F1 Team Boss Zak Brown On How McLaren Supercharged Its Business

Name: F1 Team Boss Zak Brown On How McLaren Supercharged Its Business
Uploaded: 2025-11-21T16:56:28+00:00
Duration: 39 min 53 s
Channel: Forbes

Forbes

2 hours ago

On the brink of insolvency five years ago, the team is now dominating on the Formula 1 track—and, under the leadership of CEO Zak Brown, building up its sponsorships to rival Ferrari and Mercedes.

Read the full story on Forbes: https://www.forbes.com/sites/justinbirnbaum/2025/11/20/how-mclaren-staved-off-financial-ruin-and-revved-its-f1-business-into-high-gear/

00:00 Introduction
00:57 The State of McLaren When Brown Arrived
03:12 McLaren’s Crucial Commercial Fix
07:40 Profitability As A Result of Winning
12:29 Future Revenue Goals, New Sponsorship Opportunities, and Global Reach
18:51 Expanding F1's Global Footprint and Fan Base
26:29 Formula 1 Business Model Revolution
34:33 Why F1 Team Valuations Skyrocketed and Future Revenue Streams
38:31 Continuing F1's Growth and Concluding Rapid Fire Questions

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00:00Probably like most sports, the kind of built-in advantage that the big teams have,

00:05obviously McLaren being one of them, is it's all about people.

00:09And I think we're fortunate that if all things are equal

00:13and you're kind of getting the same pay because of the cost cap,

00:16so we can't pay more or less than the next team,

00:19do you want to work for McLaren?

00:20Or do you want to work for, you know, and again, it comes back to the baseball.

00:24Everyone wants to put the pinstripes on because that's an iconic team.

00:30Joining me today is Zach Brown.

00:40Zach, thanks for being here with us.

00:41Thanks for having me.

00:42In October, you clinched back-to-back Constructors Championships for McLaren.

00:46Let me ask you, how does one celebrate that properly?

00:49With your racing team.

00:51And not just the racing team at the circuit, but the entire racing team,

00:55which is made up of 1,400 people at McLaren Racing.

00:59The strong majority of those participated in Formula 1.

01:03Of course, we have an IndyCar and a sports car team as well.

01:05But I think it's important, while the moment takes place at the racetrack,

01:09that we recognize and celebrate with everybody that's contributed.

01:13So pretty exciting times.

01:15Let's flash back a little bit.

01:16You become CEO of McLaren Racing in 2018.

01:19Obviously, the team's fortunes are much different back then.

01:21I'm curious, kind of, what was it like coming in at that point?

01:24What was the state of the competitiveness of the team, the business?

01:27What did it look like?

01:27It wasn't pretty.

01:29We had a great brand.

01:31You know, we're the second most historic team in Formula 1 and motor racing.

01:36So I knew I had that to play with.

01:38But I didn't quite realize how bad it was.

01:41We had record low sponsorship, corporate partnership.

01:44Our fans were pretty upset because we hadn't done our usual winning for a long time.

01:51A lot of morale issues on the factory floor.

01:56Other than that, everything was great.

01:59But I knew that we had a great history.

02:04I knew that we must have some fantastic people inside the organization because there had been a lot of winning done previously by the same individuals.

02:12And that we lacked leadership and motivation and teamwork.

02:18And so ultimately went about first, kind of, tackling the commercial side of our shortcomings, because that was kind of more my background, getting the fans reengaged, becoming vibrant, going from being an exclusive team to an inclusive team.

02:34And then reversing the downward trajectory we were on.

02:38And it took a little bit of time.

02:39But once we got going, it's almost been a straight run up to the top other than in 2023, where we had a big dip.

02:46But we recovered extremely well for that.

02:48And a couple championships from that moment onwards.

02:51You mentioned the rich history of the brand, obviously.

02:53I'm curious, do those expectations kind of feel heavy on your shoulders as you're going through this path?

02:57They do.

02:59I think, you know, I'm a baseball guy.

03:00And so if you're a New York Yankees fan, pick a team.

03:03I'm going to say a Louis Cardinals fan.

03:05But, you know, expectations, if you're the New York Yankees or a team of that caliber, is that you should be winning all the time.

03:10And when you don't, because you have a huge fan base, you've got a lot of people that you're kind of letting down.

03:18So it does feel an immense amount of pressure.

03:21I'm happy we've been through what we've been through because I think it's made us some more resilient, stronger racing team.

03:30But certainly didn't enjoy it at the time.

03:32So you mentioned that, obviously, one of the things you came in and wanted to kind of rectify immediately was kind of the level of corporate sponsorship.

03:37I'm curious, was that kind of what you deemed the most crucial area to grow?

03:41Were there other parts of the business you thought could kind of really bring things up going?

