How Formula 1 Is Monetizing the "Dead Air" Between Race Weekends

An F1 inspired entertainment complex

Beyond the Chequered Flag

For decades, the business model of Formula 1 was elegantly simple yet fundamentally constrained: it was a circus that sold tickets to a show that only occurred 24 weekends a year. Under the stewardship of previous management, the sport operated as a pure intellectual property licensor—an asset-light entity that collected race promotion fees and media rights while leaving the heavy lifting of infrastructure and operations to third parties. However, under the ownership of Liberty Media Corporation, a profound structural transformation is underway. The sport is aggressively pivoting toward the "Experiential Economy," a strategic initiative designed to decouple revenue generation from the constraints of the race calendar.

This shift represents a move from a rent-seeking model to an active operator model. By deploying significant capital into physical, year-round verticals, Formula 1 is effectively monetizing the gap between the Sunday race and the following Friday’s practice session. As evidenced by recent fiscal disclosures, the reporting segment known as "Other Revenue" is no longer a rounding error; it is becoming a material driver of enterprise value, fueled by high-fidelity simulation venues, immersive touring exhibitions, and vertical commerce alliances.

This article analyzes the financial architecture and operational realities of Formula 1’s four critical growth vectors: the competitive socializing venture F1 Arcade, the roving F1 Exhibition, the data-driven partnership with Fanatics, and the market-specific infrastructure strategy in China.

The Capital Shift: From Asset-Light to Infrastructure-Heavy

To understand the magnitude of this pivot, one must look at the changing nature of Liberty Media’s balance sheet. Historically, Formula 1’s cash outflows were restricted to debt service and minimal operational overhead. However, recent SEC filings indicate a strategic departure, stating that "Formula 1's uses of cash are expected to be capital expenditures" funded directly by operations and cash on hand (Liberty Media 10-Q, 2024).

This is not merely a change in accounting; it is a change in philosophy. Liberty Media is now willing to own the asset to control the consumer experience. This is most visible in the Las Vegas Grand Prix Plaza, a permanent infrastructure project that turns a sunken capital cost—the pit building—into a year-round revenue generator. By establishing permanent venues and roving attractions, Liberty ensures the brand remains commercially active 365 days a year, mitigating the seasonality that historically depressed Q1 revenues when race activity is low.

Growth Vector 1: F1 Arcade and the Economics of "Competitive Socializing"

The spearhead of this experiential strategy is F1 Arcade, a venture operated by Kindred Concepts Ltd. that merges high-end simulation racing with premium hospitality. Unlike traditional licensing deals where F1 would simply sell the rights to a developer, this venture involves direct equity participation from Liberty Media, signaling "skin in the game."

The Financial Architecture

The confidence in this model is underpinned by substantial institutional capital. In July 2024, Kindred Concepts completed a "$130 million (£101.2m) growth financing" round led by Liberty Media, Cheyne Capital, Permira Credit, and OakNorth (Houlihan Lokey, 2024). This level of capitalization suggests that F1 Arcade is viewed not as a niche gaming startup, but as a scalable infrastructure play comparable to major hospitality chains.

The unit economics of these venues reveal a specific revenue mix that prioritizes hospitality over gaming. Industry benchmarks for competitive socializing concepts—such as Topgolf or Flight Club—typically target a split of "80% Food & Beverage (F&B) to 20% Gaming" (World Experience Organization, 2023). F1 Arcade mirrors this, using the simulators as a loss leader or engagement hook to drive high-margin F&B spend.

The financial performance of the initial sites validates this thesis. The London flagship site generated "£6.48 million" in revenue during its first seven months, and the group reported a revenue surge to "£31.9 million" for the fiscal year ending December 2024 (Propel Info News, 2025). However, the aggressive expansion comes at a short-term cost. The group posted a pre-tax loss of "£16.2 million," reflecting the classic "J-Curve" of a high-growth infrastructure rollout where pre-opening costs and capital expenditures outweigh immediate returns.

Crucially, however, the company notes that "each mature site generates strong positive site-level EBITDA," confirming that the underlying business model is sound once the initial capital outlay is amortized (Propel Info News, 2025).

