Sirius XM Inc. (FWONK) Earnings Call Transcript & Summary

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[Audio Gap] It's an exciting new chapter. As you look at more broadly at kind of the next few years of F1, what are the growth levers that you're most excited about? To the mic, please.

Thank you, Shane, and thank you all for joining either through the webcast or in-person. Look, I think we're blessed that there's an opportunity actually in all the lines of the business. We've seen major uptick in broadcast, for example, in the U.S. this year, and I think we have opportunity to grow broadcast really around the globe, particularly as we've seen new digital entrants begin to become bidders or potential bidders on airing our process -- product rather. In addition, we've seen growth in our own digital product, which I think speaks well to why they might find it appealing. If you look at the line around promotions. Obviously, we're going to have a major uptick this year with Vegas. But we're also seeing increases in our promoter fees everywhere we renew. And why are they willing to pay us more, partly competition because there are more cities that want to have a race, but also the fact is that they're able to grow their races, have higher attendance at higher prices. So all that bodes well, I think, for that line. And then the sponsorship line Brandon here in the front row, we can put him on the spot. We nearly tripled sponsorship over the last 3 years, I think it's about that about, right? And I'm expecting Brandon will triple again in the next 3 years. No, we'll have -- I think there's a lot of opportunity. And Vegas actually, I think, could be a great kick start for that. We've seen it both ways. We've seen anticipation, some new sponsors coming in because of Vegas and the work that Brandon and Renee have done, and Emily. But also, I think once we have the event in Vegas, there's going to be a whole new recognition for Formula One in the United States, which still is our most important sponsorship market. And a night race down the strip that's going to be iconic, that 10 o'clock view. And I think a few Americans will not have seen that view at some point. That is going to be on every piece of television imaginable. And I think that is going to kick off a new round of sponsor interest as well and more broad sponsor interest. We have some great brands we're very happy with, but I think we'll continue to broaden out, and you've seen some of that already with new -- the brands that are coming in and entering are probably more in the consumer mindset and the broader consumer mindset. And then some of the other lines like hospitality, we've seen only growth in Paddock Club interest, Paddock Club size, Paddock Club pricing. So I'm pretty excited about every line of the -- frankly, in the P&L. I don't know Brandon or Stefano, if you'd like to add anything.

I would say that you were very spot on. I mean I can see that the opportunity of Vegas, we just enhanced the visibility and the awareness in this market that is huge. I believe that there is a lot of room to take with all the different products in the mainstream that we have in our P&L. And I think that the American audience will really understand better in growing up the attention next 1 month, we're going to be in Miami. In October, we're going to be in Austin and we're going to be in November here. So I think this is just really building up more and more attention that will spread all around the world. So I would say today, I think that in a humble way, we should be very, very proud of what we are doing because I think that we are stepping up the level of the game. And I would say that yesterday, we had the [indiscernible] with Craig in the sport meeting with other commission of the American sport. And it's great to share the fact that also they realize that we are there. Just a couple of years ago, I mean, I think that for Adam or for Roger will be very difficult to say what is Formula One. Now I would say they recognize us, and we were sharing something, for example, related to the format. We don't have to stop. We don't have to be compliance with the old guys that are saying, if there is a change, Oh, my god, what is happening. And I think on that, we take the lead, and we want to keep the lead on the sport business. So I would say all is looking good. But as always, when everything is looking good, we need to be humble and making sure we do the right thing. And I'm sure that later on, Renee will have the chance to explain what is the incredible expectation that we are having here. And of course, for us, it is very, very crucial to have the best experience ever for our fan to become hearing in Vegas.

I'll go to that right now, Renee, question we received. I know we're still a few months out from the Vegas race. Wondering if you could talk a bit more about the vision and the opportunity in Vegas over the coming years. Any initiatives or ideas that eventually you'd like to incorporate that maybe aren't being done in year 1, maybe early learnings also taking on the promoter role.

Thank you, Shane. I would say year one is going to be a lot of learning. We're hoping to get a lot right. We want to create the most incredible fan experience we can and also create a great track for the drivers. We want our team principals happy, really trying to create the best events throughout the ecosystem. But I'm sure we won't get everything right year 1, and we're going to take those learnings, and we're going to improve upon the event in years 2 and beyond. We are blessed to have Clark County having already given us a 10-year approval to keep racing when we convince Greg to spend all the money on the land and the building. I think it was probably with a plan to raise for more than just a handful of years. And we're going to look to recreate and really reinvent ourselves. What can we do differently around talent, around customer activations. Early feedback is we need more general admission. Our fans are not happy. We don't have more general admission. That is something that we're going to address in follow-on years. But I think at this point, all we can do is head down, work hard and look forward to what's to come.

Yes, if I could add on Vegas. You -- I think there will clearly be a learning curve. We came to Vegas with a whole bunch of objectives: first, to be a promoter partly because we had ideas about what great promoter should do. And we probably thought if we were going to opine on that to some of our promoter partners, we might actually want to be a promoter so we can walk the walk as well as talking to talk. We also thought that Vegas was a great opportunity for all the reasons we've talked about economically. It also is really a great showcase. And our goal here should be to be -- sorry to all of you in the audience be long term greedy in the sense that we're going to have a high revenue stream here. We're going to have a high cost stream here, but it's more important that we have a great experience for everybody involved than that we coin at the first year. I think we will make a lot of money in Vegas over the long term. I'm very excited. I think we will make money, good money this year. But way more important than that is that we have a great experience for our drivers, for our patrons, for our -- bringing in the Augusta thing -- for our fans, for our viewers, for everybody involved. So that's the goal.

