IN THIS EPISODE, YOU’LL LEARN:

• How F1 generates billions of dollars from 24 live events
• How Liberty got away from the tracking stock structure to simplify things
• Why the business remains capital light
• How the Concorde agreements pose risk
• Details of F1 Group’s other surprising racing league
• How Netflix’s streaming coverage of F1 helped grow the sport
• The debt structure Liberty built to help build sustainable cash flow
• Why most sports franchises fail to produce cash flow
• How cross-promotions and synergies create exciting new growth levers
• And so much more!

Disclosure: This episode and the resources on this page are for informational and educational purposes only and do not constitute financial, investment, tax, or legal advice. For full disclosures, see link.

TRANSCRIPT

Disclaimer: The transcript that follows has been generated using artificial intelligence. We strive to be as accurate as possible, but minor errors and slightly off timestamps may be present due to platform differences.

[00:00:00] Kyle Grieve: Imagine a company that owns the exclusive commercial rights to a sport with 800 million fans globally. Not the teams, not the athletes. Just the right to broadcast, promote, and monetize every single race for the next 86 years.

[00:00:13] Shawn O’Malley: That company is Formula One Group, a subsidiary of Liberty Media. And here’s what’s wild. They only host 24 events per year. Fewer races than most sports hold games in a single season, and yet they’re generating billions of dollars in revenue with over 24 percent free cash flow margins.

[00:00:32] Kyle Grieve: But what really caught my attention is just how durable this business actually is. While most investors were sleeping on it, F1 has compounded revenue at seventy percent annually since liberty acquired it in 2017 while being a relatively capital light business.

[00:00:46] Shawn O’Malley: And today, we’ll find out whether a seventy five year old sport that most North American investors completely ignored until Netflix’s Drive to Survive series came out can actually deliver the kind of returns that justify owning it at current prices, or whether you need to wait for Mr. Market to panic again for the math to work.

[00:01:09] Intro: Since 2014, with more than 200 million downloads. We have interviewed the world’s best investors, studied deeply the principles of value investing, and uncovered many compelling investment opportunities. We focus on understanding businesses and intrinsic value, investing accordingly and sharing everything we learn with you. This show is not investment advice. It’s intended for informational and entertainment purposes only. All opinions expressed by hosts and guests are solely their own, and they may have investments in the securities discussed. Now, for your hosts, Shawn O’Malley and Kyle Grieve.

[00:01:55] Shawn O’Malley: Hey folks, today we continue our quest of hunting for intrinsic value by looking at one of the most popular sports in the world. No, we are not talking about soccer, cricket, or tennis. We are going to look in depth at F1 racing, which is a sport with over 800 million fans worldwide, which is just absolutely mind boggling.

[00:02:18] Kyle Grieve: That’s right Shawn. I mean, that stat just blew my mind as well. But there’s other things that also blew my mind. So first is that this is a sport that hosts an absurdly low 24 events a year while generating billions of dollars in revenue, not only for its owner in Liberty Media Formula One, but also for the individual teams that are involved in the races.

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