Technical Due Diligence: The 20ms Barrier

The operational risk in this vector lies in the technology stack. F1 Arcade is not deploying standard arcade cabinets; it is deploying "prosumer" grade simulation rigs that require complex integration. The simulators utilize "D-BOX haptic motion systems" to provide granular physical feedback and run on the "rFactor 2" physics engine provided by Motorsport Games (Motorsport Games Annual Report, 2024).

The critical metric here is latency. To prevent motion sickness—a catastrophic failure point for a hospitality venue—the system must achieve a latency of less than 20ms to align visual cues with physical haptics. Furthermore, the visuals are managed by "Scalable Display Technologies," which automates the warping and blending of images on curved screens to ensure a seamless field of view (Scalable Display Case Study, 2024). This reliance on a complex web of third-party hardware and software vendors (Motorsport Games, D-BOX, Vesaro) introduces a supply chain risk that Kindred Concepts must manage aggressively, particularly given the historical financial volatility of partners like Motorsport Games.

With a roadmap targeting "30 locations globally by 2027," including major U.S. hubs like Las Vegas, Philadelphia, and Atlanta, F1 Arcade is betting that American consumers will adopt F1 as a lifestyle habit, not just a Sunday morning viewing activity.

Growth Vector 2: The Destination Economy and The F1 Exhibition

While F1 Arcade targets the social gamer, the F1 Exhibition targets the cultural historian and the family demographic. Produced by Round Room Live, this vector operates on a dual-track model: a roving international tour and permanent destination hubs.

The Roving Asset Model

The exhibition business is characterized by high logistics costs but potentially high yields. The exhibition has successfully toured Madrid, Vienna, London, and Toronto, with the Madrid show ranking as the country’s "best-selling temporary show of 2023" (Liberty Media Investor Day, 2024). The revenue model is gate-driven, with ticket prices in London starting at "£25 for adults," supplemented by a "running royalty" structure where Formula 1 receives a percentage of Gross Box Office Receipts (GBOR) (F1 Exhibition Press Release, 2024).

The operational complexity here cannot be overstated. This is a "Roving Asset Heavy" model involving the transport of "High Value Artifacts," such as the burnt chassis from Romain Grosjean’s 2020 crash. Moving such assets across international borders requires specialized insurance and logistics to minimize "dark days"—periods where the assets are in transit and generating no revenue.

Permanent Infrastructure: The Grand Prix Plaza

Perhaps the most significant evolution of this vector is the transition from temporary to permanent. In Las Vegas, F1 launched the Grand Prix Plaza 2025. This facility houses year-round attractions including "F1 DRIVE" (electric karting) and "F1 X" (a 4D immersive exhibition) (Grand Prix Plaza Press Release, 2025).

This strategy represents the "Disneyfication" of Formula 1. By converting the Las Vegas pit building—a massive capital expenditure—into a year-round retail and entertainment hub, Liberty Media is engaging in asset utilization efficiency. They are creating a pilgrimage site for fans who may never afford a $1,000 race-day ticket but are willing to spend $75 on a Tuesday afternoon for a karting session and a merchandise purchase.

Growth Vector 3: Vertical Commerce and the Fanatics Alliance

Underpinning these physical experiences is a sophisticated commerce engine powered by a strategic alliance with Fanatics, Inc. This partnership is not a traditional licensing deal; it is a "Vertical Commerce" (v-commerce) integration designed to mitigate inventory risk and maximize data capture.

Risk Transfer and Agility

The core economic advantage of the Fanatics partnership is the transfer of inventory risk. Through its rights to manufacture and "on-demand" capabilities, Fanatics allows Formula 1 to avoid holding massive stock of team merchandise that could become obsolete with a driver change. Fanatics manages this volatility, utilizing a model that "flexes supply and demand regularly" to capture "hot market" trends, such as a specific driver winning a race (SportCal, 2021).

Financial Terms and Data Sovereignty

While specific contract terms are confidential, industry analysis of Fanatics' deal structures reveals a reliance on Guaranteed Minimum Royalties (GMR). Fanatics typically pays a guaranteed floor amount to the IP holder regardless of sales, with royalty rates generally ranging between "12% and 16%" of net sales once the minimums are exceeded (Genesco/Fanatics Filing, 2020).