[indiscernible] related investors see the opportunity on rates promotion from self-promoting, essentially giving us potentially more leverage with our partners. Could you speak more about to what degree this could become a change with the other markets where you would maybe look to self-promote, or how can you leverage the learnings from taking on the promoter role, maybe start with Stefano and then others add on.

I think that what Greg says about Las Vegas was a clear opportunity that was important for us to take to maximize from one side, what we believe a promoter should do on the other side to leverage on this experience. I would say that the beauty of today is that we have a great bunch of promoters. And due to the competition that is around the world, everyone is really not only in terms of, let's say, contribution, financial contribution, they are getting better and better in preparing new experience for the fans, investing in new facilities so that is good. So already the effect on being asked the promoter here has already induced everyone to be better because, of course, we are there to make the best business ever. And therefore, if there will be other opportunity for sure, we're going to -- we will not be shy. But I think that on the other hand, I think that we are very lucky that today, the quality of promoters around the world is really very strong.

And they've raised their game. And I would say, in part, I credit the F1 management team for historically, the promoters were kind of on their own. Prior management called them the victims extracting money from them. And I think we've tried to take a perspective really credit to Stefano and before that Chase and team, [ Chloe ]. I was saying, how do we create the best experience, bringing them together to talk about shared experience at my table when somebody was asking, are the U.S. promoters looking at you negatively? I see they think the growth in the whole sport is good and the best experience for that they can learn from and have best practice shared is actually helping them all raise their game and do better and make more money.

A lot of reporters try to create detention where there doesn't exist among us and the [ Dalton and Bobby ], but the reality is Tyler and Bobby and I are talking quite a bit. We're talking about sharing resources. We're talking about how we can leverage each other's activations in terms of what's working and what's not. And we do believe that rising water raises all ships, and that's the intention, it's not to galvanize or cannibalize anyone else in the process of building something here in Vegas.

How do you think about the 3 American U.S. races, right? How do you think about maybe differentiating them? Are there brand identities to each year 1 and maybe beyond year 1 as well?

Well, I think that it's pretty clear that every raising not only America has a different personality, a different cultural approach, a different quality, different segmentation of fans. And I think that having 2 races here in the U.S. And by the way, sometimes we forget that just a couple of years ago, we were thinking, do we really need to stay in the U.S. It's really the market we should be on. And thanks to the stubbornness is it the right way to say of us. We are here and...

How about tenacity.

Tenacity, sorry for my word, I would say, we had 2 races last year with Miami. And this year, we're adding another one. So in the blink of an eye, we are getting there. And I think that as Greg was mentioning before, also Renee, I mean, now also Austin was the first, second Miami, I understand that it's just a bigger benefit for everyone. So I don't see any kind of cannibalization. Everyone is different. Everything is different. So events are different. Quality is different. So I don't see any problem there.

Look, each of them is going to have things that are unique and distinctive. The fan festivals at Austin, given where it is and the spread it has, are not going to be matched either Miami or in Las Vegas. It's not -- the contour is what's available, doesn't do it. The tower that they have, the concert that they have, the way they do it on that, that's hard to beat. That's a very distinct experience. What Miami has, there's going to be no beach here. There's not going to be the same thing. Miami has a lot of things that are very distinctive as well. And then -- and obviously, those are races that are on tracks or different form, Miami, different than Austin, and then we're going to be a street race on a very different form and a night race. So they all have distinctive differences, and I think they will all develop their character. Miami is fairly new, we're totally new. They'll develop their character and their distinctiveness over time.

Stefano, how do you view the optimal mix of races on the calendar? And how do you balance historic or supply away?

Well, actually, I think that the balance we are now is pretty good. I mean, as you know, this year, we had to give up the possibility to be in China due to the COVID restriction and COVID uncertainty. But I would say in terms of numbers, 24 is the right number. And the mix and the continents that we are having today, I think, is looking good. I would say that in terms of a possibility in the future, as you know, there's no secret on that. We are still seeing if there is a chance to go to Africa because it's the only country that is missing. But on the other hand, I would say the only comment that I'm always saying to our promoters when historic is only looking behind, there is something that is not good. When historic is a good foundation to look ahead with a different future, that is beautiful. So that's why with the so-called historical Grand Prix, we are really focusing in understanding what is the view of the future. I mean to be arrogant and believe in that you have a granted future because you had the race since 100 years. We're very honest. It's not enough. And there's a sign of respect, is not enough for the tradition of these places. And I think that in this moment, everyone is understanding that, and we are not playing any games. We are very transparent with them. We are saying that if they want to be in the calendar, they need to do the things that we believe is right for them and also for us as Formula One. So I think that I would say that the number and the quality of races are respecting also the so-called historical one. But it's pretty clear that in the next -- in the last couple of years, the perception from these historical places has changed because they realize that the landscape is different.