03:44Or was it just we need to fix corporate sponsorship ASAP?

03:47It was all of the above.

03:48But ultimately, if you don't have enough corporate partnerships, you're not going to be able to invest in the technology and your people and get the best drivers.

03:55And it was also something when I was done racing, I spent 20 years, you know, with a created a motorsports agency.

04:02So it was an area that I knew I could help lead the transformation of McLaren.

04:08And if I could bring in great corporate partners that would let us invest in our people, our infrastructure and our team and kind of get some momentum going.

04:16So it was kind of more about being kind of the lowest hanging fruit, so to speak, for my skill set, because I certainly wasn't about ready to jump into our aero department and start making recommendations on how we can improve our aerodynamics.

04:30That would we'd still be at the back of the grid if I was doing that.

04:33At this point, though, you know, obviously, you've got to spend money to build a winning car.

04:38And this is a point where spending is not capped.

04:40The cost cap is not implemented yet.

04:41So how do you kind of navigate that pre-cost cap free spending period when you're still trying to rev up the business as well?

04:48It was tough.

04:49That was one of the reasons why we were such a proponent of the cost cap was to level the playing field.

04:54So we were spending more than we had.

04:56You know, the game of Formula One at that point was who can afford to kind of lose the most.

05:01And then you had the big OEMs in.

05:03And because the commercial returns are so awesome in Formula One, they could justify spending half a billion dollars because they were getting a great marketing return.

05:12But we didn't have that.

05:13So that's one of the reasons, main reason, why I fought so hard to bring in the cost cap at the right level.

05:21And I think we're seeing that, you know, not only is McLaren seeing the benefit of that, but the sport.

05:25Last year, we had seven different winners win multiple races.

05:29I've never seen Formula One so competitive.

05:32And if you look at the NFLs, and it's something that MLB is trying to do now is, you know, balance it to where, you know, everyone has nine players on the field,

05:40where right now you've got 12 and seven from an economic point of view.

05:45And that was the same way in Formula One.

05:47Do you think the goal of creating more parity is going as far as it should?

05:51Because obviously, Red Bull, since cost cap has had some dominant seasons, you guys are having dominant seasons.

05:55And we're still, you know, seeing these class of teams where, you know, you have the dominant, you know, people at the front of the grid and those kind of stuck at the back.

06:02So there are inherent advantages, whether it come to facilities or, you know, being able to spend on drivers.

06:08Are we really accomplishing the goal of parity or is there work kind of left to do there?

06:12I think there's always work left to do.

06:13I do think we are accomplishing it.

06:15So, you know, if we look at even though we've won the most races this year, we haven't had the most polls.

06:21You still have had three different teams, 30 percent of the field win races last year, even though we had a fantastic year.

06:29It came down to the last lap of the championship for us to clinch the championship.

06:34So I think it's definitely going the right direction.

06:37I think probably like most sports, the kind of built-in advantage that the big teams have, obviously McLaren being one of them, is it's all about people.

06:48And I think we're fortunate that if all things are equal and you're kind of getting the same pay because of the cost cap, so we can't pay more or less than the next team.

06:58Do you want to work for McLaren or do you want to work for, you know, and again, it comes back to the baseball.

07:03Everyone wants to put the pinstripes on because that's an iconic team.

07:06So I think we have a built-in advantage and that we're a team that people probably have a stronger desire to work for, like the other few big teams.

07:16But otherwise, we're all playing with kind of the same size bat.

07:19One of the interesting things about the cost cap, too, is you have these teams that are generating hundreds of millions of dollars in revenue.

07:25And if you can cap what you're spending on expenses, all of a sudden profitability is a very realistic thing.

07:31How much of a goal has that become?

07:33Because, again, this is still a relatively new change to the sport.

07:35And I'm curious, is that important to you?

07:38Do you see that as something that you need to fulfill every year or is it just kind of an added bonus?

07:43It's kind of all of the above.

07:44If I put in a sequence, what are our priorities?

07:48Our priorities that are win, right?

07:50That's the remit that I've been given is go win championships, take care of our employees, our team, have this great work environment, have awesome fans.

08:00Oh, by the way, as an owner, who likes the right checks and capital calls?

08:06But that's, you know, we're a performance-led business and organization.

08:12And if you can accomplish having huge fans, great corporate partners, winning races, the profit kind of takes care of itself.

08:18But we're not in this to drive a profit.

08:21But, of course, as our shareholders, two great shareholders, anything we can do to build value and give them a return on their investment.

08:29And if you look at the valuation that's been reported recently from the acquisition of our minority partners to where it was five years ago, the growth has been amazing.