Beyond the financials, the strategic value lies in data. Fanatics possesses a database of "94 million sports fans" (J.P. Morgan Asset Management, 2024). By integrating this commerce data with F1’s viewership metrics, Liberty Media creates a "Golden Record" of the fan—a unified profile that tracks a consumer from their TV viewing habits to their physical attendance and merchandise purchasing. This data granularity significantly enhances the valuation of F1’s sponsorship deals, as partners can target specific spending demographics with high precision.

Growth Vector 4: The China Strategy and Regulatory Navigation

The final vector of growth lies in China, a market of immense scale but distinct regulatory hurdles. Unlike the direct ownership model in Las Vegas or the equity partnership in F1 Arcade, F1’s strategy in China relies on a state-backed proxy: Shanghai Juss Sports Group.

The Juss Sports Monopoly

Juss Sports, a state-owned enterprise, holds a monopoly on Shanghai’s premier sports infrastructure. They own and operate the Shanghai International Circuit, which recently regained its "FIA Grade One license" after renovations, securing a contract extension to host the Chinese Grand Prix "until at least 2030" (GrandPrix247, 2024).

Navigating Data Sovereignty

The expansion of experiential ventures in China is complicated by the Personal Information Protection Law (PIPL), which creates strict barriers against the export of user data. Consequently, F1 cannot easily deploy the data-heavy "Arcadians" digital currency system used in Western F1 Arcade locations. Instead, the strategy leans on physical infrastructure where Juss Sports acts as the regulatory shield.

The Shanghai Pudong Football Stadium, also managed by Juss Sports, features dedicated "professional esports facilities" (Coliseum Online, 2020). This infrastructure positions Shanghai as the natural hub for F1’s sim racing expansion in Asia. However, this will likely operate as a licensed model with a siloed technology stack to ensure compliance with Chinese data sovereignty laws, limiting the global data integration that Liberty Media achieves in other markets.

Conclusion: The Valuation Multiple of a Lifestyle Brand

The transformation of Formula 1 under Liberty Media is a case study in modern sports management. By moving beyond the rights-holder model and entering the "Experiential Economy," F1 is systematically de-risking its business. "Other Revenue" is evolving from a peripheral income stream into a stabilizing force that smooths the cyclical lulls of the racing calendar.

Feature	F1 Arcade	F1 Exhibition	Fanatics Partnership	China Strategy (Juss Sports)
Primary Entity	Kindred Concepts Ltd.	Round Room Live	Fanatics, Inc.	Shanghai Juss Sports Group
Revenue Model	Hybrid: Food & Beverage (~80%) + Gaming (~20%)	Gate-Driven: Ticket Sales + Merch + Promoter Fees	Vertical Commerce: Royalty % + GMR	Licensing Fee + Promoter JV Share
Key Financials	£31.9m Group Rev (FY24); $130m Raised	Ticket Yield: £14 - £33; Record Presales (Toronto)	12-16% Est. Royalty; 94m Fan Database	Contract Extended to 2030
Asset Strategy	High CapEx: 30 Venues by 2027; $5-10m/site	Roving Asset Heavy + Permanent Hub (Vegas Plaza)	Asset Light: Inventory Risk Transferred to Partner	Market Specific: State-Owned Infrastructure
Primary Risk	Operational: Complex tech stack & latency (<20ms)	Logistics: Damage to high-value artifacts during transit	Concentration: Reliance on single global commerce partner	Regulatory: PIPL (Data Sovereignty) & Geopolitics

The financial commitment to this strategy is absolute. The $130 million financing for F1 Arcade and the nine-figure investment in Las Vegas infrastructure demonstrate that Liberty Media is willing to trade short-term free cash flow for long-term enterprise value. They are building a business where a fan in Boston can race a simulator, a fan in London can view a burnt chassis, and a fan in Shanghai can attend an esports tournament—all on a Tuesday in November when the engines on the track are silent.

The risks are real. The operational burden of managing hospitality venues, the technological dependencies on niche simulation vendors, and the geopolitical complexities of China require a management bandwidth far exceeding that of a traditional sports league. However, if successful, this strategy does more than just generate revenue; it transforms Formula 1 from a sports league into a global lifestyle conglomerate, commanding the valuation multiples to match.