Formula 1’s commercial rights holders Liberty Media expect the upcoming Las Vegas Grand Prix will reach almost $400 million (£313.7m) in set up costs.
The upcoming race around the Las Vegas Strip Circuit in November is the only round of the calendar that Formula 1 is promoting itself. Liberty Media have signed a ten-year contact with the city to host the race annually until 2032.Work on a permanent pit building and paddock has been in progress throughout the year, with heavy roadworks carried out on the Las Vegas strip and other public roads which will form the circuit for the race.
Speaking at a investors’ call yesterday, Liberty Media CEO Greg Maffei admitted that the costs of setting up the infrastructure for the race had increased beyond original projections.
“I am pleased to say preparations are running on schedule and despite inflationary cost pressures, we expect no change in revenue and profitability assumptions that we laid out previously,” Maffei said. “We are increasing capital expenditure estimates for the paddock building and track work.”
Liberty’s chief accounting and principal financial officer, Brian Wendling, explained that the increase in set up costs had not impacted their expectations for the profitability for November’s inaugural race.
“For the quarter on SG&A [selling, general and administrative expenses], we had $7 million (£5.49m) of costs associated with LVGP,” Wendling said. “On Vegas there’s no change to our revenue and profit expectations for the race in year one.
“Our paddock building is now 85% complete. We expect CapEx related to the Vegas race – including both the paddock building structure and track-related capex – to be close to $400 million, of which approximately $155 million was incurred in the first half of the year.”
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Las Vegas Grand Prix CEO Renee Wilm explained some of the logistical problems involved with preparing the city’s infrastructure for the race.
“There have been wires overhead that have needed to be moved. A lot of this was driven by the requests and, quite honestly, requirements of the local stakeholders as we began this process of preparing the track for actual usage. We’ve also encountered some additional requests from the local stakeholders, such as the casino properties around enhanced security, around opening and closing the track. So this has led to additional equipment that was needed, as well as just additional actual road work.
“Of course, with regard to the paddock building, it is being built at lightning speed in an inflationary environment. So as you can imagine there have also been some additional costs along the way in that regard.”
Maffei says F1’s owners intend for the Las Vegas race to be one of the biggest sporting events of the year.
“The Las Vegas team is pulling together an event of unprecedented complexity and scale,” he said. “It will be the largest and, our argument would be, the most premium sporting event of 2023. It’s a view that’s a testament to our Super Bowl aspirations for all our grand prix events.”
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Coventry Climax
5th August 2023, 14:29
And after the first race we will know if bigger and pricier is also better.
MichaelN
5th August 2023, 15:48
It will be, at least according to F1 itself. City track races tend to do well the first time around, so they’ve probably already drawn up the self-congratulatory press statements. They’ve also never said a critical word about the original Sprint Qualifying, which they claimed was super popular, despite completely dumping the concept for this year and going to stand-alone short qualifying & race format.
The time zone is probably the biggest issue in terms of international viewers, and there’s not much that can be done about that (see all the frustrations about the FIFA World Cup for Women currently taking place in Australia & New Zealand).
Gerrit
5th August 2023, 20:44
Have a think about your time zone comment and reflect that the international audience is spread around the globe. With races held around the globe; the global audience will each in turn face a time zone not conducive to sitting on the couch on a Sunday afternoon for a 2pm start.
Small price to pay to watch F1 live. Be inventive like we have to on the far side of the globe from the Europeans and record live events to view at a more suitable time. Or better still, be like us and watch it live when the household is asleep so you can concentrate fully on the race without domestic interruptions.
MichaelN
6th August 2023, 10:58
F1 certainly does attracts a global audience, but as its own annual reports state the vast majority of that audience is in Europe and East-Asia. An evening race in the California time zone is particularly inconvenient given just how far west it it. Moving the race to a very late 22:00 start on a Saturday is basically the only way to make it somewhat practical, thereby giving it a 07:00 start in Europe and 13:00 start in China on Sunday. Those times are workable for sure, but it also requires F1 to race basically until midnight. Potential changes to that schedule in subsequent races there would push the time back a bit.
Growing an audience in the Americas is an important goal for F1, so it makes total sense to have more races there at convenient times for the folks there. But they can’t ignore the audience they already have, nor how out of the way California and adjacent states are even compared to other places in the Americas. That’s the audience that gets the shortest end of the stick here. A 22:00 race start in Las Vegas is a 01:00 race start in New York, and a 02:00 race start in Brazil.
Gerrit
7th August 2023, 0:03
In other words someone somewhere has to get up early or stay up late.
