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