"2023 marks another incredible season for F1 (Formula One World Championship), with strong engagement across all platforms, record attendance at race venues, and F1 becoming the fastest-growing sport on social media for the fourth consecutive year," F1 President and CEO Stefano Domenicali proudly stated at an event last year.
F1 races, the World Cup, and the Olympics are known as the three major sports events, with annual viewership reaching 60 billion people. As one of the most successful and popular annual event series in global commercial operation, the Americans who acquired the F1 IP from a British billionaire and CVC Capital have successfully promoted the global commercial operation of this event.
In China, this niche event returned to the Shanghai circuit on April 19th after a five-year hiatus. "I expected it to be popular, but I didn't expect it to sell out in seconds. I remember that five years ago, the seats were not full," said Thomas, a veteran F1 fan and one of the most well-known sports content creators on Bilibili. He told reporters that he tried to secure tickets early this year, "Unfortunately, my reflexes weren't fast enough, and I didn't get any."
Tickets for the F1 Chinese Grand Prix have become the most sought-after resource in the sports ticketing market this year. At 8 PM on January 9th, tickets for the 2024 F1 Chinese Grand Prix officially went on sale. As soon as the tickets were released, the Jiushi Sports app, which hosts the F1 Chinese event, was overwhelmed by fans trying to buy tickets. Since then, the topic of "not being able to buy tickets" has quickly spread on social media.
Industry insiders believe that with the continued rise in popularity of the F1 IP, and the addition of the first Chinese official driver, Zhou Guanyu, this edition of the F1 Chinese Grand Prix has garnered more attention than ever before, and the commercial value of this event is also expected to increase further in the future.
The transformation began eight years ago. In 2016, Liberty Media, an American company, planned to acquire F1 from then 86-year-old F1 boss Bernie Ecclestone and CVC Capital. The transaction was completed in January 2017, with a total value of approximately $4.4 billion.
Ecclestone is widely recognized as the "Godfather" of F1, having managed F1 for nearly 40 years, and his contributions to this traditional sporting event are evident. Ecclestone is almost synonymous with F1, but it cannot be denied that he is also a controversial figure. Now, the new owners plan to transform F1 in their own way.
The Americans' ambition is to make this aging, traditional European event more Americanized, youthful, and globalized.
Sean Bratches, F1's Managing Director of Commercial Operations, said in an interview in February 2017 that over the past few decades, F1 has fallen behind the tide of the digital communication era.Following the completion of the transaction at the beginning of 2017, the Ecclestone era came to an end. Taking the helm of F1 was Chase Carey, who had previously served as the Vice Chairman of 21st Century Fox. From the subsequent commercial operations of F1, it is evident that compared to the old-school and stubborn godfather, Carey has a clearer understanding of the ways of modern entertainment media communication.
After a series of management adjustments, new marketing and communications departments were established within F1, which did not exist in Ecclestone's F1 management structure.
According to the financial reports published by its own media, F1 suffered losses of $37 million and $68 million in 2017 and 2018, respectively, due to increased investments in expanding digital media and other areas. However, by 2019, F1 turned a profit, earning $17 million. This was the first time since 2016 that the event had shown a profit in its annual financial report. That year, F1's total revenue reached $2.022 billion, an increase of $195 million from the previous year. Liberty Media attributed the revenue growth mainly to the increase in licensing fees, sponsorships, and the like.
However, like many other industries, F1 was also affected by the global COVID-19 pandemic in 2020. That year, F1's revenue dropped from $2.02 billion in 2019 to $1.14 billion, and the profit turned into a net loss of $386 million. Fortunately, as the events gradually resumed, F1's revenue began to rise steadily again. The financial report released in February 2024 showed that F1's total revenue in 2023 reached $3.222 billion, a year-on-year increase of 25%, with a profit of $392 million, a year-on-year increase of 64%.
This also allowed the Americans who own F1 to taste the sweetness. In 2023, the Liberty Media Group topped the Forbes Sports Ranking with a valuation of $20 billion.
Village Chief Thomas believes that the new owner has indeed revitalized the face of F1. During Ecclestone's tenure, F1 had gradually become a European event mainly aimed at an older white male audience, but in recent years, the Americans have changed it, attracting more young and female audiences. In his view, at that time, Mercedes dominated the F1 paddock, winning the podium for several consecutive years, making the races dull and predictable for the audience, with no appeal in the storyline. "However, Liberty Media has made sweeping reforms to F1, such as in the presentation of broadcast methods, where Liberty Media has further increased the information density of F1 races, continuously strengthening the drama of the F1 events themselves and the immersive experience of the audience's viewing. In addition, the documentary series 'Drive to Survive,' which F1 has been collaborating with Netflix on since 2018, is real, high-quality, and thrilling content for Netflix; for F1, it is the most valuable marketing and the most sticky advertising for users."
The F1 documentary has been a great success. Public data shows that, based on Netflix's approximately 231 million subscribers, more than 50 million viewers have watched the series, especially in North America, where surveys show that over 30% of viewers learned about F1 through this series. "From the results, 'Drive to Survive' has indeed helped F1 develop a large number of young and female viewer groups, which has given this once old white male sport a new lease on life," Village Chief Thomas believes.
