The Sportico report showing F1 teams averaging $3.42 billion in value tells a story most people miss.
This isn’t about racing getting more popular. This is about F1 fixing what was broken.
A decade ago, teams were at risk of folding. The Enstone operation that had won championships as Benetton and Renault was struggling to pay bills under Genii Capital ownership. Poor results meant lower prize money, which meant worse results. Teams were stuck in a downward spiral with no way out.
The 2008 financial crisis created an institutional fear of manufacturer exits that still shaped F1’s thinking years later. Mercedes missing Verstappen in their academy system showed how even the best-funded teams made costly mistakes. The sport needed structural change, not just better management.
The Two Changes That Fixed Everything
Liberty Media did two things when they purchased F1’s commercial rights. They replaced the revenue splits between teams and F1 management. Then they implemented a budget cap.
Most people see these as separate fixes. They work together.
The budget cap sets a more even playing field for all teams. The range between top teams and bottom ones won’t be as vast as before. This encourages teams to plan their spending intelligently instead of wasting resources pursuing marginal gains. Teams with manufacturer backing can’t simply spend their way to competitiveness anymore.
The revenue split matters because while results still matter, the size of the difference between P1 and P10 in the constructor’s championship won’t be as vast. Heritage teams like Ferrari, McLaren, and Williams get a little extra from being in the sport, but this amount isn’t as biased toward Ferrari as it was in the past.
Together, these changes make running a competitive F1 team somewhat less daunting. The budget cap created a more sustainable F1 model and a stable environment for people. It prevents teams from spending their way to competitiveness and reduces disparities between top and bottom teams.
McLaren Proves The Model Works
McLaren lost $137 million on $166 million in revenue in 2018. Last year they turned a $76 million operating profit on $700 million revenue. MSP Sports Capital’s 2020 investment generated a 10x return when they sold their stake.
This turnaround happened because McLaren recovered from the Honda partnership disaster and demonstrated the humility to change. Before Zak Brown took over in 2018, the team was losing nine figures annually. Now it’s a profitable sports team.
The budget cap enabled McLaren’s transformation by creating a stable environment where smart decisions mattered more than deep pockets. McLaren succeeded without manufacturer backing, proving the new model works for independent teams.
Running at the front means more exposure. Video of the races, still images, and overall interest in the team increases. Sponsors want to be with a front-running team because of this exposure, which makes the team more valuable. McLaren’s valuation rose 78% in just one year to $4.73 billion following their consecutive constructors’ championships.
Why Investors See What Others Don’t
Institutional investors now view F1 teams differently than automotive sponsors did. They see continued growth because F1 has lagged behind other professional sports in some areas.
F1 now has commercial tie-ins with Hot Wheels, Legos, and other mass consumer brands. MLB and the NFL have had similar partnerships for decades. F1 is just catching up to where American sports leagues were years ago.
CVC Partners was more interested in extracting money from F1 revenues to pay their loans from buying the sport. Before then, Bernie Ecclestone saw F1 as a way to make himself one of Britain’s wealthiest men. Both were thinking short-term and not about the long-term potential of the sport. It was more about trading than investing.
Liberty Media changed this by analyzing their fanbase to understand who was watching F1 and what each segment wanted. They optimized different experiences and content based on the wants of those segments. This included streaming, social media, and greater access for fans. They thought things through and were methodical on how to maximize value while retaining the essence of the sport.
The Scarcity Factor
Only ten teams exist, eleven when Cadillac enters in 2026. Control sales remain rare, yet nearly every team receives weekly investment offers.
The FIA and FOM have made it difficult to join F1, which contrasts with how it was in the eighties and nineties. This means more revenue for the existing teams without having to worry about being flooded with new teams. The structure is manageable now and sustainable compared to what it was just a decade ago.
Williams, purchased for roughly $200 million by Dorilton Capital in 2020 when it was headed for a third straight year at the bottom of the standings, is now valued at $2.14 billion. The team didn’t score a single point in 2020 but is now on track to finish fifth in the standings.
F1’s $3.42 billion average valuation clears MLB’s average of $2.82 billion. Even the least valuable team, Haas, was worth $1.68 billion, more than the Milwaukee Brewers at $1.63 billion.
The American Market Reality
American fans represent potential because the market is so large and wealthy. Many leading companies are based in the US, and their presence in F1 is helping raise the stature of the sport in the US.
The first Las Vegas Grand Prix was flashy but almost flopped due to problems with the track, the timing of the event, and cold temperatures. Max Verstappen called out the excessiveness of the event in an interview soon after the race ended. The focus on entertainment for that event went too far, as did the disruptiveness of the race itself. Last year it seemed more subdued and things ran smoother.
Liberty Media must be careful with American expansion. The sport faces tension between sport and entertainment, and F1 must prioritize sport over entertainment to maintain what makes it valuable.
What Heritage Actually Means
F1 originated in Europe. While US fans can look at NASCAR or IndyCar teams and drivers that have a long-term association with those series, it’s not as easy for F1 to do so. Other than Ferrari, most US fans aren’t as familiar with names like Williams and McLaren because many of these fans are relatively new.
This is where F1 can sell its distinctiveness to American fans. The heritage, the technology, the global nature of the competition. These elements combine to create what institutional investors now call a new class of premium investment opportunity.
The Risk Nobody Talks About
The valuations make it almost impossible to either enter the sport or purchase an existing team. Whether it’s a 12th team or buying into F1, the barrier to entry is becoming very difficult.
F1 teams have been evolving over time regardless. Teams like Williams and McLaren have had partnerships in the past where they apply F1 knowledge to other areas. They are racing teams, but many are using their technical knowledge outside of racing, which further increases their value. This is likely to continue into the future.
The transformation from teams at risk of folding to billion-dollar assets happened because Liberty Media fixed the structural problems that plagued F1 for decades. The budget cap and revenue split changes created financial stability. The scarcity of teams drives premium valuations. The American market expansion brings new revenue streams.
F1 shows that financial maturity and professional management can transform a sport. The teams are now stable and sustainable financially. Even a decade ago, this wasn’t the case.
The question is whether F1 can maintain this balance as valuations continue to rise and new investors enter the sport. The sport has matured, but the real test is keeping what made it valuable in the first place.