08:40And I do think that having a healthy sport, having race teams be healthy and creating value ultimately puts better performance on the track because we can afford to go racing versus what we've seen in the past where teams that have had financial challenges ultimately then can't perform on track.

08:58A couple of things there I want to come back to.

08:59We're going to put that to the side for a second.

09:01Flash forward to where we are now.

09:04Obviously, it seemed like, you know, following Mercedes' incredible run, Red Bull was going to be the team of the decade.

09:09You avert, you know, a budding Red Bull dynasty.

09:11And I'm curious, kind of, did you feel like you were there already?

09:15Did you feel like you arrived early?

09:16How exactly did you avert kind of the budding dynasty here?

09:19Yeah, it's interesting.

09:21Some people inside our factory thought we would be exactly where we were.

09:24I'm a bit more of a pessimist, but I use that as a way to motivate me.

09:29I think we've been so strong this year.

09:32I think it would be no one can really come into a season going, we're going to dominate.

09:37That's quite arrogant.

09:38But I think that's good because it's healthy for us.

09:41And if you look, we haven't won the last few races.

09:43So we're feeling that stress of not having won the last few races, which keeps our feet on the ground, keeps us working hard.

09:51But I knew we would eventually get there, but it's pretty hard to put a timetable on it.

09:57So in Formula One, prize money is on a lag.

10:00So in terms of, you know, the winnings you're yielding from the championship, that's not going to largely be a component of the 2024 flylings.

10:07Yet revenue for the team jumps from 23 to 24 by 100 million pounds, which in Convert, I believe, is around 140 million U.S. dollars.

10:16How did you already lock in that level of growth?

10:19Because this is effectively happening before you kind of have this incredible kind of ascension to championship level status.

10:24I think it's a combination of we have a world-class commercial team led by a gentleman named Matt Dennington and Nick Martin.

10:34They've done a fantastic job.

10:35Unbelievable CMO, Lou McEwen, Louise McEwen, who then works with all our fans and our brand, which allows our commercial team to bring in commercial partners.

10:46As we mentioned when we got started, unbelievable brand, two unbelievably exciting young drivers.

10:56So when I think you put that all together, we've done a really good job off the track, which has enabled us to do a really good job on the track.

11:05What then does the championship season do for you?

11:08It doesn't hurt.

11:09It only helps.

11:11But, you know, it puts pressure on and then it raises expectations.

11:15And so expectation management, this is sport.

11:19It's not if we don't win the championship at some point.

11:22It's when.

11:24And so, you know, we need to keep our feet on the ground.

11:26We need to, while capitalizing on our on-track performance and our popularity,

11:32not do what I've seen from other teams who kind of sell too hard off of that.

11:37And then as soon as you fall to second or third or fourth in the championship, you're right on the backs of foot.

11:42So we're trying to kind of let everyone enjoy the moment, but not squeeze the lemon so much that when we are second, third or fourth in the championship,

11:51that we have everyone coming and knocking on our door.

11:53So we tend to kind of sell ourselves, if you'd like, as a top team, a top three team.

11:59And if we can over-deliver, fantastic, but not put ourselves in a position where that becomes the expectation.

12:06What do you think that does for revenues for 2025?

12:09Like when you think about, okay, where you were in 2024, how do you expect to perform this year versus last year,

12:13considering you have the championship money coming in now and also a growing commercial business?

12:18Yeah, I think, fortunately, we're not a public company, so I can kind of answer that question without getting myself in trouble.

12:23We've had a very strong 2025.

12:24So, you know, our season kind of commercially, as far as revenue generation's over, we're totally focused on 2026.

12:34So 2025 will be a fantastic year.

12:37It has been on the track.

12:38Hopefully we can get our drivers first and second.

12:41So we're very focused on that.

12:42And from a business standpoint, life's never been healthier.

12:46We, of course, announced earlier this year that we're going to become McLaren MasterCard,

12:51which we're very excited about in 26 and beyond.

12:55All of our great partners, the Googles, the Dells, the OKEx, everyone's coming back.

13:01So we're in a very healthy spot with our partnerships.

13:05I'm going to come back to MasterCard and some of those other sponsors in a moment.

13:08But even beyond 2025, when you think 2026 and beyond, you know,

13:12the Dallas Cowboys are held up at this team that generates over a billion dollars in revenue,

13:16and that is such a rarity in sports, what's your expectation for 26 and beyond,

13:21knowing the path you're on?

13:22Is a billion dollar top line, you know, something you see in the future for yourselves?

13:26Dollars, maybe.

13:27I think we have a lot of work ahead of us to get there, but we like to shoot for the stars.

13:34You know, we don't have unlimited inventory.

13:37So, you know, there's only so much hospitality we can put on.

13:40There's only so many hours in the day for our drivers to show up and do appearances.

