F1 business expert Mark Gallagher believes the investment into Alpine involving Ryan Reynolds is a “really significant moment” for the sport in the United States of America.
F1 has gone from strength to strength to strength in the years since Liberty Media took full control of the sport in 2017, with three races set to take place across the United States – in Miami, Austin and Las Vegas – over the course of the 2023 season.
On Monday, the Renault Group announced that Otro Capital, Redbird Capital Partners and Maximum Effort Investments had purchased a 24 per cent stake in the Alpine F1 team with Reynolds and fellow Hollywood stars Rob McElhenney and Michael B. Jordan involved in the deal. The team now has a valuation of £700million following the investment.
Alpine deal compared with Williams 2020 sale
With Reynolds and McElhenney credited for transforming the fortunes of Welsh football club Wrexham in recent years, Gallagher feels the Alpine deal is a reflection of how much F1 has grown during Liberty’s tenure.
Appearing on the GP Racing magazine podcast, he said: “Off the back of the Alpine announcement, there was this whole discussion online about, ‘Is the team really worth $900million?’ Well, it clearly is because that’s what they paid for it. Literally, it’s in the mathematics.
“If you pay $200m euros for 24 per cent, you work the maths forward [and] it’s a $900m valuation on the team, call it a billion. Why not call it a billion, because what’s $100m when you’ve already got $900m on the table? [It’s] a billion-dollar Formula 1 franchise.
“If Alpine is worth $900m, what does that make Red Bull Racing worth? What [does] that make Mercedes’ F1 team worth? What [does that] make teams with arguably a longer heritage in terms of their brand name? I’m thinking particularly of McLaren.
[McLaren chief executive] Zak Brown – and I’ll put my hand up here and say I was one of the people who rather dismissed this comment – not too many years ago said, ‘A Formula 1 team is worth half a billion dollars’, and people were like, ‘Nah, it’s not.’
“And we kind of thought the proof of that was in the Williams deal. The Williams team was sold in September 2020 for rather less than $200m – and that was for the whole [team].
“So here we are less than three years later and teams are now worth five times that amount and it’s really significant.
“It’s a really significant moment because I’ve been saying for some time that whilst all of us in Europe keep talking about the Netflix effect and saying how much bigger Formula 1’s getting in America, we genuinely don’t realise just how big Formula 1 has become in America and it’s not until you’re spending a lot of time there that you see it.
“I am just back from [an] almost two-week trip to North America and I spent quite a lot of time in New York, including presenting at a conference, which was a private equity company, so precisely the kind of Oregon company that has now been used by Rob McElhenney and Michael Jordan and Ryan Reynolds to buy into Alpine.
“So [a] private equity company, in a room full of 100 investors, and after I finished my presentation I had people coming up to me saying: ‘Formula 1’s just amazing. It’s this interface of sport and technology and the companies are experts in aeronautical engineering and aerodynamics and powertrain technology and electronics and data analytics.’
“And so I’m standing there, I’ve got this group of high-powered investors [and] they’re telling me how amazing Formula 1 is, because I’ve just given them an overview of how the industry works.
“So you’ve got a sport which truly has exploded on the scene in the United States and Liberty have done a phenomenal job.
“Off the back of the Alpine valuation, I went on to the New York Stock Exchange and had a look at yesterday’s valuation of Formula 1 under Liberty and its shares yesterday were worth a total of $29.26billion.
“When you bear in mind that Liberty bought Formula 1 off CVC on a valuation of $8.5billion in 2016, that means that we’re somewhere around three to four times the valuation after six years which by the way, in case anyone didn’t know, included a three-year global pandemic and assorted wars in Europe, financial crises – and still they’ve managed to drive this growth.”
While F1 has been a hard watch in 2023 with the dominant Red Bull team winning all of the eight races held so far, Gallagher is convinced that the sport has never been in a better place off track.
And despite fears that the deal could represent a good F1 exit strategy for Renault, he believes the involvement of figures of Reynolds’ stature will open many doors for the French manufacturer.
He explained: “Whilst the product, as in the racing on a Sunday afternoon, can leave a lot to be desired, it depends how you look at it because I personally think the ‘behind Max Verstappen racing’ is often quite a good quality.
“There’s no question that the overall product does look rather predictable and we seem to be in the middle of the Verstappen domination era, which is a pity because it means all the new fans that have been attracted are being forced to watch the sort of [Lewis] Hamilton/Mercedes-type domination, perhaps even more so with Max and Red Bull, so the product we can talk about separately.
“But the business – in terms of the bottom line, the growth, the profitability – has never been stronger and this Alpine deal is a really, really good barometer of where we are at. It’s a fabulous deal for Alpine, for Renault’s chief executive Luca de Meo and Laurent Rossi of Alpine.
“To see the fact that they can sell less than a quarter of just the Formula 1 team – not the engine business in Viry, but just the Formula 1 team in Enstone – for that kind of money is a really good payday for Renault.
“And, of course, in getting on board a portfolio of American equity investors and celebrity equity investors, that opens up another business network for the team, particularly in the United States.
“The very fact that Ryan Reynolds and Rob McElhenney have demonstrated great success in what they’ve done with Wrexham in football and indeed in other sporting arenas, and with his other brands that he’s done [is promising].
“Here’s a guy, he’s an entrepreneur, he’s a [celebrity] – he’s just got a formidable network, so that’s going to be powerful and I think that’ll help further build a fanbase [for] that team in America.
“It’s beautiful for Renault, because on the very same day that they announced this deal with the Alpine performance brand they also announced their plans for expansion of the Alpine sportscar brand in its new era as an electric vehicle, high-performance brand, including getting it off the ground in the United States, which is what they need to do. And, again, you can imagine how they can use these connections very powerfully.
“So it’s an extremely good deal, very good news for Enstone and far from me agreeing with those saying that this is a sign of Renault’s exit, I actually think it’s the opposite. I think it’s a sign of continued faith in the sport.
“And let’s face it, the Mercedes-Benz Formula 1 team is two-thirds owned by people other than Daimler-Benz – it’s owned by Toto Wolff and Sir Jim Ratcliffe.
“So actually selling a chunk of the team doesn’t mean you’re leaving, it actually shows a very clever play, so very interesting.”