trading, in my opinion, low,” he said. “Franchises, which is what Formula 1 is, it’s not football where you have promotion and relegation, are measured on a revenue multiple.
“We’re trading six or seven-time revenue multiple. Why is an NBA [basketball] team trading 12-time multiple?
“There’s only 11 Formula 1 teams, that’s probably all there’ll ever be. You’re very risk averse in the sense you have a global footprint. We have long-term contracts, the sport is growing.
“I think the teams are undervalued compared to US franchises.”
Benefitting from F1’s growth
Speaking about Aston Martin‘s commercial performance, Slack told attendees at the Monaco event how the team’s revenue has skyrocketed since its rebrand from Racing Point for 2021, thanks to a clear commercial strategy and F1’s own growth.
“The sport itself is in great shape, and you’ve seen all the teams do well commercially, so we’ve had a really good ride since we became Aston Martin,” he said.
“I think we’re up 20 times or so in revenues.
“Part of it is we’re benefitting from an expanding pie. But we’ve also had a bit of a different approach, because we were such a small team when we were Racing Point.
“We were the last team in followers and probably last in commercial revenues. I think we’re about third or tied for third in that [commercial] area now.
“We tried to build an organisation that set out to be experts in marketing and delivery and partnerships and guest experiences, all of that.
“So again, we’re really fortunate to have done all of that during probably the greatest period of growth in Formula 1, where Liberty’s done a great job and promoters have done a great job.
“All these things have played to our hand that really had nothing to do with us. But the other part, we’ve executed pretty well.”
Unlocking F1’s commercial power
Slack believes that gaining a foothold in the US has been key to F1’s commercial growth, as previously the paddock wasn’t geared up commercially to think in a truly global way.
“How can you have a global sport if you don’t have the world’s biggest economy?” he said.
“Traditionally, I think Formula 1 was really a European marketing play for a lot of companies.
“You had tobacco companies, you had the OEMs. So you had some money coming into the sport, but it was really about European marketing.
“Now it’s completely global. So that’s been the key to unlocking a lot of the economics of Formula 1.
“You can’t just come and impose some American sports business model and rationale, but you have to understand where you can make improvements.
“I think we’ve balanced that in Formula 1 in the way that we’ve handled it. You need to understand what the sport is about.
“The culture is very strong in Formula 1, sometimes to the point of, we talk about it as a bubble, but not really understanding what’s going on in the rest of the world.
“So that was an opportunity for us when we came in. We thought to do some things a bit differently that perhaps were more interesting from a partnership standpoint.”
Asked where he saw F1’s next avenues for expansion, Slack highlighted opportunities in Asia, but also the benefits that can go beyond financial as F1 links up with huge consumer facing brands like Disney, Lego and Pepsi, that can help reach new, younger fans.