13:45There's only so much real estate on the racing car.

13:48So we are towards our peak, if you'd like.

13:52We are entering the World Endurance Championship in 2027, which is the 24 hours of Le Mans.

13:58That's to create some more opportunity for partners to join McLaren Racing.

14:03So a billion dollars top line.

14:06It won't happen tomorrow, but it's something good to shoot at.

14:09So earlier this year, you know, you've touted the scale of McLaren's commercial revenue.

14:15New deals with Octa and Alwin.

14:18Also re-upping deals with Alterix, Medallia, Salesforce, Smartsheet, Stan Lee, Black & Decker.

14:23You even went as far as suggesting this could be one of the best commercial years for an F1 team ever.

14:28Why do sponsors gravitate to McLaren?

14:31Good question for them.

14:33But I think, first of all, we care.

14:35We care a lot about our partnerships.

14:37We don't see them as a sticker on the race car.

14:40We're very passionate about their businesses.

14:43We have two types of partners, those that are B2B, and they help us, therefore, be a better racing team, whether that's a work day from an HR perspective and helping us on the back end, whether it's Adele who's assisting us with our wind tunnel or a Cisco community.

14:58They're all integrated into our racing team, so they're very meaningful and important to us beyond the pure economics.

15:06And then you have consumer brands who are helping us engage with our fan base, bring in more fans, introduce new fans.

15:13So the lifeblood of McLaren, I think they know that.

15:17They have that level of importance to us.

15:21We have a great commercial department, very sophisticated.

15:24We try and want to kind of win off the track as much as we want to win on the track.

15:30So we're very competitive.

15:32We've got a great brand and an unbelievable sport.

15:35We're going to be the only team competing for the Triple Crown again, which is the Indy 500, Monaco, and Le Mans, and those three championships.

15:41I think we have an exciting proposition in a bunch of different ways partners can engage with McLaren Racing through our different teams.

15:49I think you put that all together and the quality of people that we have and the attention we put on our partnerships, the results have been fantastic.

15:57You know, you mentioned brand.

15:58I'm curious, that reputation, do you feel like you get more impact from McLaren as like just the general kind of car brand or as a racing team specifically?

16:06Kind of all of the above, you know, in some territories we're well known as a Formula One team, an Indy car team, sports car team, others.

16:13It's our automotive.

16:15I think the beauty of it is we're both and a very popular brand.

16:20So I think the two businesses, if you like, are very complementary and help each other build our businesses.

16:27I have no doubt they're selling more road cars because we're a successful racing team.

16:30And I have no doubt that we're more famous because we have an awesome car company.

16:34Like, what type of consumers are you delivering to your sponsors?

16:38Like, what is the ideal package of eyeballs or kind of data that you're able to hand over that makes these sponsors so interesting kind of working with you guys?

16:44I think it depends what their goals and objectives are, right?

16:47There's some that are very interested in the people in the grandstands, you know, the fans.

16:53You know, you look at someone like MasterCard, you know, kind of in everyone's back pocket, right?

16:58They're in my pocket.

16:59They're in my pocket.

17:01And so, therefore, you know, they have quite a wide reach.

17:07You then get into the Ciscos and the Dells of the world who might be a bit more B2B focused and they're more interested or focused, I should say, in the paddock club where there's a more corporate environment.

17:18We call Formula One kind of 24 little mini Davos, even though they're pretty big, traveling the world.

17:24So there's a lot of business that's done inside a pit lane, if you'd like, a paddock, and especially a McLaren because of our partner ecosystem.

17:35They're doing a lot of business together.

17:37So we see ourselves as a sales, marketing, R&D development for our partners.

17:44So they all have different goals.

17:46We sit down with them.

17:47We develop kind of where you're trying to take your business.

17:49And then we look at how McLaren can help them accelerate their business.

17:54You have a background in this area of the business, obviously.

17:56In 1995, you found JMI, and that's later acquired by CSM.

18:01What drew you to that side of the business?

18:03And what was kind of your breakthrough moment?

18:05I love the business of motorsports.

18:08I'm fascinated by businesses and how they run.

18:10I learn a lot from our partners, so I enjoy it, as you kind of mentioned at the top of the show, if you'd like.

18:19I'm not going to contribute to our aerodynamics or our vehicle performance team, but I feel on the commercial side.

18:25So I enjoy it.

18:26I'm fascinated by it.

18:28I've been doing it for a long time and love to network, get to know people, and help people accomplish their goals together.

18:37So how does that lay the groundwork for McLaren's commercial strategy today?

18:41What specifically were you able to take away from your time with that company versus now?

18:46I think it's being focused on our partners first, right?

18:50It's obvious what we need.

18:52We need a beautiful racing car.