As you point out the majority audience is in the European theater but is that viewing demographic at saturation point? The USA is not demographically saturated to the virtue that is F1, so they get what the growth that viewing demographic requires.
Here on the other side of the world we are so used to recording and watching sport.
For example; have just watched a enthralling Indycar race (yes drivers were actually racing side by side) from Nashville whilst eating my breakfast. Tonight I will watch the Arsenal v Manchester City game when the family is safely in bed.
I guess it is a mindset where we are so used to recording and watching at leisure whilst Europeans are used to live broadcasts and need to be seated on their couch at 2PM on a Sunday afternoon to enjoy sport.
Best get used to recording and watching. Has domestic and social benefits.
ferrox glideh (@ferrox-glideh)
5th August 2023, 20:51
Of course bigger is better, and biggest is best- just ask the dinosaurs (right before they went extinct.)
SteveR (@stever)
5th August 2023, 14:47
I’m curious whether all this construction is included in the F1 ‘carbon neutral’ equation……
PacificPR (@streydt)
5th August 2023, 15:56
So much one could have done with those 300 million in that respect. Or maybe they could have spent a fraction of that amount to ‘recycle’ one of that many beautiful racetracks available in the states.
ferrox glideh (@ferrox-glideh)
5th August 2023, 20:53
$300 millio9n would have built a lot of hotel rooms near Road America, for instance.
pcxmac (@pcxmac)
6th August 2023, 5:36
the traffic in and out of there is insane. At least a few lanes in either direction from the highway.
Yellow Baron
5th August 2023, 21:09
I’m just wondering if they’ll sneak a safety car in wherever possible to ensure all the investment doesn’t lead to a boring race
bernasaurus (@bernasaurus)
5th August 2023, 16:10
“It’s a view that’s a testament to our Super Bowl aspirations for all our grand prix events.”
The qualifier there is the ‘all’ part. You can’t manufacture World Cup finals every week. Or if you do, it won’t last. We’ve talked about how NASCAR having so many races takes the ‘special’ away from each.
$400m is a lot of money, and they’re only doing it because they know they’ll turn a profit. But, we as F1 fans talk lovingly about Spa, Monza etc with their somewhat rudimentary facilities but great atmosphere, challenging racing. Do we need a shiny bauble concrete neon freeway?
Nearly half a billion dollars on something that already feels temporary. You can buy a ticket to watch it in a nearby sports bar for more than $2,000. The market for that is very fickle. Once they’ve done it once, they won’t be back next year.
$400m could buy every F2 drivers seat for a season, and F3, let’s do that, and have a ‘on merit’ championship rather than drivers needing funds / backing to compete.
Or jazz up Watkins Glen or Road America with infrastructure for F1 for half the price.
Moving telegraph poles in Vegas doesn’t strike me as the best idea.
floodo1 (@floodo1)
9th August 2023, 14:13
It’s disgusting
Jeffrey Powell
5th August 2023, 16:26
I can think of nothing worse except of course if they reinstate Valencia ,great city abysmal track. I suppose Las Vegas would win the city and track being equally abysmal. One of the great attractions of F1 used to be the spectacular tracks ,the USA has some great race tracks that would be entertaining to watch F1 cars on but there’s no chance we will see them especially with this lot in charge. Please remember this is just my personal opinion and that I am sure to many people ‘Lads Vegas’ is a wonderful place.
Phil Norman (@phil-f1-21)
5th August 2023, 18:48
What a colossal waste of money. Why not spend the money on developing or improving other current circuits or cutting their hosting fees. Liberty are a disaster. No better than Ecclestone in many ways. At least the sport was in his bones.
notagrumpyfan
6th August 2023, 7:20
Why does the title refer to GBP, when the quote is in USD and this site pretends to be catering towards racing fans all over the world?
ferrox glideh (@ferrox-glideh)
7th August 2023, 3:53
You can’t fool me, I know that you really are a grumpy fan.
Jim from US (@jimfromus)
6th August 2023, 19:06
It is going to be interesting if F1 can keep US viewers in the 2nd half of this season. American Football starts back up in a few weeks. F1 is just not competitive this season. Even the mid-field is not truly competitive week to week. For the season, the mid-field is competitive but not at each race. The mid-field cars are affected by track and weather conditions, too hot, too cold, rain etc. AM was very fast. Then Ferrari and Mercedes. Now McLaren but are they really. The drivers are bringing their cars across the finish line in their expected slots based on their qualifying performance. I will still watch the races but not live unless I have nothing else to do. I’ll look at the writeups and watch on-demand.