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There's no other sport in
the world that can give
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you the feeling of being
in the arena where the
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gladiators are, when
really the action is going
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on.
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You're trying to imagine
scenarios, how the start
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could turn out and you
know the what-ifs.
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Going racing. It's
intense. You can see if
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you've done things right.
If you want to change
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anything, it's too late
on the grid.
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We're in the prototype
business. We're standing
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still. You're going
backwards because
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everyone's going forward.
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And the team, we are half
glass empty people rather
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than half full. Maybe our
lives are a little bit
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more miserable than
others, but it keeps us on
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our toes.
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Formula 1 is the most
elite racing league on the
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planet, and it's doubled
in value since U.S.-based
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Liberty Media bought F1
for some $8 billion in
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2017. What's it worth
now?
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The enterprise value is
about, floating around,
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say $16 billion. And
together, the ten teams on
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the grid are reportedly
valued at more than $15
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billion.
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Today. I don't think you
could buy a team for less
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than $750 million, and
the top teams are valued
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at $3 billion.
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That's a total change.
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It's a rapid rise for one
of the world's fastest
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sports.
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It's Toto Wolff, everyone.
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So let's get started.
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My name is Anita Elberse,
but this is really not
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about me. This is about
this man, the most
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successful team principal
of our era.
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We have ten teams, and
those ten teams have been
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there through thick and
thin.
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We were shaken by Covid
and we made it.
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Formula 1 teams are run by
CEOs and team principals.
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Welcome to the Miami Grand
Prix.
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In some cases, they're
both.
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Toto Wolff of the
Mercedes F1 team has his
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hands full with three
roles.
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You're unique because you
are CEO, principal and
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part owner of Mercedes.
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Which one takes the most
time?
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While the engineers will
always say that I'm
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spending too much on the
CEO side, and I need to
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remind myself that in our
business, it's the
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stopwatch. If we win,
financial success is going
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to follow. My priority
must always be to create a
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framework where our
performance people are
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able to thrive.
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23 race weekends of the
year, I'm the team
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principal of a
high-performing sports
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team, and for the other
52 weeks of the year, from
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Monday to Friday, I'm the
CEO of a high-tech
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technology business, so
it keeps me keeps me busy.
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You need to know what
you're doing technically
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because you've got a big
design team.
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The technology in F1 is
at the forefront.
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You know, you always
develop something and you
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need to run a business.
You need to have that
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money coming in. So you
need to sell sponsorship
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or report back to the
board, to the investor in
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the team and tell them
what you're doing with
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money.
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What does the CEO of
McLaren Racing Team do?
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That's what a lot of
people on the racing team
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actually ask.
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My job is to get the best
people to give them the
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resources they need, the
direction they need.
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On the commercial side,
bringing on new corporate
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partners and most
importantly, servicing and
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making sure our corporate
partners are benefiting
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from their affiliation
with McLaren.
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And then, of course, I've
got a board and
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shareholders. I'm pretty
much seven days a week.
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CNBC is a corporate
sponsor of McLaren racing,
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one of the top five teams
in Formula 1.
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To get to the top of the
league –
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We've now won 27 of the
last 31 races
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— you have to start early.
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When did you start
getting into racing and
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F1? You're the longest
serving team principal,
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right?
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Yes, I have that title
now, apparently.
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I started at the age of
11 racing go karts, and
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then I did some testing
as a test driver in
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Formula 1. But then I
retired from driving in
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1998, and then Red Bull
approached me when they
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acquired what was the
Jaguar Formula 1 team to
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come and be the first
team principal of Red Bull
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Racing.
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Racing wasn't part of any
of my upbringing.
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When I was 18, I got
invited to a junior
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Formula race, Formula 3
in Europe, and this is
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really where I found my
identity.
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You started as a mechanic,
right?
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Correct.
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I started as a mechanic in
'86, in rallying, in world
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rallying.
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And how does going from
mechanic to now being a
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team principal inform
you?
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Do you think it gives you
an edge?
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I don't know if it gives
me an edge, but for sure
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it gives me an advantage.
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I mean, it's very
difficult to pull the wool
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over my eyes.
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F1 cars are made from
scratch.
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It's part of the reason
that operating costs for
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the teams are sky high.