18:54We need strong economics to be able to pay great drivers, invest in technology.

18:59But the only way you're going to put that partnership together is if you truly understand what your corporate partners are trying to do in their business.

19:08So it's all about understanding their business, giving them what they need.

19:12We have partners all shapes and sizes.

19:15And so we're more interested in being associated and affiliated with high-quality companies, fast-moving, some big, some small, but all great brands.

19:26Brands, that's what gets us excited because they're all shapes and sizes.

19:30It kind of takes care of itself over time.

19:32We've got a great track record of retention with partners, growing partners.

19:36So we're just focused on getting aligned with the right types of companies.

19:40Is it just big tech?

19:42Are there any other new categories that sponsorship has really opened up and you guys are dealing in places like you never would have thought before?

19:49Yeah, I mean, as the world evolves, crypto is obviously a big category, if you'd like, that didn't exist not too long ago.

19:58Tech is an obvious place to be in Formula One because it's technically the most advanced sport in the world.

20:06Consumer brands, I think, have been historically difficult to engage because of the structure of Formula One with the fans.

20:15And that's why you see the NFLs and the NASCARs so popular in America as they've been very fan-focused.

20:21And I think now that we've shifted to being a very fan-focused sport, not just McLaren, you're seeing more consumer brands coming in.

20:29So I think that's what you'll see is we've got, you know, hundreds of millions of fans that want to support their racing teams and their drivers.

20:38So I think you'll see more consumer brands continue to come into the sport.

20:42Are we going to see, like, McLaren with a cosmetics brand sometime in the near future?

20:46We've got some brand extensions, if you'd like.

20:49I'm not sure cosmetics is, you know, right on target for us.

20:53But, you know, we're sport, we're high performance, we're technology.

20:57So watch this space for maybe another sport or two that is, you know, premium sport.

21:05Technology is very important, global.

21:10So I do think you'll see us in some other sports here in the not-too-distant future.

21:15So when you talk about kind of the U.S., Middle East, Asia, do you feel like you guys have fully tapped the sponsorship opportunities?

21:21Do you feel like there are still plenty of brands knocking at the door trying to get in?

21:25Oh, I think there's plenty of room for growth.

21:27I think Asia-Pac is a territory that we need to continue to grow in.

21:33I think, you know, Europe's always been the sweet spot of Formula One, and we're in an unbelievable place.

21:38Not just in North America, but America is right, where we've got, I think it's about six races here.

21:44So I think we have demand for probably 30 Grand Prixs, but only logistically can do 24.

21:51So I'd like to see us maybe have 20 fixed races and eight that rotate every other year.

21:57And that's a way to expand the geography of where we hold races without expanding the actual calendar itself on an annual basis.

22:06Okay, so MasterCard, first title sponsor since Vodafone, since 2013.

22:12How significant is this?

22:13I mean, it runs through 2031.

22:14Reports say it's more than $100 million annually.

22:17Should we believe that?

22:18Is this the biggest partnership McLaren's ever had?

22:20It is the biggest partnership that McLaren have ever put together, which is very exciting.

22:25You know, I said from day one, we weren't pursuing a naming rights partner until we kind of found the right one.

22:34We, you know, as you mentioned, we've had a very healthy financial season.

22:41So for us, it was about having the right partner.

22:43They had billions of transactions.

22:45So when you think about how global they are, technology, they're, of course, kind of B2B and how they do business.

22:52But they're a massive consumer brand, you know, who hasn't heard of MasterCard or doesn't have a MasterCard in their back pocket.

22:58So I think they're going to give us great ways to engage with our fans on a global basis.

23:03They're very experience-based.

23:05They're very passion-based.

23:07So there's a lot of similarities.

23:09I think McLaren and MasterCard rolls off the tongue quite nicely.

23:12We were looking for a, you know, if we were going to get into that business, a long-term partnership because, you know, their brand is next to ours.

23:20And so we don't want to put just any brand next to ours, and we don't want to do it for a short period of time.

23:24If we're going to rebrand ourselves, it needs to be the right partner for the right term who can help deliver the right value.

23:32Put aside the economics.

23:33There's a lot of companies that can deliver economics, but who can actually deliver an increased fan base for us and work with all of our other partners.

23:41So I couldn't be more excited by that.

23:43Do you think that a nine-figure annual partnership is the price of doing business for a title sponsor in Formula One now, or is that something that's unique to McLaren?

23:53A little bit of both in the sense of I think the big teams, that's the value that we can deliver, right?

23:59People are only going to pay what they feel is good value.

24:02And I think your top teams, your top three, four teams, can deliver that type of return where someone's happy writing that check.

24:13I think as you go further down the field, the economics start to diminish because they just don't have the same brand power we do.

