Formula 1's Las Vegas Grand Prix Is Too Big to Fail
"Hearst Magazines and Yahoo may earn commission or revenue on some items through these links."
Liberty Media, the owners of Formula 1, knows what it's selling. Its vision of F1 is one of glamorous world travel, celebrities wandering the pre-race grid aimlessly while Martin Brundle berates them, and an escalating series of VIP experiences looking down on the level of VIP just below them. There is racing, sure, but the "high speed world of Formula 1" is about the image that develops around it as much as it is about the competition. All of that is on display in Las Vegas, where everything is sacrificed at the altar of spectacle.
It all started on Wednesday night with an opening ceremony broadcast. Drivers spent the evening waiting to be lifted up onto the top of moving stages, then quickly lowered back down again after waving to the crowd. A Mercedes AMG F1 social media account likened the ceremony to the introductions at the Hunger Games, a fictional event from the Hunger Games franchise where children are forced to murder each other as penance for their territories rebelling 70 years earlier. An openly contemptuous Max Verstappen was almost unhappy enough with the ceremony to make that an apt comparison; the 2023 world champion said that "they still make money whether I like it or not, so it's not up to me."
The opening ceremony reflects one of many ways that the traditional hallmarks of a grand prix weekend are being altered to make the second take on a Las Vegas Grand Prix the most spectacular event it can be. Typically, an F1 race is timed to balance the demands of local audiences in attendance, local TV audiences, and TV audiences in the category's core market in Europe. This race is being held at 10:00 PM local time, with qualifying running at midnight the night before. That puts the race at 1:00 AM in America's biggest TV markets and 6:00 AM in England. The sacrifice was made to get cars on track with the stellar backdrop of the Las Vegas strip lit up at night in hours when Vegas partygoers are stirring anyway, but the choice of a mid-November date for a race in the desert will leave local spectators watching the race in 50 degree weather.
Ross Brawn said that these temperatures were not considered in the initial planning of the event, something that becomes clear when you look at the track map. The circuit's pig-like shape actually looks like it could create a fun race, but the combination of long straights and right angles is going to make heating tires tough with colder ambient temperatures. When the series qualifies at midnight, drivers will have to find a way to get heat into their tires on a warm-up lap while other cars on track are nearing their top speeds. When it races at 10 PM, those same drivers will have to find a way to keep temperature in their tires on their recon laps before a standing start into a sharp turn 1. In the race, drivers leaving the pits will be asked to make a corner in an exit lane just below the turn 1 apex. It is a unique challenge, to say the least.
If the race does get going without a major crash in turn 1, and TV audiences around the world do tune in, the problems unique to Las Vegas will fade into the background as fans sees F1 cars speed through one of the planet's most unique places. Then, the problem of the 2023 F1 season will seep in: Max Verstappen is favored to win this race by a large margin. On all but three occasions this year, he has done just that. Take out the races where his Red Bull teammate Sergio Perez won and you have just one race won by a competing team all year. After a historically competitive 2021 season and an interesting start to 2022, that 2023 dominance has been a major drag on fan interest.
And those problems pale in comparison to the crisis that has happened already. During Thursday night's first practice session, the first laps ever run on the new temporary track in anger, a drainage cover was lifted off the road and into a Ferrari at speed. It destroyed most of Carlos Sainz Jr.'s Ferrari, damaged the chassis of Esteban Ocon's Alpine, and brought out a red flag just eight minutes into the session. Covers around the track were investigated and repaired, delaying the day's second practice session to 2:30 AM. Local crowds were kicked out of the grandstands, meaning that even those who chose to stay and wait out the repairs saw just eight minutes of running on their Thursday tickets. While official figures for the session were not released, a photo of one grandstand during the scheduled portion of free practice 1 that did run suggests that fewer people than expected attended the session anyway.
These issues an immovable object ready to stand in the way of an unstoppable force, F1's very lucrative American business. A Miami Grand Prix sold as a VIP experience in a football stadium's parking lot was a smashing success in year 1, attracting enough celebrity and wealth to make the water-textured flooring in the yacht marina a punchline rather than an embarrassment. This year's race was another moderate success, even if one of the most visible brands at the 2022 race had a little bit of an Enron situation to deal with. A race at the Circuit of the Americas has survived the addition of two more United States races, drawing over 400,000 through the gates in its somewhat deceptive system that counts each day of attendance as a unique visitor. The markers suggest that a big event race in Las Vegas was a good business decision.
