Drive to Survive’s economic and popularity impact on F1
Drive to Survive has made F1 the trendiest sport in recent years, driving major interest & commercial opportunities to the sport. Today we break down its economic impact on F1 and its teams
Editor’s note: True F1 aficionado since the days of Schumacher vs Alonso
Offseason recap
Formula 1 is back! Pre-season testing started on February 21st, and Season 6 of Drive to Survive premiers today on Netflix. We officially get the season on the way with the first race on Saturday March 2nd in Bahrain. Perfect time then to take a deep dive into the numbers behind F1’s recent growth and examine the true impact of the often quoted “Netflix-effect” from the docu-series Drive to Survive. But, before we get there, let’s briefly recap what has happened in the off-season to get us all up to speed:
- Hamilton joins Ferrari! Well, not quite yet, but from the 2025 season on Sir Lewis Hamilton will pair up with Leclerc to form the new Ferrari duo. This seismic driver move happened shortly before the season and caught everyone by surprise, even Hamilton’s outgoing team Mercedes. Not even the most successful driver of all time can resist the allure of Ferrari, plus a multi-year deal rumoured to be worth up to $100m annually (up from a pedestrian 2-year $125m deal he was on with Mercedes) might have helped with the decision. A perfect match, the global face of the sport joins the undisputed number one brand in F1.
- Andretti bid rejected: Despite backing from General Motors, Andretti Racing’s bid to enter F1 as an 11th team was unanimously rejected by F1 and its teams. While the FIA had approved the bid, F1 cited concerns over expected competitiveness, commercial viability, and the necessity of a customer engine.
- New team names: The familiar names of Alpha Tauri and Alfa Romeo are no more. Instead, we get beautiful sounding names that roll off the tongue in Visa Cash App RB Formula One Team and Stake F1 Team Kick Sauber, respectively.
- Team bosses: Haas has parted ways with fan-favorite team bass Guenther Steiner, while Christian Horner is facing allegations of inappropriate workplace behavior prompting an external probe initiated by Red Bull. The process is still ongoing, and certainly causing a great amount of distraction for the reigning constructor champs.
With no shortage of drama, Formula 1 returns in full force, reminding us why we love the sport.
The Drive to Survive effect
F1 has experienced a remarkable surge in popularity recently, particularly in the United States, at one point even becoming the fastest growing sport in the world. In 2016 when Liberty Media purchased F1 for $4.4bn the picture looked vastly different. Liberty Media wasted no time implementing strategies to rejuvenate the sport, targeting a younger demographic and enhancing its revenue streams. Initiatives included the introduction of F1TV, an over-the-top streaming platform, increased social media accessibility for both the sport and its drivers, and most notably, a groundbreaking partnership with Netflix to produce the documentary series, F1: Drive to Survive, which debuted its first season in March 2019.
By spotlighting the personalities of race drivers and team principals, showcasing the drama both on and off the track among rivals and teammates, and capturing the spectacle of competing at the pinnacle of motorsport, Drive to Survive captivated audiences worldwide. While the series was not the first of its kind in the realm of behind-the-scenes sports documentaries (preceded by the likes of ESPN’s 30 for 30, NFL’s Hard Knocks, Amazon’s All or Nothing), it struck a chord with viewers who became emotionally invested in the drivers themselves, and then by extension generated an interest in the sport. Nowadays, imitations can be found a dime a dozen, especially by Netflix itself, trying to recapture the same lightning in a bottle with Full Swing (Golf), Breaking Point (Tennis), Unchained (cycling) and many more.
The commercialisation on the back of Drive to Survive has been nothing short of remarkable, with Liberty Media capitalising on the popularity boom in the US specifically, as evidenced by the new race additions of Miami (2022) and Las Vegas (2023), joining the existing US GP in Austin. However, with all the talk about how Drive to Survive boosted the popularity of F1 among a younger cohort, what tangible impact has it had on the sport from an economic and viewership perspective?
Viewership
To begin with, how many people actually watch Drive to Survive? Total Week 1 viewership for the series (as well as viewership of prior season in that same week to catch up on all the action) has grown from 288k in 2019 to 644k in 2023 when Season 5 aired (also, let’s not forget that Mercedes and Ferrari refused to participate in the first seasons as they thought it was distracting and not of much added value…not surprising to get some questionable strategy calls from Ferrari, but we are accustomed to better from Mercedes).