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For the Mercedes team,
that figure was more than
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$400 million in 2022,
which includes everything
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from marketing to
mechanics to driver
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salaries.
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And this is all you can.
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That's massive. That's
massive carbon.
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It's an aerodynamic
miracle in that car.
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We're trying to have the
airflow flowing underneath
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the front wing and above
it, and that airflow then
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spreads around the car
and hopefully provides
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downforce.
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Can you put a price on the
cars? They cost about $50
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million to develop, and
they're a couple of
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million dollars to
actually build one.
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These cars here probably
$2.5 million each car.
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To make? To make. It lasts
for one season?
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It lasts for one season.
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And then what? And then
they go in a museum.
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R&D is the biggest single
investment.
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If you took the car that
starts the year and it was
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on pole and you didn't
touch it, by the end of
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the year, it would be
last. We have new stuff on
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our car this weekend.
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We'll have new stuff on
our car next weekend.
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So it's a prototype race.
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You're never sitting
still.
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And to pay for all that,
teams have to bring in the
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bucks, mostly from
sponsor contracts and F1
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itself. What about the
prize money?
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How does that work, now
that you're at the top?
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Well, the prize money is
essentially split into
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three columns. So you get
one column for
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participation. You get
one column for where you
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finish in the
constructors championship.
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Then there is a third
column that is all has a
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historical content to it.
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So for example, Ferrari,
benefit the most from that
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column because they're
the longest standing team.
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Our business today
generates about $600
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million in revenue, and
we are growing with 10% to
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15% annually.
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We have predictable
income streams because
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sponsorship contracts
normally between 5 to 10
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years.
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You've got MoneyGram as
the title sponsor.
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How did that come
together?
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I think MoneyGram coming
to us was very smart.
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I mean, it's an American
company which wants to get
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more business globally in
the big teams.
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You know, it's all about
the big team.
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And with us I think they
get more about them.
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We are still the youngest
team.
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Why did you think this was
a good idea?
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We were known as a
traditional 80-year-old
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brand that is a retail
cash business.
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One thing we looked at
from a marketing
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perspective was how do we
amplify the
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characteristics and the
brand attributes that we
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were becoming more and
more, which is around
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innovation and
technology, safety, speed,
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etcetera. And then what
really pops out about F1
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initially is that they
race in, at the time, in
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20 different countries,
and we looked at those
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countries in that
particular year, it
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overlapped with 70% of
our send revenue.
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So while we're a U.S.
company and it's our
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largest market, we do
more business outside the
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U.S. than we do inside.
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Are the Formula 1 fans
MoneyGram customers?
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Yeah, we typically
interact with consumers
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that are 25 to 35 years
old.
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They're oftentimes
migrant communities that
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have left their home
countries and they're gone
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to find employment
sending money back home.
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And so the connection
with a racetrack, the
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connection with the
driver, the connection
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with the sport itself
really binds them and
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connects them in many
ways.
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It's a global sport.
MoneyGram is, you know,
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connecting people
financially all over the
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world. And I think all
these synergies, synergies
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are there.
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One third of what we do
is, you know, PR-sponsored
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stuff, marketing media.
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It's a big, large part of
it.
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It's what keeps us racing.
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You know, it's a small
privately owned team and
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all these partners that
we have on board, you
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know, they're the ones
that, you know, make this
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possible.
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How do you determine the
placement of the sponsor?
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So we measure precisely
how much exposure a
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sponsor gets by being on
the car.
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So depending on the size
of the sponsorship deal
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you're getting more
spaces.
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But to be honest, the
sticker on the car is just
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the icing on the cake.
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It's more the
relationship that you
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have. How can we help
them to increase their
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sales or help them with
their marketing targets?
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What we're doing is
tailor made for the
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specific partner.
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Does the success of F1 and
the team have any bearing
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on Mercedes sales?
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For the consumer?
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I think it's a long-term
branding exercise where
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people say, okay, what is
what is it that I think
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about Mercedes? We are
being given the
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responsibility of
carrying the star, the
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automobile. You know,
it's not like a
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sponsorship platform,
like we're doing tennis or
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golf. We are building
race cars and we're
00:09:40
building road cars.