24:22So to me, it's all about the value that we can create that warrants someone going, I'm comfortable with that level of investment because I feel like I'm getting that back and more.

24:33I do say, I don't know if there's a number Ferrari, whatever, except with their iconic brand.

24:39But let me ask you, when you bring in a sponsor at that level into your portfolio, and obviously a title sponsor is a massive, massive deal, how does that change the dynamic of your portfolio?

24:48Because obviously, I don't want to say there's an importance differential here, but there kind of is.

24:54Well, you've got to take care of all your partners, and so you need to make sure you don't over-promise and under-deliver and go the other way.

25:02And I think, you know, kind of coming back to my agency days, I had a lot of clients in different forms of motorsports, and it was all about having the right people, the right plan, the right size and scale to make sure you service all your partners.

25:19So you can never be in a situation where one's more important than another, and therefore you give a lesser service, if you'd like.

25:27So it's all about having, being prepared, regardless of how many partners you have, being prepared, passionate, scaled, focused to be able to deliver on them.

25:38So, you know, our team that's working on MasterCard is a different group of individuals that are working with Google than are working with Cisco.

25:46So as long as you're delivering for each, you're scaled up appropriately, you don't have to kind of worry about picking and choosing who gets priority.

25:54Well, now that you kind of add this category back, I guess, how do you keep pushing the boundary going forward?

25:59Because it's not like you can add another title.

26:00I mean, I guess hypothetically you could.

26:02No, we're very happy where we are.

26:05It's all about taking care of what you have.

26:07I think the sport, and hopefully we can lead the way, I still think has a lot of room for growth around kind of what's called fan monetization.

26:19If you look at, you know, the NFLs and the NBAs, you know, they're less dependent upon corporate partnership, and really their larger revenue stream is the fan base.

26:30We're kind of the other way around.

26:32So I think we're in a great spot from a corporate partnership point of view, but I think there's lots of exciting opportunities where we can provide more products and services, digital applications, insights into our team subscription base.

26:46You know, we have a papaya club, which is our fan club, but being able to pitch that at different levels of different levels of engagement where people will go, yeah, I'd love to join that club for $10 a month or $5 a race or whatever the case may be.

27:01So we're building that value proposition because we need to make sure that we deliver the right value to our fans.

27:06But I think that's a big area of revenue growth opportunity for us.

27:11McLaren recently consolidates its cap table.

27:14Reports say valuation between 3 and 3.5 billion pounds, which I believe is between 4 and $4.7 billion.

27:20Walk me through the deal.

27:22Why does that make sense for you guys?

27:24Well, I think the sport, until it was kind of fixed, if you'd like, with the cost cap, you always had a few teams in big trouble and going out of business.

27:34And then you had others that, you know, the kind of financial fair play was way out of balance.

27:40If you look at the value creation of these NFL, these NBA teams that are, you know, skyrocketing and yet Formula One's the largest annual sporting event in the world,

27:50it was a bit of a head scratcher of, you know, why was I think it was public knowledge that Williams was traded around $150 million.

27:58It was public knowledge what our value was when our investors came in.

28:03It was around a half a billion.

28:05But yet you look at NFL and NBA teams and they're trading for $5, $6, $7, $8, $10 billion now.

28:12And you go, hmm, that's $500 million and that's $5 billion.

28:16But the sport's actually bigger.

28:18And it was because it kind of had a flawed business model.

28:21Once we fixed that business model, I think your sports investors went, wait a minute, this is undervalued.

28:28What a great opportunity.

28:29And now look at how quickly manufacturers have come in.

28:33Audi's acquired a team.

28:35Cadillac's coming in.

28:36The level of investment that have come in, you know, real serious investors.

28:42And so now I don't think you can acquire a Formula One team probably under $2 billion.

28:49And not long ago, you could almost acquire anybody for $2 billion.

28:53And so it's a great success story.

28:56Just to clarify, can you speak to where in that valuation range that the sale landed?

29:01What's been reported is not a million miles off.

29:05Yeah.

29:05And in terms of where you see yourself in the valuation hierarchy, you know, do you see yourself kind of back at the top of the grid?

29:12I mean, again, I believe in Forbes rankings, we had you in 2023 at fourth.

29:17Are you guys challenging for number one from your area perspective?

29:22I mean, you've got to say Ferrari, of course.

29:23Of course, right.

29:24It needs to be number one, you know, unbelievable racing team.

29:27They're the longest standing sport in Formula One and what an unbelievable brand.

29:31So I think no one would argue they're number one.

29:35And I think when you get into who's number two, we're the second most historic team, an unbelievable brand, Mercedes, unbelievable team, Red Bull, unbelievable team.

29:46So you've got to say those are the top four.