Of greater significance to F1’s bottom line is the development in US viewership figures in particular, due to the high commercial value of an individual viewer there. The popularity growth is more pronounced in the US and can be attributed very much so to Drive to Survive funnelling new fans to the sport. Viewership rose from slightly over 0.5 million in 2017 to 1.1 million in 2023 (slightly dipping from a peak of 1.2 million in 2022). This surge has had profound impact on F1’s media rights value in the US, where ESPN paid around $5m annually prior to the 2023 season, whereas the latest 3-year deal from 2023–25 cost ESPN around $75–90m annually for the same rights, quite a noticeable jump.
While average viewership in the United States has experienced notable growth in recent years, leading to an estimated increase in US F1 fans from 44.9 million in 2019 to 49.2 million in 2022, the global audience has witnessed a decline during the same period, dropping from ~87 million in 2016 to ~70 million in 2022, despite the surge in US viewership and the popularity of Drive to Survive. Several potential explanations exist for this trend, including shifts in interests and habits stemming from the pandemic in 2020, a decrease in competitiveness dampening enthusiasm (though prior to Red Bull’s current dominance there was an era of Mercedes supremacy), or even a pricing-out effect, with fewer people having access to the sport through free-to-air channels as F1 increasingly becomes locked behind paywalls.
Race attendance
Average race weekend attendance remained stagnant at around 200k from 2017 to 2019, but has picked up significantly after the pandemic impacted seasons of 2020 and 2021. The average attendance now reaches close to 280k in 2022 and 2023, which can be attributed to multiple factors, chief among which is the Drive to Survive phenomenon. Additionally, a post-pandemic rush back to entertainment events has undoubtedly contributed to these figures, along with a more extensive weekend program featuring the introduction of 3 and 6 sprint races in 2022 and 2023, respectively.
The growth in attendance has predominantly come from races in the Americas and Europe, with the British Grand Prix at the historic Silverstone racetrack leading the pack in terms of overall weekend attendance.
Team valuations
In addition to the shifts in popularity and viewership, particularly within the crucial US market, a variety of factors have significantly influenced F1 in recent years, leading to skyrocketing team valuations. They have increased on average by a massive 276% from 2019 to 2023, with revenue multiples on valuation soaring from 1.2x to 4.9x. Ferrari and Mercedes are on top of the pecking order, with valuations (for their F1 outfits, not the whole car manufacturing entities) of $3.9bn and $3.8bn respectively. Both of these teams also generated the highest revenues in 2023, at $680m and $700m, which translated into F1 leading EBITDA. The imminent departure of Hamilton from Mercedes promises to present a fascinating case study as to how these figures evolve. Ferrari as a company has already seen its stock price rise more than 10% on the day of the Hamilton announcement, adding more than $7bn in valuation to its market cap. On the flipside, you probably do not need to be too much of a prophet to guess what the impact of losing the highest profile and most marketable driver on the grid may have on the Mercedes F1 Team financials going forward.
Beyond the popularity boost, structural changes implemented by Liberty Media have significantly contributed to these valuation explosions:
- Cost cap: In 2021, a cost cap was introduced to rein in the extravagant spending of the wealthiest teams — Ferrari, Mercedes, Red Bull — who routinely exceeded $400 million per season to maintain a competitive edge. In 2021, the cap was set at $145m, with planned reductions to $140m in 2022 and $135m in 2023. The cap was based on a 21-race calendar, and will be increased by $1.1m for each additional race (24 planned in 2024). Furthermore, an extra $4.3m was allotted per team in 2022 and moving forward to account for inflation. Notably, certain significant costs are excluded from the cap, such as driver salaries (would be tricky for Ferrari to pay Hamilton that salary otherwise), compensation for the three highest paid staff members (technical directors are not cheap at all), amongst others. This cap was introduced to foster competitiveness and financial sustainability, compelling teams to operate with greater fiscal responsibility and improving their operational performance, consequently driving up their valuations. The concept of profitability entered the sport, where recouping expenses was hard to come by before, making the cost cap the preeminent factor that has led to these valuation gains.
- Race calendar: Races were added that increase the revenue generation from additional circuits paying hosting fees and it generates increased media rights valuations for an expanded product schedule. New races were strategically placed to increase commercial opportunities (Miami and Vegas) or maximize hosting fees (Qatar and Saudi Arabia).
