Photo Credit: Scuderia Ferrari
Liberty Media, Formula 1’s commercial rights holders, is facing one of it’s biggest challenges: promoting a Grand Prix weekend by themselves. The long-awaited Las Vegas Grand Prix is set to reach almost $400 million (£313.7m) in set-up costs. Heavy roadworks have been done on the Las Vegas Strip and other public roads that will make up the race’s circuit in order to construct a permanent pit building and paddock.
Greg Maffei, CEO of Liberty Media, said on a call with investors that the price of building the race’s infrastructure had gone over budget: “I am pleased to say preparations are running on schedule, and despite inflationary cost pressures, we expect no change in revenue and profitability assumptions that we laid out previously.
“We are increasing capital expenditure estimates for the paddock building and track work.”
However, he assured his investors by affirming that the Grand Prix will be one of the biggest sporting events of the year.
“The Las Vegas team is pulling together an event of unprecedented complexity and scale.
“It will be the largest and, our argument would be, the most premium sporting event of 2023. It’s a view that’s a testament to our Super Bowl aspirations for all our grand prix events.”
Brian Wendling, Liberty’s chief accounting and primary financial officer, insisted that this rise in expenses will not affect the running and the expected revenue from the weekend, saying:
“For the quarter on SG&A [selling, general and administrative expenses], we had $7 million (£5.49m) of costs associated with LVGP.
“On Vegas, there’s no change to our revenue and profit expectations for the race in year one.
“Our paddock building is now 85% complete. We expect CapEx related to the Vegas race – including both the paddock building structure and track-related capex – to be close to $400 million, of which approximately $155 million was incurred in the first half of the year.”
In the same call, Renee Wilm, CEO of the Las Vegas Grand Prix, outlined some of the logistical challenges associated with preparing the city’s infrastructure for the competition, adding: “We’ve entered into a couple of challenges as we’ve uncovered asphalt, cables under the ground that needed to be addressed.
“There have been wires overhead that have needed to be moved. A lot of this was driven by the requests and, quite honestly, requirements of the local stakeholders as we began this process of preparing the track for actual usage. We’ve also encountered some additional requests from the local stakeholders, such as the casino properties around enhanced security around opening and closing the track. So this has led to additional equipment that was needed, as well as just additional actual road work.
“Of course, with regard to the paddock building, it is being built at lightning speed in an inflationary environment. So as you can imagine, there have also been some additional costs along the way in that regard.”
