Wolff supports Brown calling for billion dollar acquisitions in F1

Toto Wolff has supported Zak Brown calling for billion dollar acquisitions in F1, saying that profit and revenue are key in the business.

Before the US GP, McLaren boss Brown said that he thinks F1 teams are worth billions. He credited it to Liberty Media, and hailed them for making the sport financially viable.

This is a bold claim to be making, given F1 in itself is hardly as mainstream as some other sports. The Mercedes Team Principal was asked his opinion on the matter, and sided with it.

Wolff supported Brown calling for billion dollar acquisitions in F1, and said that it is a very attractive proposition.

When asked what this measure would mean for F1 teams in real terms, Wolff said, “In real terms, it means real numbers.

“NBA teams…or the NFL is something I understand better, the valuations are a sheer result of the revenue and bottom-line figures.

Toto Wolff and Zak Brown can see F1 teams being valued at a billion dollars
Wolff (left) thinks Brown’s (right) valuation of F1 teams is accurate.

“You could say these teams are valued between five and six teams their revenue, or around 20 times EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization).

“With the cost cap we are coming into a situation where there are real numbers and teams are going to be valued on the same kind of metrics, like other sports.”

Money matters

F1 recently introduced the budget cap to prevent exorbitant spending by the top teams in the sport, and to give the smaller teams to take the fight to them. This has narrowed the gap in terms of finances, and Wolff said that it would aid Brown’s idea.

“If the franchise and revenue stream are sustainable long term, and Formula 1 is very attractive as a model because we sign sponsorship deals between three and 10 years and TV deals between five and 10 years, so as a business case itself is highly attractive because you can discount future cash flows easily,” he continued.

“When we turn into profitably you can apply the same metrics as your peer group and that’s where I agree with Zak, it’s down to our own revenue and profits.”

Read more: Wolff unmoved despite US GP defeat – “Everything can change”

Add Comment