Benchmark has a buy recommendation for Formula One Group (NASDAQ:FWONA), even as the International Automobile Federation’s honcho Mohammed Ben Sulayem appeared to throw cold water at a reported purchase price comes from Saudi Arabia.
Reports surfaced on Friday that the Saudi sovereign wealth fund was evaluating Liberty Media’s purchase of Formula 1 at a price Priced at over $20 billion including debt.
Ben Sulayem tweeted on Monday: “As the guardian of motorsport, the FIA, as a not-for-profit organization, is wary of the allegedly inflated $20 billion price tags imposed on Formula One.”
“Any potential buyer is advised to use common sense, consider the greater good of the sport and come up with a clear, sustainable plan – not just big bucks,” he continued.
That’s what Formula 1 did Accuse Ben Sulayem of meddling with its commercial rights (which it acquired in a 100-year deal in 2001, while the non-profit FIA ultimately owns the rights to the championship).
“The FIA has given an unequivocal undertaking that it will do nothing to interfere with the ownership, management and/or exploitation of these rights,” Formula 1 reportedly wrote to the FIA. “We believe that these comments, which originated from the official FIA President’s social media account, constitute an unacceptable interference with those rights.”
In any case, Formula 1 brings major benefits to global and US venues, said benchmark analyst Matthew Harrigan, ahead of a biggest-ever 24-race calendar for 2023 – and Audi’s entry in 2026.
“Beyond the appeal of Formula 1 as a platform for brand growth, the improved sustainability and efficiency profile of Formula 1 contributed to Audi joining Formula 1 with Sauber as a strategic partner in 2026,” said Harrigan. “The rising media attention of Formula 1 now includes a Brad Pitt starring Formula 1 film, produced by Lewis Hamilton and also starring action legend Jerry Bruckheimer.”
A valuation model linked to the S&P 500 suggests Harrigan’s enterprise value is $18.6 billion, “moderately below” the alleged $20 billion Saudi bid. He is sticking to a price target of $73, which means 16% upside potential.