From Financial Ruin To High Gear: The Business Strategy That Saved McLaren F1

Forbes

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/  Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1  Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript  Stay Connected Forbes newsletters: https://newsletters.editorial.forbes.com Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com  Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.

Transcript

00:00Here's your Forbes Daily Briefing for Saturday, November 29th.

00:05Today on Forbes, how McLaren staved off financial ruin and revved its F1 business into high

00:12gear.

00:14When McLaren drivers Lando Norris and Oscar Piastri crossed the finish line in 3rd and

00:194th place at the Singapore Grand Prix in October, the chase for Formula One's Constructors

00:25Championship was over.

00:26For the second consecutive season, McLaren had claimed the sport's ultimate prize, and

00:32that left Zac Brown with a pivotal decision to make, how to properly celebrate.

00:38For Brown, the 54-year-old McLaren Racing CEO, though, there wasn't much question how to

00:43surround himself.

00:44He says, quote, with your racing team, and not just the racing team at the circuit, but

00:50the entire racing team, which is made up of 1,400 people at McLaren.

00:56One knows all too well that the latest McLaren dynasty was preceded by a painful 26-year

01:01title drought.

01:03He adds, quote, so pretty exciting times.

01:07After coming up short with a stunning double disqualification in Las Vegas last weekend,

01:12there are two Grand Prix races still remaining in the F1 season.

01:16This weekend, in Qatar, followed by Abu Dhabi next week.

01:20McLaren still hopes to collect more hardware.

01:23Norris has been in pole position to capture the Drivers' Championship, a feat no one has

01:28managed in a McLaren since Lewis Hamilton did so in 2008.

01:32His closest competition in the standings is his teammate, Piastri, 24 points back.

01:39Just as impressive as any trophy, however, is what McLaren has accomplished off the track.

01:45In 2019, Forbes valued the team at $620 million on $165 million in revenue the preceding year.

01:54While only three teams were worth more, McLaren was by far the least profitable outfit in the

01:59sport, with an astonishing $137 million operating loss earnings before interest and taxes in

02:062018.

02:08Six years later, Forbes estimates McLaren's Formula One team is worth nearly seven times

02:13as much, at $4.4 billion, and up to third place on the grid, after revenues grew to $614

02:20million in 2024.

02:23The team's operating profit also soared to $61 million in a new era of financial responsibility

02:29under the series cost cap, which was implemented in 2021 to limit spending in several areas related

02:35to race car research and construction.

02:39At the center of McLaren's turnaround is Brown, a former marketing executive who took over

02:44the team in 2018.

02:46His commercial-first approach, a departure from the age-old idea that winning is the

02:50best way to attract sponsors in Formula One, has enabled the organization to rival the

02:55pace of the sports financial giants, Ferrari and Mercedes.

03:00Forbes estimates that roughly 70% to 75% of McLaren's revenue comes from its commercial operations,

03:07as opposed to prize money and central league revenue from media rights and race hosting

03:11fees, with the vast majority of that total from the robust stable of partnerships Brown has

03:16assembled, including prominent brands like Google, OKX, Cisco, Dell, Hilton, and Lego.

03:25Ricky Paugh, the founder and managing partner of 1440 Sports, a consulting firm that specializes

03:31in motorsports and golf sponsorship, and has worked with McLaren, says, quote,

03:36Zach Brown flipped the model and said, let's go be really visible, get sponsors, and treat

03:41them really well, and we'll use that money to reinvest in engineering and people, and we'll

03:45win races.

03:46He has created a flywheel that he's running right, and people are just trying to catch him

03:51with engineering, and that's just not going to happen.

03:55And Brown is only upping the ante.

03:58In August, McLaren announced that MasterCard would become the Formula One team's title sponsor

04:02next year, filling a naming rights slot that had been vacant since Vodafone split with the

04:07team after the 2013 season.

04:10The deal, which is reportedly set to run through the mid-2030s and pay roughly $100 million annually,

04:17is what Brown says is, quote, the biggest partnership that McLaren has ever put together.

04:23If McLaren can continue its championship-winning ways, it should have plenty of other opportunities

04:27to grow its business.

04:29But in Formula One, where the difference between success and failure can be a tenth of a second,

04:34Brown isn't taking anything for granted.

04:38For full coverage, check out Justin Birnbaum's piece on Forbes.com.

04:44This is Kieran Meadows from Forbes, thanks for tuning in.

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