Okay. So Greg, I just wanted to ask about the -- to the degree you can address it. The discussion around M&A. There's been obviously reporting about maybe some overtures. I'm not asking you to comment specifically on things really. You guys are known as people know how to hold, know how to manage, when you buy when you sell you have [indiscernible] you have multi-share class structure here, have a lot of kind of things in your discretion. What can you tell us about how you think about the appetite for you to think about options and for others to look at this, we kind of manage that [indiscernible] meaningful is at, at this point?

Thanks, Barton. You've had a long history as many in this room with us. And you know given just this tracking tax structure we have, the likelihood that we would be a near-term seller, seems unlikely, right? Because we'd be incurring corporate level tax, that's anathema to us and would not be good for our shareholders. But more importantly, as far as -- but the opportunity is we think it was kind of funny that some of the comments that, oh, the prices that were allegedly discussed at meetings that I never had, but okay, allegedly it was in -- they didn't seem like higher prices at all. We think there's more opportunity here. And we're long-term holders because we see some of the things I outlined early, I mean putting the finger on Brandon to deliver more sponsorship for us. But no, I do think there's a huge opportunity. And so this is a good place for our capital to be and we think we're going to compound well, we have compounded well. We bought in at $21 a share, I don't know, I think it was mid-70s to this morning, mid-low 70s, in a pretty good run. We think there's more to go. We also think there's a lot of opportunities that are going to open up potentially for other places to put our capital. You're seeing some of it here, what we've invested in Las Vegas, over $500 million. We think we're going to get a very good return on that money. I think we're going to get -- we're going to see opportunities around the sport to grow elements and put our capital to work, could be M&A related. We've looked at other things in the past that we're around the sport where we thought we could be synergistic and add value. I think there are some of those. We're constantly looking at those. And I think there are a couple now that are attractive, the success, who knows. We haven't bought anything in the last 3 or 4 years, maybe that was smarter or maybe it was stupid, but much has been a fact. I think we will see more opportunities now in this kind of environment we've excelled in, in the past, and I hope we can excel again.

Peter Supino, Wolfe Research. To the extent that the Las Vegas Grand Prix gives your team a template best practices for how to make even more money at these events. How long does it take you to use that and globalize it and encourage your partners to learn from the example and drive up the value of other events?

Stefano, do you want to...

Yes. Well, I think that Renee was saying something very important. We need to be humble. We know what to do. But also, I think that we put in place ideas that other promoters take with a lot of experience. So I think that the chance for us to create a perfect experience for our fans will be, of course, be able to be used as inputs to other promoters in a way that could be respected the differentiation of every Grand Prix because that's something that is key for us. Every single Grand Prix has to be different, unique, the quality on the top, of course, but I think that we're going to be the Monday after the race that the briefing we're going to have together, I think, will be very important because from that, we're going to send a lot of inputs to our friends that were looking at us because the first, you're going to see this Grand Prix with a different eye will be the promoters that are working with us since many, many years. Of course, it's also for us a big challenge in a positive way to show what we believe is the right thing to do. And therefore, it's a good place where we can, for sure, learn and improve the ecosystem in the right way. So I'm very positive about it. And I think at the end of the day, next year, everyone will benefit from the experience that we're going to have here in Vegas.

I'd just add one thing that we have a phrase sometimes it's called dealing with pride. And what I mean by that is, we want to share with all of our promoters best practices, right? The things that work that we know that we can scale and they can bring to other partners that they elevate their game. So we have a group of people inside the company who are focused on building those best practices and sharing them with the rest of our promoters so that we are raising the game across the board and talking about what works and what doesn't work well. And there are other sports industries that do this quite well, but we're going to build on that as well. So we want to make sure that we take the things that work and help them be implemented in other markets in the way that they should be in that market.

And if I can, Greg. I would just add to that. And we've found this even over the last 12 months that we're more sympathetic to the promoters because now we actually understand what they go through. day in and day out, dealing with permitting, dealing with track design, with selling hospitality, building hospitality in an inflationary environment. And I think we've been able to work with Brandon's team to really reach out to the promoters and further enhance those relationships and help the negotiations, say, okay, here's what we are seeing as a promoter. Here's how we think we can get to a better deal with you. And I think we've been able to really employ that for the benefit of everyone who's been renewing this year. The other thing I would add to that is Brandon and I have been working a lot around sponsorship. There's a great halo effect to Vegas to global and global to Vegas. And now we're also looking to share some of those opportunities with our local promoters by bringing them into the deals is benefiting us, it's benefiting them.

I also think it creates sort of back to, Barton, your question about places where you put our capital, where we're not necessarily going to be the promoter, but maybe we have a role where we're investing alongside. I think there's a role for us in hospitality in a bigger way. I think you'll see us do things around that where we can be synergistic and we can be helpful to the other promoters. So I think you'll see us look for those kind of ancillary opportunities around the track, around the business that are attractive and high return, which are beneficial to us and to the other promoters.

Not that you all need more teams, but I think there's a lot of demand, Porsche comes to mind. And the fee right now is $200 million. I don't think the teams are very interested in $200 million. So under the Concorde Agreement, can you -- where does that need to get to, to get teams interested? As I recall, you guys don't share in that fee. So you're just trying to do what's best...

