Thanks for the great feedback on last week’s edition! Please keep it coming by responding to this email or on social media (LinkedIn, Twitter).

Forwarded this newsletter by someone in your network and want to receive it yourself? Subscribe here 

Good Thursday Morning. Here’s the rundown of this week’s Sports Business Playbook:

• 📰 This Week’s Topic: F1’s Alpine Racing, owned by French automaker Renault, is bringing sports and entertainment stars on as investors. The goal: maximize exposure for a historically mid-field team.

• 🍸️ Impress Your Friends at Cocktail Party: Want to show off your sports knowledge in a public setting but don’t have time to read the deep dive? Hit the “Impress Your Friends at Cocktail Party” section at the bottom for a CliffsNotes of this week’s topic

• 🤯 “Whoa of the Week”: Another feather in the cap for women’s sports

• 💪 Weekly Reminders that Sports are Awesome: Two NFL players’ first baseball game, and one rookie’s improbable journey to the NFL

Hey team,

Earlier this week, F1 racing team Alpine (pronounced “Al-peen”), owned by French automaker Renault (“Ren-O”), announced a new group of investors, and it included some of the biggest names in the sports world:

• Patrick Mahomes

• Mr. Taylor Swift himself, Travis Kelce

• Northern Irish golfer and LIV Golf pugilist Rory McIlroy

• English boxer and former heavyweight champion Anthony Joshua

• English footballer Trent Alexander-Arnold

• Spanish footballer and World Cup champion Juan Mata

These stars, plus the already announced Otro Capital, RedBird Capital Partners, and Maximum Effort Investments — also known as Hollywood stars and Wrexham FC co-owners Ryan Reynolds and Rob McElhenney, took a 24% stake ($210 million) in the F1 team.

This is a motley crew. Yes, these athletes and movie stars are rich, but they’re seemingly random and not comparatively rich to the billionaires who are involved in F1.

So, why is Renault doing this? The $200 million cash injection is great for the health of the team, but given how hot F1 is right now, they could easily source this money from any number of high net worth individuals or investment groups. Why these guys?

The answer lies in looking past the check sizes and understanding Renault’s global marketing strategy.

A Formula that’s a Winning One

F1 is the global racing circuit that has been on the ascent since being acquired by Liberty Media in 2017 for $4.6 billion, and it has exploded in the United States in recent years thanks to Netflix’s Drive to Survive series.

A couple of reference points:

• Revenue jumped from $2.1 billion year-over-year to $2.5 billion in 2022, and up from $1.78 billion when Liberty Media acquired it in 2017.

• All 10 teams made over $150 million each last year, with Mercedes leading the way at $524 million. The two main areas of revenue are sponsorship revenue and a percentage of the total F1 revenue that is allocated to each team based upon their race results.

• According to Morning Consult, more than 1 in 5 F1 fans (22%) said DTS was a “major reason” they became fans of the sport, and 30% said the same last year

With this financial success and growing popularity, valuations have skyrocketed in recent years.

For example, Dorilton Capital bought the lowest performing team, Williams Racing, for $179 million in 2020. That same team is now worth ~$800 million (+450%) in Sportico’s 2023 valuations.

These rising valuations have caught the attention of investors, including the group at Alpine/Renault.

Renault is a massive French automaker — $48 billion USD revenue last year — that has been involved in F1 in some form since the early 1980’s. Their racing team now goes by Alpine, which is their luxury sportscar brand.

On the track, they are…fine.

Alpine is in what’s known as the “midfield,” which is the group of teams that is usually vying for 4th (and sometimes 3rd) because Red Bull, Mercedes, and Ferrari have been at the top of the sport and fighting for 1st for the last decade plus. As expected, Renault/Alpine’s best finish in the past 8 years has been that 4th spot.

The racing team’s business performance looks similar — it sits squarely in the middle of the pack, with the 6th highest valuation ($1.08 billion) and 4th highest revenue ($261 million) and operating profit ($35 million).

From a social following (IG, Facebook, and Twitter) perspective, the team is 5th as of 2022, according to PlanetSport:

1. Mercedes: 25.6m

2. RedBull: 24m

3. Ferrari: 18m

4. McLaren: 17.1m

5. Alpine: 6.6m

Similarly, their drivers — Pierre Gasly and Esteban Ocon — are both likable and capable drivers but they do not have anywhere near the star power that the major teams have with the likes of Lewis Hamilton (Mercedes), Max Verstappen (RedBull), and Charles LeClerc (Ferrari).

Even though it is firmly placed in the midfield right now, Renault has aspirations of growing both on and off the track, and it believes this new investor group is one key pillar in that strategy.

The French Connection

While F1’s popularity has grown exponentially in the last few years, as noted above, most fans are gravitating to the top teams — Red Bull, Mercedes, Ferrari, McLaren.

