Formula 1 overestimated fan demand for the $500 million Las Vegas Grand Prix, the most expensive race of the year.

Formula 1 overestimated fan demand for the $500 million Las Vegas Grand Prix, the most expensive race of the year.

LAS VEGAS — There’s no such thing as a flawless first-year event, so go ahead and accept that there will be bumps and bruises at the $500 million Las Vegas Formula 1 Grand Prix.

The warning signs were as bright as The Sphere when early prices opened for this week’s race, the most expensive Grand Prix to attend on this year’s 24-race calendar.

With multi-million dollar hospitality offerings, exorbitant hotel rates, and an average initial entry price of around $2,000, this race was never intended to attract new fans to the world motorsport series or grow the American audience. Liberty Media, the owner of Formula 1, clearly viewed the race in Las Vegas as a global event for the top racers.

Grand Prix CEO Rene Willem pledged that “we will be sold out by the time of the event” in an earnings call on November 3 by the Formula One Group.

Well, the big race has finally arrived and tickets are still available, either directly or on a heavily discounted secondary market. Hotel prices have fallen along the Strip and all signs suggest that Liberty, which is promoting Formula 1 racing for the first time, has significantly exceeded its price point to attract new fans and spenders.

That ticket prices drop by as much as 60% on some days leading up to Saturday night’s race is only a small part of the heartburn behind the scenes. Local residents were angered by the daily disruptions caused by construction of the 3.85-mile (6.2 km) street circuit that uses much of the Strip while highlighting several Las Vegas landmarks with a 17-turn layout that has been likened to a “flying pig.” “.

There were early reports that Formula 1 was demanding exorbitant licensing fees from any company with a view of the track. Eventually, Formula 1 relaxed its fees, but not before threatening to set up structures that would block views. There are fresh concerns about how casino staff will work once the strip is closed so Max Verstappen can win another race in what has long been a championship-deciding season.

The Caesars Palace Grand Prix in 1981 and 1982 was held on another ridiculous track, because it used a large area of ​​the parking lot. This race has seen nearly two years of hype. This is the baby of Formula 1, backed by Liberty, which spent $240 million to buy property at the end of the strip to build a training area and permanent pit building.

This investment is included in one-time costs, which Greg Maffei, Liberty’s president and CEO, highlighted when he asked Morgan Stanley’s Ben Swinburne on an earnings call, “Do you still expect that kind of revenue approaching $500 million?”

“I think revenue numbers close to that are still a reasonable estimate of profitability,” Maffei replied. “We’ve seen some one-time costs and start-up costs that may have been larger than expected. But remember how much this impacts us, not just directly, but indirectly, this is a very profitable race for us. Once we get past some of those initial start-up costs… “It’s going to go up. Let’s be clear, this year, we’re working on getting better at being out there, being on time and having a great race.”

“That doesn’t mean we won’t have some (those) goals next year, but I think we’ll be able to improve other variables as well and increase profitability.”

Lewis Hamilton drives during a demonstration along the Las Vegas Strip at the launch ceremony of the Formula 1 Grand Prix in Las Vegas on November 5, 2022.
George Russell suffers from exhaustion during a demonstration along the Las Vegas Strip at the launch ceremony of the Formula 1 Grand Prix in Las Vegas on November 5, 2022.

F1 and Liberty want Las Vegas to become a long-term fixture on the F1 schedule.

Promoters will consider this week a success when all is said and done because Formula 1’s return to Las Vegas after 41 years is a star-studded entertainment event. When the race was announced in early 2022, it was clear that Liberty was chasing F1’s newfound, Netflix-led popularity within the US.

Las Vegas’ addition to the 2023 calendar marks the third stop in the United States – more than any other country – and the fifth in North America. Before the behind-the-scenes “Drive to Survive” docuseries that exploded at the height of the pandemic, Austin, Texas, was home to the only Formula 1 stop in the United States until Miami was added in 2022. The United States last hosted three Formula 1 races in One season in 1982.

But there’s nothing this weekend aimed at the new American fan, starting with the prices or even when the cars will be on track. The Saturday night race itself is not scheduled to start until 10pm local time – and is supposed to be televised in Europe during the Sunday morning hours – and as such, overnight temperatures in Las Vegas are expected to be the coldest in race history. Series.

There is plenty to do while waiting for the actual race. Parties and special events take place throughout the week and include “The Netflix Cup,” a live event that brings together drivers from “Drive to Survive” and golfers from “Full Swing” in a match-play tournament.

People watch a recording of Mercedes driver Lewis Hamilton being played on the screen during a press conference to announce the race in Las Vegas on March 30, 2022.

Verstappen, who clinched the world championship title for the third time in a row with six races remaining in the season, and won 17 out of 20 races this season, was not affected.

“First of all, I think we are there more for the show than for the race itself if you look at the track layout,” Verstappen said. “But you know, I’m actually not that interested in that. I’m more like, ‘I’ll go out there and do my thing and then leave again.'”

This is the other problem with this tumultuous event. Barring complete disaster, Verstappen and Red Bull should win again this weekend, and American race fans don’t find his dominance attractive. Viewership on ESPN this season was down 8% from last year, but its Nov. 5 victory in Brazil was still the most-watched show that day on the sports network and its audience in the 18- to 34-year-old demographic averaged larger than the NASCAR championship finale. , according to the SportsMedia Watch website.

Formula 1 continues to achieve high marks with its global audience, who appreciate the nuances of the racing series and understand that the best competition is not usually for the sake of winning. F1 boss Stefano Domenicali touched on this with investors.

“The other teams are still competing first, with intense battles along the way in each event,” Domenicali said on the earnings call. He pointed out that six different teams rose to the podium this season, and the performance of Ferrari, McLaren and Mercedes also improved.

“We have more battles to see over the remainder of the season, even as a number of teams shift focus to their 2024 cars,” Domenicali said. “With performance gaps appearing to narrow over recent events, we hope there will be a real challenge for Max next year.”

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