F1's US Popularity Fuels Investment from Top Morgan Stanley Fund
Amidst Formula One's (F1) surging popularity in the United States, a renowned Morgan Stanley fund has recognized its investment potential.
Kristian Heugh, managing the $14.6 billion Global Opportunity Fund, acquired a stake in F1 owner Liberty Media Corp. in Q3 2024. With a 27% return rate, Heugh's 34-stock portfolio surpassed 92% of its peers in 2024, as per Bloomberg data.
"F1 is potentially one of the world's most distinctive assets," Heugh stated. "Its viewership is expanding, particularly in the US, outperforming many major sports facing declining viewership."
Previously perceived as an elite European motorsport, F1 has gained traction in the US, partly due to Netflix's popular documentary series. Notably, Las Vegas hosted its first Grand Prix in four decades in 2023, attracting 300,000 attendees. This year, three races are scheduled in the US, including Miami.
According to ESPN data, 1.1 million viewers tuned in to races on its platforms last year, narrowly missing the 2022 record but doubling the 2018 audience.
On Wednesday, Liberty Media shares rose approximately 2% in late New York trading, approaching their recent record high and following a 47% surge in 2024. The company plans to spin off Quint, a provider of ticket and hospitality packages for sports and entertainment events. Additionally, its acquisition of the MotoGP World Championship is underway, despite facing an EU investigation.
Beyond the untapped US market, Heugh sees allure in F1's brand and its long-term contracts securing "tremendous visibility." Furthermore, he anticipates escalating rivalry among streaming services to enhance the value of sports rights.
Although automakers are transitioning to electric vehicles, Heugh believes electric racing technology remains nascent for long-distance performance. The implementation of a hybrid system next year and F1's commitment to carbon neutrality by 2030 should appease sustainability-conscious fans.
Heugh also highlights F1's appeal to younger audiences and its growing social media presence, mitigating the risk of declining fan engagement.
"I was astounded that my kids were enthralled with F1, something I wasn't interested in," he remarked. "That was a wake-up call for me."