Billion dollar F1 future predicted for teams within five years

McLaren

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Billion dollar F1 future predicted for teams within five years

Brown believes the budget cap has changed F1 for the better

Sam Hall

Sunday 24 October 2021 14:00

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McLaren Racing CEO Zak Brown has predicted F1 teams could change hands for over $1billion in as little as three years.

F1's stock is on the rise at present, increasing the value of the teams who are aided by a cost cap which means they can no longer spend their way out of problems and so seemingly sit in the red financially.

Brown, however, feels it is now not unrealistic to start talking about teams being worth $1bn should the current upward trend continue.

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“I think Formula 1 teams can definitely be worth billions," assessed Brown. "There are a lot of sports franchises – NFL, NHL, the Premier League, NBA etcetera, that are worth billions.

“Now that Liberty has come in and made the sport financially viable, financially sustainable, we’ve seen rapid growth in countries wanting races.

"McLaren will be a profitable racing team in the not-too-distant future. Prior to the budget cap coming into place, I don’t think you could have said that.

"It was a sport where you had to spend as much as the biggest spender in the sport so the franchise was more about who could afford to lose the most and that is not a very attractive franchise model for a lot of people.

“So I think that fundamentally changed things."

McLaren and Williams have received additional investment since the announcement of the budget cap, with Michael Andretti also interested in acquiring the Alfa Romeo team.

"That is why you’re seeing real sports investors like MSP and UBS, who have invested in McLaren, who have a history in basketball and baseball.

"They know and have got experience and success in recognising when they think value creation is coming.

“If you look at the size, the scale and importance of Formula 1 compared to these other leagues, you kind of scratch your head and go why are some of these teams worth more than McLaren, Mercedes and Red Bull?

“I think the answer has been, historically, because the sport financially consumes money, but now that Liberty has changed that structure, I think that is why you are seeing real sports investors come in and investors in general.

“I think we will be sitting here in three, four, five years' time, seeing Formula 1 teams trade at over a billion dollars assuming anyone wants to sell.

“The fact that no one wants to sell drives a premium and that is a great price to pay.”