Always, Jeff. Always. Well, actually, I think as you know, the process of having another team has been launched by the FIA in our [indiscernible] our Concorde, that's [ opposite ] to do it. But the evaluation is -- has to be done together to see from the technical perspective, from the sporting perspective, for the financial stability and to make the bigger picture if annuity will give value to the league to the sport. And there will be a different position. And I go back to one point I was said at the beginning. The figure that we're seeing is the so-called antidilution payment was down $200 million just a couple of years ago -- a couple means 2 years ago because at that time, no one would have expected that the value of this business would have rise up so much. Today, the difference is that the situation is totally different for sure. And it's our duty to make sure that we protect the business the best way that we can, and have a bigger picture. Today, there's so many that would like to come. There are teams that are more vocal than others. Some of them are much more silent, but they are really expressing their interest. As always in life, there's someone has to meet that evaluation, and we are part of this process, and we're going to do the right thing at the appropriate time during this year.

And then I just had one follow-up about actually the racing this year. I mean realizing it's still pretty early. The Red Bull is dominant, specifically in the DRS zones. You've had some people, people tend to complain, but maybe they actually aren't pushing as hard as they can because their setup is so much better than everybody else. Is that something the FIA kind of reviews? And do you feel confident that the competition you can come up with packages to compete? Or are we going to see Red Bull run away with again this year?

Well, let me comment on this point in a quite detailed format. Of course, first of all, if a team is faster than the others, congratulations, they did a better job than the others. It's the duty of FIA, the regulator to make sure that they check the compliance of the car with the regulation. If you look at the others of the bunch of the other teams are very close, very, very close. I'm very confident that with the budget cap, this situation will evolve in the best way for the better competition. But on the other hand, there is thing that I was just discussing in my table during lunch. What is interesting to see in the new markets when the new audit is coming in, that is not a really important factor. It's more in the, let's say, for the avid fans that if you see a card that is dominant, they're creating a level of less interest for the new market, for the new fans that are coming to the business, this is not really very important. And for us, it's involved because we want to make sure there is a great competition in the ecosystem. But I would say, if I look today in the market where we are growing, this factor is not so relevant as you think. And this is, in a way, very interesting to share, but that's the truth. And I would say you said one thing that is important, it's too early and too premature. For sure, we see the first 3 races, Red Bull was very, very competitive. I'm expecting the other to catch up. We need to wait and see the effect of the penalty that they had last year with the wind tunnel reduction. The [indiscernible] is very long. And I think we're going to have good surprises before the end.

And if I could just add, the history of Formula One is that there have been teams that had to run. Red Bull had to run, Mercedes had a long run. But if you look behind that, we're actually seeing more overtaking and more competition than ever. There is I think we can look statistically, there has been more overtaking this year than in prior years, and I think you'll see more of that. So there is excitement on the track. And as rightly as Stefano puts on -- points out its 3 races. We'll see how the year goes.

I guess 2 questions probably for Greg. One is on capital allocation. You're at very un-Liberty-like leverage levels at F1, as you know, and continuing to come down. And one question we get a lot...

Interest rates are up.

I heard, investors is just -- any use of capital is -- you have such a high multiple asset in F1, that it's like a little bit of the winner's curse, right? Anything you buy or invest in may be less attractive in the eyes of the market. I'm just wondering if you think about that as you think about the opportunities to put capital to work, and then I wanted to ask you about media.

No, no, it's a fair point. I mean back to the winner success, we have a very high multiple asset. I think that multiple is probably merited given -- this is a business we started out the year barring COVID like events. We started the year with 95% of our revenue locked down. Maybe there's a go-get on 5% to 10% at most, again, put it on Brandon. Sponsorship is probably the big variable, right? There's some upside in some races, but most of them were contracted. Vegas will be an upside race, but they're -- a lot of them are contracted. So we have reasons to why this should have a very low WACC, it's a very secure business, lots of tailwind, all good. We think we will find synergistic assets around. And hopefully, we can convince you and representing Mr. Market that...

Jason is not here.

That we're doing something that's smart and thoughtful with that. So far, the biggest thing we've done with the capital is put it over there in the ground. And I think, hopefully, you all having toured it, will agree that looks like a useful investment. But I do think there are -- and hospitality is one area, trying to build packaging around that is an area I think we could be synergistic. I think there are other motor sport assets that we've looked at in the past that we'll get opportunities on that would be synergistic. We will try and find smart things to do. And if we take a flyer in the sense that it's not absolutely in the wheelhouse, I hope we'll convince you that, look, our track record is meritorious that you'd go to give us the benefit of the doubt that we're playing for the long haul and it's beneficial.

That makes sense. And just on media rights, it's obviously a big topic these days for a variety of reasons. Any, I don't know, concern on your part or any opportunity you want to take to dampen expectations around, what everyone just sees is this like up and to the right -- media rights environment? Because you look at the Disneys of the world and what they're doing, the year of efficiency at every tech company. Should we be thinking about a fundamentally different environment for a while than what we've seen in the last 5 years?