This leaves the remaining teams looking for ways to grow their addressable audience. In this instance, increased addressable audience means more visibility, which means more sponsorship revenue — one of the key drivers of a racing team.

As noted a few editions ago when talking about the MrBeast-Charlotte Hornets jersey patch deal, there is a widely held thesis that stars can bring eyeballs to sports properties because fans, particularly younger ones, are more likely to be interested in the things their favorite influencers are interested in.

Renault/Alpine wants to ratchet this concept up to the max with its investment group.

The individuals mentioned at the beginning bring nearly 100 million Instagram followers and are incredibly diverse in terms of the audiences they attract and geographies they are popular in. Plus, Reynolds and McElhenney are riding a major wave of publicity coming off of their recent success with their other sports investment, Wrexham FC.

Alpine sees this shared platform as a force multiplier and eventual flywheel:

1. Massive increase in distribution network for content that will grow fan interest and affinity in the team (visibility).

2. This expected visibility should lead to increased revenues from sponsors who want to be a part of the journey.

3. Those revenues can then hopefully elevate Alpine to the top of the midfield and eventually compete for a championship, which brings increased visibility and revenue. Rinse and repeat.

But, this potential flywheel also hopefully carries into activities outside of racing for Renault.

Win on Sunday, Sell on Monday

Renault’s revenue has steadily decreased in the last five years, and it is looking for new marketing concepts to drive additional sales. Plus, the French automaker is reportedly reentering the US market in the next few years for the first time since 1987, and it is going to need a ton of advertising firepower to gain the requisite market share.

This investment group helps with both of those.

Car manufacturers that also have F1 teams, such as Mercedes and Aston Martin, believe that there is a correlation between on-track success and automotive sales for their brands.

One eye-popping number from a brand health study that Aston Martin conducted in January: 96% of customers believe the association with F1 increases their consideration of the brand.

Renault is likely thinking along the same lines here and expecting on-track success to translate to commercial success. As Aston Martin team owner Lawrence Stroll says in the NYT article, “win on Sunday, sell on Monday.”

Plus, it does not hurt having this many major celebrities from an array of key markets as potential spokespeople for the brand.

You can already hear the writers’ room at Reynolds’ Maximum Effort ad agency hard at work.

🍸️Impress Your Friends at a Cocktail Party

Want to show off your sports knowledge in a public setting but don’t have time to read the deep dive? This section is the CliffsNotes of this week’s topic

• Opener: A star-studded list of athletes and celebrities, including Patrick Mahomes, Travis Kelce, and Ryan Reynolds, are a part of a group investing $200 million for a 24% stake in the F1 team Alpine, which is owned by French automaker Renault.

• Shot: Due to better business practices and the success of Netflix’s Drive to Survive, F1 is rapidly growing — revenue jumped from $2.1 billion to $2.5 billion last year — and team valuations are skyrocketing.

• Shot: Alpine is a “midfield” team both on and off the track, ranking somewhere between 4th and 6th out of 10 in racing as well as business and general following.

• Chaser: Renault/Alpine plans to harness these stars’ massive social media following (i.e., nearly 100 million Instagram followers) and use it as a force multiplier increasing the distribution network for content, growing fan interest in the team, and attracting sponsors to boost revenue. The ultimate goal is to propel Alpine to the top of the midfield and compete for a championship, leading to sustained visibility and revenue growth.

• Chaser: The potential benefits can extend outside of racing for Renault. Renault is preparing to reenter the US market, and it needs major advertising to capture market share. Car manufacturers with F1 teams, like Mercedes, Aston Martin, and Renault, believe that on-track success correlates with increased automotive sales. Renault is aiming to convert increased on-track achievements due to this investment group into commercial success, echoing the racing adage "win on Sunday, sell on Monday."

🤯“Whoa” of the Week

Insane, mind-blowing things constantly happen in the sports business world. Here was my favorite of the past week.

1. The wins continue to stack up for women’s sports

💪Weekly Reminder that Sports are Awesome

This newsletter is, of course, mostly centered on the business side of sports and the things that happen off the field. That being said, it’s important to remember why we fell in love with sports in the first place, though.

This section is meant to highlight the amazing things that happened in sports this week that serve as that reminder.

1. Philadelphia Eagles players D’Andre Swift and Terrell Edmunds were mic’d up for their first ever baseball game. It was Game 2 of the NLCS between the Phillies and the Diamondbacks.

2. The LA Rams’ Byron Young has an incredible journey to the NFL.

Thanks for reading! Let me know what feedback you have.

Also, if you enjoyed this breakdown, please consider sharing it with your friends and network by clicking the social media icons at the top of the newsletter.

Until next time, sports fans!

-Alex