The refreshed F1 has gained greater commercial value. According to the Financial Times, about 300 companies and brands sponsored 10 F1 teams in 2023, a number that is twice as much as a decade ago. Public information shows that in 2024, the top five F1 team sponsors are: first, Oracle (Red Bull Racing); second, Saudi Aramco (Aston Martin); third, Petronas (Mercedes); fourth, Stake (Sauber); and fifth, Bybit (Red Bull Racing).
Expanding into emerging markets, the next stop is China.
As a global event originating in Europe, F1 has experienced a long development of more than three-quarters of a century. This motorsport has gone through ups and downs, with the 2008 global financial crisis and a series of subsequent rule changes leading to the loss of fans. Now, F1 is gradually reshaping its former glory.Launching global marketing campaigns, especially in emerging markets, is a crucial part of reviving Formula 1 (F1).
When it comes to the history of F1 in China, it dates back to 2004, the year when F1 was first held in the country. After China signed a seven-year cooperation agreement with F1, Shanghai began various preparations for F1's entry into China. Led by the Shanghai Municipal Government, a significant investment was made to construct the first F1 circuit in China, known as the "Shanghai International Circuit," in Jiading District. The circuit covers a total area of 5.3 square kilometers, with a single lap length of 5.451 kilometers, 28,400 fixed seats, 24 VIP areas with a capacity of 11,200 people, and the entire venue can accommodate up to 200,000 spectators.
Wu Yuchen, a person in charge from the motorsport consulting firm Morningside Heights, told reporters that the popularity of this year's F1 Chinese Grand Prix was expected. The year 2024 marks the 20th anniversary of the F1 Chinese Grand Prix and the first return of the race since 2019, when it was the 1000th race in F1 history. Additionally, the F1 Chinese Grand Prix welcomed its first home-grown driver—Zhou Guanyu, a Chinese driver born in Shanghai in 1999, which means this race is his home debut.
With the addition of the local Chinese driver Zhou Guanyu, F1 has garnered significant attention in China. The celebrity effect of this young and handsome race car driver has also brought more commercial value.
Motor racing may appear to be a sports competition, but at its core, it is a commercial activity. As one of the most expensive sports in the world, every logo on the body of the cars in the F1 races represents the hard cash of sponsors.
Reporters learned from interviews with industry insiders and sponsor brand companies that Zhou Guanyu's official joining of the F1 Alfa Romeo team, apart from his own strength, the sponsors behind him and the vast Chinese market are also what the event organizers and the team value. With Zhou Guanyu's joining, his Alfa Romeo team received as much as 30 million euros in sponsorship fees. Zhou's addition was jokingly referred to in the industry as "bringing money into the team." Previously, AMX officially announced Zhou Guanyu as the spokesperson for the AMX brand; the sports lifestyle brand lululemon also appointed Zhou Guanyu as its brand ambassador last year; and another Chinese company, SenseTime, sponsored Zhou Guanyu and, in turn, sponsored the Sauber team. Companies like these usually have deeper ties with Chinese driver Zhou Guanyu and his team. Moreover, the cooperation prices are substantial, all at the level of tens of millions.
"In F1, it is not uncommon for star drivers to 'bring money into the team,' and many top drivers have numerous endorsements, which can bring significant commercial benefits to the entire team," Wu Yuchen said to the reporter.
Wu Yuchen told the reporter that although F1 has been in the Chinese market for 20 years, there are not many Chinese companies that sponsor F1. In addition to Lenovo, which is the title sponsor of the Chinese Grand Prix this year, there was the patriot who started with MP3 players, and later Weichai Power. "Compared to football and basketball, the high entry threshold of this event is indeed more niche, and there were no Chinese faces to create some buzz in the early days. The public watching a group of foreigners compete, unless they are really passionate about racing, it's hard to get excited."
F1, now partnered with China's first driver, has created a sensation in China, leading to a situation where tickets were "sold out in seconds" at the beginning of the year. When the 2024 F1 Chinese Grand Prix officially went on sale, shortly after the tickets were released, the only official ticket purchasing software was temporarily jammed by the traffic. The situation of not being able to buy tickets, which was previously encountered at various star concerts, appeared for the first time at the F1 Chinese station.
According to Jiu Shi Sports, before the sale, the overall number of reservations exceeded three times the total inventory of tickets for sale, and some popular ticket products had particularly high reservation rates, with the grass stand reservations being 15 times its inventory; the three-day pass or single-day Sunday session reservations were as high as 10 times the inventory. At 8 PM on January 9th, when the tickets officially went on sale, more than 10 times the number of users who had reserved tickets simultaneously rushed to the Jiu Shi Sports APP to purchase tickets, setting a historical record. This also triggered traffic restrictions to ensure the stable operation of the system, causing some users to experience lag, which returned to normal after the traffic pressure decreased.Wu Yuchen believes that the emergence of China's first Formula 1 driver signifies that the race has garnered more attention in the Chinese market. The substantial traffic brings about business expansion and potential economic benefits. If Zhou Guanyu performs well enough to secure a contract renewal with the team, such exposure and commercial value will undoubtedly continue to grow. Similarly, this will also help F1 win more viewers, traffic, and of course, commercial cooperation in China.