It is a great question. You've got 2 curves running, right? The traditional linear players who are all talking about cutting where they're spending my good friends [indiscernible] talking about how he's not -- what he's going to do with his RSNs and what he's going to do on basketball. You have, obviously, digital players rising up, when do those curves cross and be meaningful, we'll see. We have an enormous benefit. We are not getting that much money by the scale of these things, right? Forget the NFL, forget baseball, forget basketball, we are way down the curve. So we were able to get an enormous pop in the U.S. because we started out at such a low number. And a negative perhaps as we're not a massive tonnage sport, but in a way, that is a positive. They can say this is -- these are -- I was listening to Stefano describe how we're going to create amazing experiences at each of these races. Chase used to call it each one as a Super Bowl, and our opportunity to make each of them tentpole events is good for some of those broadcasters. We may not be the 162 games that my friend, the Braves are playing, but we're a different kind of success that could be meaningful and it's not so much money. So there is these 2 trends running. But the positive is, we're starting off a low base with a rising demand and demographics, which look great compared to a lot of other sports. So I can't tell you with certainty that all plays to the positive, but when I weigh the wins of the negative and the positive, I feel pretty good.

A question for Stefano. Obviously, I think you need team permission to go above 24 races?

25. Over 25.

Over 25. So we don't obviously know what the calendar is for next year, and we all try to think about the growth curve. Is it -- and I think one of your interviews you've talked about like 32, do we be thinking about this actually going to be in 30-plus markets in 5, 10 years?

No. Negative. For many reasons, I would say there's no secret. The next year, the objective is to have 24 races. And that comment was just related to the fact that we are in a situation that never have before. Once again, I started to look over behind not forget anything. Just a couple of years ago, we were hosting. We were organizing 15 races, 15, and some of them in the old world, were paid to have a number of races to have a world championship. But now to see the interest that is growing so much is just a great asset to make sure that we maximize of course, the financial perspective, but also the qualitative performance of each promoter. And then it's up to us to understand what is the best strategic development in terms of new opportunities that may develop in the future to have eventually a rotational base for certain Grand Prix that they're ready to discuss about it and to invest even stronger with the ones that we believe that could create a great step in terms of our business growth like in U.S., for example.

So Stefano, perhaps towards that, and you can talk about, look, we have a calendar, some of which has historical reasons, gotten to 24, it does drain people, and there's a lot of travel. And you might want to talk about how you're trying to optimize some of those races for efficiency guys.

We try, of course, every single promoter has some reason to have a certain weekend, a certain opportunity. Now we try to make sure that in the year after year, we have a quite leaner approach as much as we can in order to minimize the movement because, of course, we have a very ambitious target with our carbon neutral in 2030. That is a big effect. We had a world championship. We are not doing that in one single region. We're moving all around the world. So we take that very seriously. So we're going to try to be as much as effective as we can in order to minimize the ups and downs from different regions, different countries. Of course, knowing that we cannot have, for example, 4 races in a row in the same continent because they're going to have a problem commercially and for other reasons. So -- but for sure, there is a lot of attention in this subject in order to develop the calendar is the best read that we can.

Greg, you mentioned Brandon and sponsorship a number of times. So I don't know if that -- maybe that's an opportunity to ask him about where he sees the opportunity. You mentioned the U.S. maybe there's other verticals, other regions where you see F1 is underpenetrated?

Yes. I mean, clearly, we see a big opportunity in I'll call the region, right? So North American region, if you from my perspective, I look at not only the 3 races we have in the U.S., if Canada, if Mexico, you can have Brazil, from a time zone perspective, that works very well for regionalization opportunities. So we're really exploring that area of how can we find big large-scale brand partners that might just want to focus on certain regions before they go to a global position? And then we're going to leverage technology to bring them into the market. So you're probably aware that there's companies like [indiscernible] and others out there that work across other sports. Our ability to sort of put virtual branding into every race, but only seen in certain regions allows us to begin to break things up in a way that we can monetize the region very specifically, right? So every race coming into the market, you can have a brand but only seen in that region, right? So we can begin to then look at regional opportunities. There's categories like telecommunications, tough to find a global partner in telecom, right, because it regionalizes a business. but you can begin to break that up and monetize it and collectively put that together in ways by having technology provide a benefit. So we're really spending a lot of time in exploring that. We work together very closely with Renee on how that will build across the U.S. and into the region, and you'll start to see a lot of that from us as we think about not only global opportunities, but how we regionalize in such a way that we can scale, if that helps.

And perhaps worth commenting also, look, historically, this was sold as paint on the track, and the opportunity to sell not only regionally but to sell on eyeballs, to sell on the digital presence to sell a very different kind of experience, partly around activation. Our sponsorship opportunities are growing because we're getting a lot smarter and offering them a lot more in differentiated ways. I don't know, Brandon, if you want to add anything on that?

Yes. I can add one other thing, which is traditionally, this is a business that has just sold on how much track do you have and how many positions can I have on the track, right? It is not sold on the quality of the exposure. The quality of what you're seeing on TV is just been like, hey, here's some square meters we're going to sell you on a per square meter basis. So we're evolving that entire model to be much more about the quality of the exposure because we control the cameras. We control the broadcast. We know where we're pointing the cameras. We know the quality of every corner, the quality of every bridge, we can put LED rotational, those types of things that allow us to then go to the market and say, "Hey, look, it's not about how many positions do you have on the track. It's about the quality of that position and of the exposure that you're going to get in return. And that opens up a whole more -- a big world of opportunity that we can use the track for, beyond just being stuck into this ecosystem of but we only have so many square meters that we can actually monetize.

And one of the reasons to work with our promotion partners is, look, one of the things that big sponsors take an AMX want is not just that exposure, they want activation. They want on-site experience and our opportunity to build those and you've seen getting Brandon fired up.