Until very recently, that bet looked safe. On the high end, hotels offered million-dollar hospitality packages that promised once-in-a-lifetime luxury experiences. The average race attendance experience was not exactly cheap either, with some major resorts starting their hotel room pricing above $1000/night and regular grandstand tickets hovering around the four figures, too. Both markets have collapsed in the past month, with unsold hotel inventory getting so bad that one reporter got a hotel room on the strip for $18 on short notice. All of those signs come after a year of Las Vegas officials telling residents that constant disruptions would be worth it for the money the race brings in, even as some of those same residents worry about whether or not fans attending the race are even going to tip.
It is an early, but somewhat spectacular, sign that Formula 1's bubble in America has burst. In the first year with three races in America since 1982, it is the most important and most extravagant race that is showing signs of fading. Not only is Las Vegas in danger of losing its title as the world's most expensive and exclusive street race from day one, it is no longer a guaranteed sellout. The attempt to build Monaco in America, a nation that supports a half-dozen sustainable street races for local series and has even begun to embrace the idea of NASCAR taking over one of its largest cities, is in danger of flopping already.
While it is not the end of Liberty Media's plan for the American market, it is a clear sign that its way will not work forever or at every scale. The century-long formula of American racing that F1 has so gleefully ignored in its latest expansion has survived by building its own traditions. We are still running a 110-year-old race in Indianapolis, and even Petit Le Mans, a 25-year-old endurance race in Atlanta, is about as young as you can get while still being proven to be sustainable. When Formula 1 left Long Beach in the Eighties, IndyCar made it a tentpole that survives to this day. That sort of sustainability has eluded F1, a series that has been looking for a real home in the country since a 20-year run at Watkins Glen ended in 1980.
F1, meanwhile, seems to be actively icing out an expansion bid from an IndyCar team with the full works backing of General Motors and the direct approval of the FIA. Haas and Williams, two European teams with American ownership, wore stars and stripes on their cars at the Circuit of the Americas. During the race weekend, one Williams executive openly wished to poach GM from the would-be remnants of an Andretti bid that they vocally oppose. It illustrates the Formula 1 strategy in United States: Existing stakeholders want every cent that can come out of the country on their terms, and only their terms. This is a core tenet of how Liberty Media, an American ownership group, plans to grow the sport over the next decade.
That plan for rampant growth on its own terms mirrors the business model very popular in the modern Las Vegas. In between turns 5 and 9 of the race track, you can see the latest monument to that dream, the MSG Sphere. The massive wizard's orb of a concert venue is certainly a spectacle, an arena plated with screens that can act as everything from a high-value billboard to a massive Emoji staring at objects in the sky. The concert venue inside, which has its own later of immersive screens, has booked U2 for a long residency to open the stage. One quarter after opening, the Sphere has already claimed a $100 million operating loss.
Sports have been a major growth target, too. Back in 2016, the city had zero teams in the country's "Big Four" professional sports. A hockey team came to the city in 2017, then a football team relocated in 2020. On Thursday, Major League Baseball owners approved a relocation of the Oakland A's to Las Vegas despite a year-long revolt from existing A's fans. Professional basketball is dipping its toes in the water with an in-season tournament that ends in Las Vegas this year, a precursor to an expected expansion into the city. Las Vegas, a metro area right in between one-sport Sacramento and two-sport Cincinnati in population, is about to have a hand in all four of America's biggest sports leagues.
The market can certainly support two teams, but four entering the city in a decade will stretch the outer limits of local interest. This would be an issue if the city of Las Vegas cared about local interest, but the heavy investment in sports is about bringing fans of other teams to the casinos. The arenas, stadiums, and ball parks are meant to be filled by away fans who want suites that come with minimum gambling spends, not the city residents who staff the resorts. F1 amplifies the problem tenfold; for most of the past year, disruptive construction has left locals and frequent visitors alike enraged. All for the promise of a weekend that is somehow projected to bring in more revenue than the Super Bowl, an estimate that only feels more ridiculous by the day as the grand prix weekend continues.
But there is a Formula 1 race in Las Vegas, which means that the city gets to claim another global sports crown jewel and the series gets to claim another corner of Americana. Whether or not the racing in Las Vegas works, enough of this has gone right that the company and city will call the weekend a success. This is how the business of expansion goes. So long as the publicly-traded Liberty Media can find an angle to tell investors that its half-billion dollar investment in Las Vegas paid off, what the people who watch and attend Saturday's race actually think will be irrelevant. Formula 1 is going to race on the strip at night, so the biggest gamble this ownership group has ever undertaken is a hit.
It has to be.
You Might Also Like
