Former Goldman Sachs Executive Sees Formula 1 as Prime Investment Opportunity
According to a former senior figure at Goldman Sachs, Formula 1 has not yet reached its peak value and represents one of the most dependable investment prospects in the global sports industry. Elis Jones, who previously served as head of global sports advisory at the investment banking giant, made these remarks during a keynote address at the Autosport Business Exchange London, an event organised by Motorsport Network.
Long-Term Growth Trajectory for F1 Assets
Jones emphasised that from an investment perspective, Formula 1 offers strong potential for returns over a five-to-ten year horizon. "When looking at it from an investment standpoint, can I make a return over five-to-seven years?" he questioned. "And the answer has been 'very much so' for the last five-to-seven years, and from my perspective, 'very much so' over the next five-to-10 plus years."
He further elaborated that if one were to design a modern sport with extensive global reach, it would closely resemble Formula 1. "If you were designing a sport today that touched almost every continent in the world on a very regular basis, it would look like Formula 1," Jones stated.
Recent Team Transactions Highlight Rising Valuations
The premium motorsport series has experienced significant ownership changes recently, with numerous stake sales driving team valuations to unprecedented levels. Notable examples include:
- Audi's 75 per cent acquisition of Sauber two years ago, followed by a complete buyout and subsequent partial sale to the Qatar Investment Authority.
- McLaren's majority owner Mumtalakat purchasing minority stakes at a valuation of $4.5 billion last autumn.
- Aston Martin finalising a deal with HPS Investment Partners and Accel that valued its Formula 1 team at over £1.5 billion.
- Williams raising capital in 2024, and Mercedes F1 team principal Toto Wolff's partial share sale valuing the team at more than £3.5 billion.
Cost Cap Implementation Fuels Financial Sustainability
Jones attributed much of Formula 1's financial appeal to the introduction of a cost cap several years ago, set at $150 million. "The inadvertent consequence of employing a cost cap has meant that the sport under Liberty has seen a huge growth in popularity based on the macro trends," he explained. "And these teams now start to make money."
He contrasted this with other major sports leagues, noting that in European football, teams rarely generate profits, while in the NFL, most teams are profitable to varying degrees, and in the NBA, approximately half of the teams may achieve profitability. "And most importantly, there's scarcity value," Jones added, highlighting the limited number of Formula 1 teams as a key factor enhancing their investment allure.
The combination of controlled costs, global appeal, and limited team availability positions Formula 1 as a uniquely attractive asset class for investors seeking reliable returns in the sports sector.