Just we don't have AMX as a partner right now, just so we all know here.

The AMX people is -- they want to have on-site activation, which is exciting, seeing us now do things like we're building our own garage. You can go have an experience in that garage. We're doing things to create. Our sponsorship opportunities are not just how many feet you track, a widely different experience now and something we can monetize is one of the reasons why we should be bullish. We are bullish on our sponsorship.

The opportunity that we give to them is not only the traditional TV, I mean now social media with other product line access, we're going to have a movie. So in term of quality and quantity for our partners, the opportunities are getting bigger and bigger. That's why, to be honest, inventory has never been so full. And that's really, once again, this will push us to be more creative and....

And that's why thinking that 24 races is a limitation is missing that there's just ways we can grow our inventory in a very different way, make it more valuable than just saying, hey, you got 25 races or 23 races versus 24.

We're trying -- we're not selling on a per rate spaces. Obviously, there's sometimes that, that makes sense for a brand, but it's much more about what's the exposure and what can we bring to them from an experience perspective. I mean the B2B side of this is just what we can do within our hospitality emphatic and the ability to be a partner of that position without even being on the track is already very interesting for brands who live in that B2B space who need the customer side of things, right? So there's ways that you can build this, that aren't just about what brand is on the track. We see a tremendous amount of upside on that.

And that's not the way this business was sold 5 years ago. That's not the way this was done before. Real change.

So actually, just following up on that. When you look at entities like Manchester United, they have 50 sponsors. And so I'm just curious, how do you view the path to maximizing value? Is it having 50 sponsors, do you think you make more by having 7 or 8 very high-value, high paying like kind of global sponsors? How do you guys think that math is maximized.

Let me just start by saying, look, I think Man U has done an amazing job, but we are selling a differentiated frankly, higher-end experience. And there probably are limits on how many global partners we're going to have. The existing global partners, look, how many are you elbowing around. So we're trying to play that careful balance. We have a premium product, and we want to remain a premium product. So there is a balance on how we're going to do it. Man U is probably unbelievably good job. It's a little different, just on how much you want to max and how you want to play that game.

Sorry. And so the second part of that question was going to be -- I think that's accurate. I think you would -- we believe a little bit more in the, I'll call it, the IOC FIFA structure for us based on the way we have our product built, then how many logos can I stick on a jersey, right? And there's a lot of value and opportunity in putting sort of a smaller amount of global opportunities together that when you go to market, what you can pull out of the market in a very competitive environment, than just going back every 2 years saying, well, now I've got the Sleeve available, and I've got the training kit available, by going in and saying we were sort of -- I don't want to be restricted, but very careful on how many global partners we add. I think we can extract a tremendous amount of value from that position every time we go back to the market.

And so the -- is a limiting factor more -- is there any kind of -- you were saying in the way you sell this differently, it's not about paint and real estate. Is there a limiting factor other than just scarcity you're trying to create? Or are there other kind of more physical or practical mitigants to how much you can sell?

I can answer to that. I would say that the limited factor is the quality of our proposition. Global partners that we have today with us requires a lot of attention. They have been investing a lot with us. And of course, the dilution of the quality of the branding is a very important factor that we need to protect. I mean, with respect to Manchester United or other teams, I mean, I do remember very well who are the partners of us. And by the way, once again, looking back, we had only 4 just 4 years ago. Now we have 10. So it's a big step. It's a big number. And all the others, a question of the value of -- I don't want to dispute about the other sports, but I think that our strategy is very clear, and we give the right value to the ones that have invested with us bigger brands, big investment, and we have the duty to maximize the visibility and the quality of our partnership with them.

And there are clearly, we are -- we give exclusivity in areas, right? We have a -- we have one watchmaker. We have one a beer maker. I mean we don't -- we're not pulling multiples on there. So there are practical limitations around that as well.

Greg, you mentioned the tracking stock structure of Formula One earlier. I was curious, just given there's some other changes going on at Liberty in terms of Liberty Live and the Braves split.

We never want to make it a deal for you, Charles. I don't want to.

When you think about where are we in the life cycle of a Formula One as a tracker versus a [indiscernible] how do you think about that?

Yes. I don't think it's front and center in our mind, no plan or intent as they would say, but I don't think the valuation is hurting by setting being a tracking stock today, right? Last time I looked everyone else in the space is looking and saying, "I wish I had that multiple. So it's hard to look and say that we're suffering because of it. And I do think we have flexibility. You've seen some of that. The fact that we were able to move the Live Nation stock out, showed the benefit of the tracking stock structure because once if we had -- remember, that was the -- basically the SPAC asset we merged to get our way into the thing, and we were able to then get it clean and be perfect, right? So that tracking stock structure turned out to be pretty good for getting the asset and then getting cleanliness for the asset. And we wouldn't have been able to do that without the tracking stock structure. We pre-SPAC before SPACs were cool. And so I think it's working. And again, I'd just remind you, we got to this place in a pretty -- wait your turn for the question.

Stop insulting Vegas.

I think the tracking stock structure is being validated here. I don't see it as an impediment.

Curious, Renee, just could you talk a little bit about staffing up your organization, kind of where you are in that process? I don't know if you're able to share any numbers of headcount on where you think you'll top out at? And then what is the permanent year-round footprint for Liberty from a headcount point of view. And I was just curious for the whole panel. Do you -- what can you tell us about this movie? I mean is it -- are you involved in this movie? And is this a big deal for the business? Like is this going to be a massive marketing event? Or is this a movie that Tom Cruise gets to make of these Tom Cruise and we'll see what happens.