- Media rights deals: Besides the massive 17x increase in US TV rights from annually $5m to an average of $83m, the overall global F1 media rights are expected to exceed $1bn annually in 2023 and reach $1.4bn by 2029. Teams stand to benefit from these increases as they share in the overall revenue pool of F1. Moreover, rumours suggest that Apple is eyeing the acquisition of the global F1 media rights to enhance its Apple TV+ sports offering, potentially sealing a deal worth a staggering $2bn annually (similar in strategy to their 10-year MLS deal, focusing on acquiring full global media rights).
F1 revenues
Besides the teams benefitting from the new leadership of Liberty Media and the transformative changes they have made to improve the commercial profile and promote diligent financial planning, F1 itself has witnessed some noticeable revenue gains in this time (excluding pandemic-shortened 2020 season), growing from $1.83bn in 2018 to $2.57bn in 2022.
The upward trajectory of revenue is expected to have continued in 2023, particularly with F1 hosting its inaugural self-promoted race in Las Vegas that year, thereby directly capturing all concession and ticketing revenues. Traditionally, F1 licenses its product to racetracks for a hosting fee, with the race organizer retaining the bulk of ticketing and concession proceeds. However, with the Las Vegas race under its direct promotion, F1 stands poised to further augment its revenue stream.
Sustaining interest in F1
F1 has seen an unprecedented boom amongst major long-established sports over the past half decade. The next challenge for Liberty Media and the teams is to maintain this interest and continue growing commercial revenues.
Recent social engagement figures indicate a downturn in interest, with sentiment analyses revealing that fans found the 2023 season, completely and utterly dominated by Verstappen and Red Bull, to be lackluster, boring and disappointing compared to prior seasons. Social reach metrics have declined across the board, with mentions down 70%, new followers down 46%, and social reach down 64% from 2022 to 2023. F1 has to make sure to course correct here and keep the actual sporting aspect of F1 engaging, not just the drivers and teams. Obviously, a title fight as dramatic and controversial as 2021 between Hamilton and Verstappen does not come along every year, but a dull procession where the winner is already clear after 5 laps and a champ is crowned with plenty of races to spare is not conducive to a captivating sporting experience.
Drive to Survive has undoubtedly been a major catalyst in driving the economic growth of F1, but not exclusively. The Netflix docu-series is part of a much broader media strategy by Liberty Media to make the sport more accessible, exciting, focused on individual characters and their interplay and making it a stronger, more regular staple across the sports calendar (expanding the number of races) aimed at bringing in a younger fan base.
F1 must continue to highlight its drivers and their individual personalities to maintain the interest of a younger generation more accustomed to reality-TV like entertainment, while also ensuring there is more of a competitive balance on the sporting side. The new engine and aerodynamic regulations in 2026 will definitely help in that regard.
Focusing on growth in the lucrative US market makes sense, though it should not distract from the broader global audience. With races in 21 countries in 2024, F1 remains the most global sport in the world. While the glamour and excitement of the sport and its death-defying drivers are inherently appealing to fans, maintaining long-term interest is essential. Drive to Survive plays a vital part in the overarching brand strategy, highlighting the people inside the helmets and their dramas on and off the racetrack. As a funnel for new fans to find and learn to love the sports, the docu-series is irreplaceable, but to keep them around, the on-track racing product has to somewhat match the drama again as well (but please not again as fabricated as that last lap in Abu Dhabi in 2021).
One random fact
Ferrari does not spend a dime on advertising, instead using their investment in the Scuderia Ferrari F1 team as their primary branding tool. Ferrari, the oldest, most popular, and most accomplished team in F1, receives a “heritage bonus” of $35m annually, due to their status as the only team to have competed in every F1 season since 1950 (and unofficially as a “please never leave F1 and thank you for driving a majority of the popularity” payment).
It’s lights out and away we go!
You should be all set and ready for the start of the new F1 season now and hopefully have a better appreciation for the impact Drive to Survive has had on the overall popularity and financials of F1, as well as other commercial developments that have led to the economic growth in the sport. Enjoy the newest season of Drive to Survive and the season opener next week in Bahrain. Let’s hope this year will be a bit more competitive in the driver’s championship!
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