29:48Are we number two?

29:49I'd like to think so.

29:50I want to flash back because these numbers are astonishing.

29:53But a couple of years ago, MSP Capital and a couple other investors who ended up being bought out first coming to the team in 2020 at 560 million pounds.

30:01And you read about it.

30:03McLaren was not doing so great financially at that point.

30:06What was that period like?

30:08Was it as dire as it seemed?

30:10It was.

30:11Now, fortunately, our major shareholder, I knew, always had our back.

30:19So it was as dire as reported, but always knew there was kind of a parachute.

30:26But we were getting pretty close to the ground.

30:29And ultimately, what they decided, you know, we were in COVID.

30:33Times were tough.

30:34Investing in automotive.

30:35You know, they be coming back to their passion is first to win.

30:39And they took the decision of let's go for it.

30:43And if that means we need to sell a small piece to enable us to go for it, we'd rather do that and drive performance and then kind of live within our means.

30:52But then that come at the cost of performance.

30:55So that was why the decision was made.

30:57Clearly the right decision.

30:59Things are much healthier now.

31:01And so Mumtelikat and Sivan, you know, Mumtelikat being Bahrain, Sivan being Abu Dhabi, long term relationships.

31:09And partnerships there decided, you know what, time is right.

31:13Let's consolidate our minority shareholders.

31:16Got a great return, which is awesome.

31:18As a CEO, you want to deliver return for your fans, your partners, your shareholders.

31:24And so it's been an unbelievable story.

31:26And long may it continue.

31:28Is it something you laugh about now, thinking about where you are today commercially versus like, wow, we're almost at the ground there?

31:34It's pretty, it's been an amazing turnaround.

31:36But, you know, the leadership team and the people at McLaren have done a wonderful job.

31:42So well-deserved.

31:43Touched on this a little bit.

31:44I mentioned, you know, especially since the cost cap valuations have been on the rise.

31:48And when we last valued the teams in 2023, the average team was worth $1.88 billion, which up 276% from the $500 million average in 2019.

31:58So why are we seeing such rapid growth?

32:00Is it just, we literally just turned the knob on fixing the business model and now everything works?

32:05Is there more to it?

32:06No, I think it's, you know, as simple as that.

32:08It wasn't quite simple getting there.

32:10I can tell you from being in those meetings around, you know, cost cap, it was pretty, had some big arguments because not everyone was supportive of it.

32:18They liked being able to win with the checkbook, if you'd like, not that they weren't unbelievably great teams, but, you know, they had an advantage.

32:28So to try and level the playing field was important.

32:31It took a lot of work.

32:33You know, hats off to Liberty.

32:34You know, Chase Carey was running the business that time when John taught.

32:38Now you've got Stefano, the CEO of Formula One, and Mohamed bin Salim, the president of the FIA.

32:45So, you know, those are the two groups that need to continue to drive forward with the team's input.

32:50But I think it was, it wasn't simple, but it's a simple description of, yeah, we needed to fix our business model.

32:56And we did look at the level of competition, as I mentioned, seven different winners winning multiple races last year.

33:01Now people are paying a lot of money to enter the sport, as Cadillac has, where, you know, five years ago you could invest at McLaren.

33:11Now Cadillac paid more to actually just buy a ticket to get into the game than you could buy teams for five years ago.

33:22So it's unbelievable value creation, but it was because I think we fixed the business model.

33:26When you think about the sport, what revenue streams are you bullish on going forward?

33:30Is media rights, like the next great unlock, because in American sports, that's, you know, the NFL, over 100 billion in media rights.

33:36For sure.

33:37I think it's a combination of, you know, rights fees to host Grand Prixs continue to climb.

33:43But as I mentioned earlier, we kind of capped at 24 races.

33:46So while you can get some incremental growth there, you're not going to get it from having 28 races.

33:52You're only going to have 24.

33:53But as the demand increases, you know, with the lack of supply, that will push up prices.

34:01Media, of course, is ever evolving in different types of media.

34:05Of course, you know, announcement coming up here in Austin, and that'll be some increase.

34:11But I come back to, I think, a fan base is probably the biggest opportunity, because we're really only kind of, what is it, seven, eight years into this journey with Liberty.

34:20So we're quite young as far as the ways we engage with our fans.

34:25And if we can continue to give them great products and services and access, we can, you know, we've got such a huge fan base.

34:32If you can get, you know, one or two more dollars out of each fan over the course of the year, that will accumulate to be quite a significant number.

34:40So I think that's the biggest area of opportunity.

34:42Just speaking to MLB, NFL, NBA, and NHL, because our data goes back nearly three decades, the average team has appreciated over those 27 years about 1,800%, which is well outperforming S&P 500.