Brad Pitt.

Is it Tom an exec producer?

No.

No. Okay.

It's the same people who made a top gun that's why Tom Cruise is the same keeps coming in.

It seems like he's getting paid somehow.

Probably in some way. I guess, so first on the Vegas operations, we started out with 4 employees last Memorial Day in a complementary win suite here on the golf course, very kind of Brian [indiscernible] to give us a home when we had none. And then since then, we've staffed up to about 45 people here in Las Vegas. We have a handful of event operations who commute in. They're sort of pneumatic by nature, the end team. So they'll commute in when needed. And I'd say we're probably pretty much at headcount in terms of around the activation of that office space. We're obviously putting a lot of time and resources in from Liberty. A lot of my colleagues at Liberty are here with me in the audience. working on finance and legal. This has truly been a complete partnership between us and F1 to get us off the ground. So I would expect 50 people year-round boots on the ground here, and we may bring in some additional help with regards to the year-round activation of the pit building. But we have not fully baked the strategy. It's something we really need to get moving on. But obviously, the race is first and foremost in our mind.

Yes. And just to emphasize just on the personnel, I mean, Renee does have a theoretical day job at Liberty as well.

That's not theoretical.

And so as we said, good thing we haven't done as many deals. So we haven't had to use that part of -- but no, [indiscernible] is a Vice President [indiscernible] where are you spending, what percent of your time is being spent on Las Vegas. Yes. So we've seconded assets from Liberty to do this. And as I think, rightly is Stefano or Renee would point out this is a real partnership between Liberty and F1, and it's different than most of the things were we've done.

I think, Renee, maybe you just talk also about what you've staffed up, the capabilities you're building, different kind of tools you're putting in place, things that might be year 1 in nature.

Yes, sure, Shane. So I'd say the largest portion of our personnel is commercial. So that includes our marketing group with Channel Social Media. They've done a tremendous job. Just -- we have over 2 million -- 220 million in prints and 239,000 plus followers in a matter of a handful of months. So marketing team is doing a really terrific job. Then we have the sponsorship team, obviously working hand in glove with Brandon and the global team to sell the sponsorships to provide for those hospitality activations to try to minimize those exclusivity categories, which probably are one of the biggest restrictions that we face. Then obviously, ticketing, we have a lot of tickets to sell. We have to organize them up. We have to figure out what are the rate hospitality places, what are the suites who's going to fit and furnish them, who's going to provide the catering, we're obviously [indiscernible] for the Paddock Club, but there's a lot more miles to feed around the circuit and just in the Paddock Club. And then on the Event operations side, they're responsible for procuring the grandstands and the suites and building the structures out wayfinding is extremely important to us. I mean a year 1 venture is really putting together the app. And knock on wood, our app is going to blow the rest of the way. It's going to have completely interactive, click where I am, how do I walk, do I need to go. Is there a shuttle available? And these are all year 1 costs and investments in terms of the technology and the personnel to get it right. Obviously, we will continue to build on that year after year, but communication and messaging instructional volunteers is all part of the year 1 effort.

Movie. So Jerry Bruckheimer is the producer, Joe Kosinski is the Director. That's another way to show what we want to do, something different. I mean, once again, when we started the collaboration with Netflix, the community, they say, what's going on. This is not our place to be. And now we understand the power of it. And then we added the very strong presence with social media, making sure that all our drivers teams are very active in promoting the sport. And that's another tool with the movie are going to be produced. Actually, we're going to start the shooting in Silverstone very soon. And you will see, it will be the first movie when basically they will be within the racing event will be quite invasive in terms of production is something that we need to control in a way but will be another way of showing the 41 never stop. Yes, in terms of...

Yes. And look, I think just Stefano's point, and I, again, go back to Chase. The Simpsons has gone for 20 years, but there aren't that many shows -- there aren't that many shows that were on that long. Drive to survive is wonderful, but we cannot rely on drive to survive to be our only promotion vehicle forever. You've got to keep it fresh, change the game. And that's one of the things I'd like to think we've done with the team entering Formula One, credit to Stefano, what we've done more recently around other kinds of Instagram and TikTok and the like, we're keeping it fresh and different. This movie kind of like Vegas is going to be a whole another level. As much as drive to survive is enormous to a lot of people in this room and a lot of people around the world. I still go places and people say, "oh, its audience is not that big. It may be big among this group, but it's not that big. A Brad Pitt movie with Lewis Hamilton Consulting and with Bruckheimer and with the Director from Top Gun Maverick. We've already seen some of the what they're going to do and how they're going to skin these cars and what they're going to -- they took the technology from Top Gun, it's going to be amazing. I do not have a role as of yet.

There will be a cameo.

I did -- you saw my cameos in DTS, they made a huge difference. I did sit between Lewis Hamilton and Brad pit at one dinner. So I was planning to see.

I had a question about the -- how to think about the TV audience for the Vegas race given the timing. I mean it's going to be 1:00 a.m. East Coast and what how material is that audience kind of consideration for the business?