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The first ever Mercedes
was a racing car.
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Why does Red Bull, an
energy drink maker, need a
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Formula 1 team?
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The shareholders have
always been passionate
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about racing and Formula
1, and they saw it as the
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perfect platform to
market their brand.
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And it's the most viewed
sport in the world outside
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of the Olympic Games and
the football World Cup.
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But of course, they only
happen every four years.
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Formula 1 is every two
weeks.
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Is it a profitable
investment for them?
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It depends how you view it
in terms of the
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recognition for the brand
globally, what that would
00:10:18
cost to advertise.
Absolutely. It's a huge
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success in the amount
that it's promoting the
00:10:23
Red Bull brand. And I
think as the sponsorship
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and partnerships and the
income improves and cost
00:10:29
caps take effect, we're
seeing the intrinsic value
00:10:33
of Formula 1 teams just
increase dramatically.
00:10:37
The cost cap that Liberty
Media introduced limits
00:10:40
how much each team can
spend on building and
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developing cars.
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Set at $135 million in
2023.
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Is the budget cap a good
thing?
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Absolutely. Anybody
investing in it knows how
00:10:53
much you're going to
spend before somebody's
00:10:54
investing in a race team
didn't know if he would
00:10:57
spend $200 million a
year, or half a billion a
00:10:59
year. There was
everything in between.
00:11:01
We're now profitable.
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We were losing seven,
eight, nine figures when I
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got started. And now
we're a profitable sports
00:11:09
team.
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The blueprint was the
American leagues, where
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when the salary caps were
introduced, the businesses
00:11:15
became sustainable. That
was introduced two years
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ago, with also the aim
not only to make the
00:11:21
business sustainable, but
also to create a more
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leveled playing field.
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Small teams basically
having the same budget
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like the big ones.
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Long term, there will be
many more teams capable of
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winning races, but also
it made our business very
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profitable.
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So how do you spend it
most wisely and how do you
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boost the performance?
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That's that's the name of
the game.
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Before, if we wanted to
develop a new front wing,
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you could develop ten and
pick the best one.
00:11:44
And you didn't mind that
you kind of wasted money
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on nine front wings.
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Now you don't want to
develop ten to land on
00:11:50
one, because that nine
wings that you've wasted
00:11:53
money on, that's money
that you should be
00:11:55
spending somewhere else.
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Becoming profitable, I
hope we achieve it this
00:11:59
year or next year. You
know that will be one –
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It's not profitable now?
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Not in the moment.
00:12:03
In the moment, I think we
are close to a break even.
00:12:06
But we will become
profitable because every
00:12:10
business to assure that
you continue, you need to
00:12:14
be profitable because it
cannot be just an
00:12:16
investment project.
00:12:20
And with profitability
comes a surge in team
00:12:23
values. Recently, a group
of celebrity investors
00:12:26
took a 24% stake in
alpine racing, putting
00:12:30
that team's value north
of $900 million.
00:12:33
We've got a lot more
newer, younger audience
00:12:37
now, which I think people
are really excited about
00:12:40
the sport and where it's
going. I used to come out
00:12:41
to the States
particularly, and I would
00:12:43
explain what it is I do,
and I never could
00:12:45
understand why people
didn't love the sport like
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I've grown up to love it.
00:12:48
And now I'm seeing people
having that experience
00:12:52
that I've had.
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As this season winds down,
it's all eyes on next
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spring.
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How should we look to 2020
for the next season?
00:12:59
Do you have a good sense
that you're going to be
00:13:01
back in the hunt for the
title again?
00:13:03
We have completely changed
the concept of our car.
00:13:06
It seems like all our
tough learnings of getting
00:13:09
it wrong so many times
now makes sense.
00:13:13
So I think the car is
going to be in a good
00:13:14
place. Is it good enough
to beat the Red Bull?
00:13:16
Is it good enough to beat
Max Verstappen?
00:13:18
I don't know, but the aim
is definitely to be right
00:13:22
up there.
00:13:23
That rivalry between you
and Mercedes, you and
00:13:26
Toto. Where does that
stand right now?
00:13:28
Well, they'll be quiet at
the moment, but they'll be
00:13:32
back. It's a bit like The
Terminator.