34:55Do you expect F1 teams collectively to trail that, outpace that, keep in line with that?

35:00I think we've had rapid growth to get to where we are, and we've kind of caught up, but still growing.

35:06So I would expect us to kind of now slot in, now that we've kind of caught up, to sit alongside an NFL.

35:13I still think the multiples that you see from an NFL and NBA are pretty awesome.

35:21You know, our revenue and profitability pretty much rivals any sport, from what I can see.

35:28Our popularity is really strong, so I think there was a lot of catching up to do.

35:32We've caught up.

35:33I still think there's definitely room for growth, but then we should probably ride that same wave as the other major sports, which has just been phenomenal.

35:41How does Formula One continue to grow, not just commercially, adding new fans and everything?

35:45Because you've got to admit, Drive to Survive, like, it was great.

35:49It had a great bump.

35:49Can that really continue to create new fans here?

35:52Are there new avenues of growth we need to see?

35:54Like, what needs to happen for the sport to keep adding fans?

35:56I think kind of more of the same, which is we're now a very inclusive sport.

36:00We've kind of pulled back the velvet rope, and we let people in to see how exciting Formula One is.

36:07So I think as media grows and there's all the different sorts of media outlets, letting people see behind the scenes,

36:16I think we can do increase our storytelling around the technology in our sport and pitching it at a level that's not too techie if you're not very techie.

36:30But it's fascinating what goes on.

36:32And so I think being able to kind of pitch that at the right level, I think people are fascinated to understand,

36:37well, why do you have a thousand people in a Formula One team?

36:40What do they do to build two cars?

36:42Well, let us show you.

36:42And I think that's an area of growth and excitement with the fans.

36:46Should box-to-box productions be listening to that?

36:48Is that a show idea?

36:49We speak with them often.

36:51They've done a wonderful job with Netflix.

36:53So I think the more content we can provide, and also there's so many different storylines.

36:58We're not a boring sport.

37:01And, you know, on-track is unbelievable.

37:03Off-track is unbelievable.

37:04We're global.

37:05So Netflix, which I think we're now maybe in our seventh season, everyone's been exciting because it's just a different story that breaks out every weekend.

37:15Do you think the commercial uptick is something that is more attributable to kind of the broader growth of the sport or kind of what you guys are doing specifically?

37:23Or is it kind of always in this kind of mix of both?

37:25I think it's a mix of both.

37:27We're obviously dependent upon Formula One being healthy, and we contribute to that.

37:33But there's only so much we can do.

37:34But then in our own world, we need to make sure we're kind of best in class.

37:38We have a great fan event we're doing here in Austin.

37:43We did one in Trafalgar Square for our Papaya fans, which was unbelievable.

37:48So we need to continue to innovate as a racing team because only 1% of racing fans actually attend a race live.

37:56So we still need to continue to work on how can we bring McLaren and Formula One to the 99% that follow Formula One but will never attend a Formula One race.

38:06A few other things I want to hit, but let's do it kind of in a rapid-fire way, okay?

38:09New regulations next year.

38:11It's going to completely change the car in ways we haven't seen before.

38:14How do you maintain McLaren dominance while dealing with these regulation changes?

38:17Good question, and it's going to be tough because it is a huge regulation set.

38:21I think we just need to keep doing what we're doing.

38:23We've got great people.

38:24We've got great technology, great partners.

38:27That's not changing.

38:28The regulations are changing.

38:30So we just need to attack the regulations the way we attacked these previous regulations.

38:34But make no mistake about it, it will catch someone out.

38:38You'll have some sort of surprise.

38:40You'll have a big team that gets it a little bit less right than usual.

38:43Are you already looking ahead?

38:44Oh, very much.

38:45Oh, yeah, yeah.

38:45We all are.

38:46So a lot of time and effort going into the development of next year's car.

38:51Having two number one drivers, how do you balance it going forward?

38:53Treat them equally and transparently and fairly and with lots of communication and let the best man win.

39:01Does adding an 11th team change things for McLaren or is it just another team to beat?

39:05Yeah, just another team to beat, but I think it's exciting for the sport.

39:08And the last thing I have to ask, are we going to see you in more movies after F1 the movie?

39:12We saw your cameo or there are more acting roles in your future?

39:14I like motor racing, but whatever I can do to promote the sport, I enjoy our fan base.

39:20I enjoy promoting McLaren.

39:21I remember my first Formula One race.

39:24I was 10 years old in 1981 Long Beach Grand Prix and the impression it left on me and it turned me into a Formula One fan and racing fan for the rest of my life.

39:32So whatever I can do that's away from the racetrack to share our great sport and McLaren with our fans, count me in.

39:39Zach Brown, thanks for being here with us.

39:40Thanks for having me on.