So I will tell you the 10 p.m. start time was very much a negotiated compromise. It was very important to us that we allow it to be at a time where our legacy fans in Europe will be able to watch it with a cup of coffee, as many of us do here for the European races. And it's not that different from -- think about boxing matches that start here in Las Vegas and our broadcast in New York. People stay up to watch Saturday Night Live and all kinds of events. So although not ideal for the East Coast, it definitely worked for the West Coast. It works for the local stakeholders. They did not want us doing it even later. They were worried about noise and they were under the misconception. There will be people in town who don't want to be at F1. They've now gotten over that misconception. But in the early days, they weren't so confident. And if we went earlier at 8:00 p.m., you're just foreclosing the European market, and we did not think that, that would be the right thing to do for those legacy fans.

Yes. This is the challenge of being a global sport, right? We do have fans all around the world, but also answering to our partners here our casino and hotel partners, they're very ecstatic about the idea that people are going to be sitting drinking for several hours, watch the race for several hours, then go gamble. So they're going to be very effective at the blackjack table then.

Maybe just one for Greg and Stefano. We're starting to think more about the Concorde agreement coming up over the next couple of years here. I was wondering if you could maybe talk a little bit about what value you feel like you're bringing to the table this time around that you didn't have last time? And as you look forward, some key items that you think you want to include or want to negotiate for in the next round and perhaps just the timing around this all.

Let me say that, first of all, we just signed new Concorde agreement. As always, we are looking to be very quick, and that is a good point. I would say today, the balance of what is on the table is, I would say, very important for the ecosystem. I mean just if you think back, I mean, more than 2, less than 5 teams were asking loans to Formula One to be alive and to survive and to make sure that we're participating in the Grand Prix. Today with the things that we've done, the system is very healthy, sustainable financially. And this is given value to our business. And that's already something that has been recognized by all the teams. So at the appropriate time, I think we're going to see it around the table. The teams will understand what we brought for them. And we will understand what we believe will be the right strategy to take all that. And I would say that could happen sooner or later, but we had just signed the new one. So we need to be -- we need to prepare that in the best way that we can, knowing that the element we put in place are the right one, that's for sure.

For what it's worth, you're all just -- there's only these people in the room, no one is listening on the web. No, Stefano and I were talking about this, this morning what we might want and when to go. Look, we think it is in everybody's interest, the teams and ours and the FIAs to solidify the success we collectively have had and show the world that we're together moving forward. So I expect this will not putting us myself at risk as always, but I don't think this is going to go to the end the way prior ones have done.

One more from the room. Jeff?

One of the ways you've improved the health of F1 for the teams is to institute effectively cost controls. How has the cost cap on relative expectations? You mentioned earlier that Red Bull penalized, do you think differently about the cost cap if you have more Sprint races because there's a greater chance for accidents. And is there flexibility around that?

Well, first of all, I think that what has been done has been phenomenal for the sport. It's now given for granted that there has been a success. And I think that if I take a very high view, the problem we faced for the [indiscernible] application were very, very small in comparison of the complexity. And now we are adding another dimension because up to yesterday, there was the sporting, the technical dimension where the teams were focused on and also the FIAs the regulator was focused on. We added the financial one, maybe the most complicated one because in terms of policy, the fiscality is different from country to country. The complexity of the details, there are things that are part of manufacturer, and there are other entities that are building up to create some resources for the team. So the complexity is for sure something that FIA has to be very strong. It will building up a team that is really very good in managing the control. But I think that what has been done is one of the pillar that's enabling the system to be so strong. And that has, of course, put the teams in a different cultural frame because now they need to think differently, how to manage the development of the year. We're talking about Sprint. That could be another effect that you can have more accidents or crashes and so on. Yes, that's part of the game. So they need to control in a different way, that's better for the unpredictability of the sport. So that's something that has been very difficult to put in the heads of the all people that were in for one since the beginning. And -- but I think that is crucial in the medium term to have it because that will enable also the sport going back to your first point, to have more competition on the track.

So I'll close by saying, when we took over, we really had 4 goals with the new Concorde Agreement, create more on-track parity through putting a hard cap in, putting in a less steeply graded payout to the team so that the bottom teams had a better chance to make more money. We had put in a new series of designs, which allowed more overtaking. And we made the team's franchises so that the 10 had value. Remember, back to the point earlier about the 200, Manor was the 11th team. And just before we bought into Formula One, it went into administration in the U.K. and got sold for 1 pound. The world has changed dramatically. Have we achieved everything on our goals? No, but we have achieved an awful lot about bringing parity and about bringing the ecosystem to be healthy and about generating interest, a number of people who call and want to invest in a team, we could fill this room in more. Our goal is to build a long-term healthy ecosystem and build a sport that has as much of some of the elements that the NFL has on any given Sunday that anybody can win and then they compete like hell on Sunday and then think about the league first on Monday. Stefano mentioned, we were at the sporting conference and we had -- the two of us had lunch with Adam Silver and Roger Goodell. Interesting to compare where we are, what advantages we have as a league, what disadvantage and they're not unique. We had only 24 races. We don't have the tonnage, but we do have international, we brought in a lot of parity. There are a lot of really important things that we can do, and that's what we're going to try and drive over the next 5 years and 10 years in this sport as much as possible, building competitiveness and make it fascinating for the team owners, to the fans and for the general public.

And with that, thank you all. We appreciate it.

Thank you.