F1, much like the crypto community, is truly global. In fact, 471M people watched the 2021 season 🤯
For 71 years, generations of fans have watched racing legends risk their lives for a chance to stand atop the podium.
Behind these drivers are organizations that include hundreds of unsung heroes – mechanics, engineers, pit crew, team principals, owners and maybe someday, even you.
F1 DAO is launching a platform for super fans to rally around a singular mission:
LET’S BUY A TEAM! And have as much fun as Daniel Ricciardo along the way.
We published our original roadmap in early January and we’ve learned a lot since then that is reflected in this update. We’ve already connected with four F1 teams, several retired drivers, other investment DAOs, and top flight attorneys. Based on those learnings, F1 DAO will proceed in three phases to maximize the likelihood of success.
Phase 1 - Building the F1 DAO Community (with Free, Application-only Membership Tokens)
Our core mission is to buy a stake in a Formula 1 team and that’s going to cost much more than any NFT sale could raise.
We initially planned on an NFT sale to raise operating funds for legal bills and events. After doing our research, we don’t think that is necessary or appropriate. The legal costs won’t be very high and members of the community are organically planning events anyway.
Over the past 60 days, our key learning has been that plenty of other people want to invest in F1 too. The imposition of strict budget caps this season has created a path for many teams to become profitable, thereby increasing valuations. Our job is to convince teams what F1 DAO can bring to the table that other investment groups cannot. Teams are looking for new ways to engage with more fans, and that’s what we’re here to deliver.
In Phase 1, F1 DAO will focus on building the strongest community of racing super fans around the world. We’re releasing a membership token in several waves throughout this F1 season. Instead of asking you for money, we’re asking you for something much more valuable - your contribution to making our community the place to be.
What does that mean?
- The F1 DAO Membership Token is 100% free and comes with unique race car PFPs.
- To earn your token, you’ll need to complete a brief application explaining why you would be a good addition to the community.
- We’ll read through apps on a rolling basis and have existing community members approve new entrants.
- No cash grabs. No flippers. Just real F1 fans.
Just because it’s free, doesn’t mean it can’t be great.
F1 DAO Membership Token benefits:
First, the artwork is amazing. We spent the last two months working with artists and designers to create a unique set of hand drawn images. The collection is inspired by race cars from the 50s, 80s, and 2020s and every iteration is unique. We can’t wait to see these out in public.
Second, you’ll get access to exclusive virtual events. You can expect AMAs and events with F1 experts, drivers, and mechanics for behind-the-scenes commentary on the sport. Early members include two retired F1 and Le Mans drivers and two NASCAR drivers eager to meet more members of our community.
We’re also hosting F1 Fantasy leagues and virtual watch parties on race day with key figures from the F1 community. In fact, we’ll host our first AMA with a retired F1 driver in the next several weeks. Join our Discord or follow us on Twitter for more announcements.
Third, you’ll get access to a token-gated Discord. Current members of our community range from someone attempting to set the world land speed record to retired drivers and sports investors.
Community members are constantly bringing up incredible ideas for how F1 DAO can get more involved with the sport. In the past two weeks, they have proposed supporting up-and-coming carting racers through our treasury. F1 is an incredibly expensive sport and some of the best drivers never make it to feeder leagues. We could provide financial support to the next five Lewis Hamiltons!
We’re humbled by how the community has come together and can’t wait for more of you to join us. We’d love to hear from the community (YOU) and what benefits you’d like to see - hop in the discord and let us know.
Important Caveat: this membership token does not represent a share in a Formula 1 team, now or ever.
Phase 2 – Fundraising for a Team
Our objective is to find a path forward that meets two objectives:
- Allow as many people to invest in an F1 team as possible
- Create a fund structure that F1 management will approve
We’ve discussed the requirements of investing in a team with experts, and that’s going to require the following for anyone who ultimately invests:
- Doxxing: sports leagues typically do not allow anonymous or pseudonymous investors
- Meeting SEC requirements, such as being an accredited or qualified investor (which means meeting certain income and/or net worth thresholds)
We will NOT raise a single dollar towards investing in a team until the legal structure is airtight. For legal reasons, the membership token does not entitle you to a share of the future fund. We wish it were simpler.
There are three work streams in this phase:
- Talking to teams to see who is interested in selling a stake (ongoing)
- Legal diligence to create a compliant fund structure (ongoing)
- Raising $50-100M from F1 superfans to make an investment (upcoming)
By the end of 2022, we hope to finalize negotiations and complete the takeover or large minority investment in one of the current F1 teams.
What if I don’t or can’t participate in phase 2? You’ll still be a part of the F1 DAO community!
Phase 3 – Operating a Team
2023 and Beyond - we’ll own a stake in an F1 team! Whether we make a minority or majority investment, we intend to keep the management team and key personnel in place while recruiting great talent from other teams.
Our goal is to have the DAO advise on as many key decisions for a team as possible while getting exclusive social perks.
It isn’t going to be easy, and we still have a lot to figure out, but together, we can achieve something great.
Let’s buy a Formula 1 team!
What is a Formula 1 Team Worth?
Short answer = a lot (but much less than other professional sports teams 🏈, 🏀,⚾️,⚽️).
There is little publicly available information on team values, though Forbes published a set of estimates in November 2019. Forbes has not updated these figures in two years, but we’ve done our best to revise them in this section. Over the last month, we have run our estimated team values by several executives at Formula 1 teams and they generally agree with our analysis.
Forbes’ Estimated F1 Team Values in November 2019
In 2019, Forbes ranked Ferrari as the most valuable team at $1.35B and Alfa Romeo the least valuable at $105M.
Since this was published, we have two data points that should drive up team values.
First, there’s a budget cap in F1 now, which boosts team profits and values
- In August 2020, all F1 teams signed a new agreement that places a budget cap from 2021 to 2026.
- Before this was signed, larger teams like Mercedes, Red Bull, and Ferrari outspent smaller teams by an order of magnitude
- Smaller teams could not keep up and nearly faced financial ruin Moving forward, the cost cap is expected to improve the economics for most teams and improve valuations
Second, McLaren sold a minority stake in 2020, revealing its value
- In December 2020, MSP Sports Capital, a U.S. based sports investment group, bought a stake in McLaren racing
- MSP agreed to invest $245M over two years for a 33% stake in the team. This valued the team ~ 1 year ago at $740M, which is a 19% increase over Forbes’ estimate from 2019.
- One of the MSP investment group’s principals became a vice-chairman of McLaren Racing, while two others joined the McLaren Racing board as non-executive directors.
- This provides evidence that a minority investment group can have an active role in daily operations and governance!
Caveat: we also know, from Bloomberg, that Williams sold to Dorilton Capital for ~$200M in August 2020. This is half of the value that Forbes assigned to the franchise in 2019. We are choosing not to haircut the other team values using this data point because: a) Williams was in a distressed financial state, and b) we believe the franchise is likely worth much more with the new budget caps in place.
So, how much are F1 teams worth today? For now, let’s take a simplistic approach and assume the following:
- Forbes’ 2019 team estimates were accurate, at the time
- All teams likely increased 19% in value from 2019 to 2020, based on the McLaren data
- Teams increased another 19% in value from 2020 to 2021, which is possible considering
- Viewership is way up
- Online engagement with F1 is also way up, according to F1 itself
- The new budget caps support increased team valuations
… which brings us to 👇
Estimated F1 Team Values Today (Jan 2022)
Caveat: these are our estimates 3 days into this project, based on whatever public data we can find. There are rumors that Andretti Racing attempted to purchase Alfa Romeo for ~$500M last year. If true, then our estimated value for Alfa Romeo may be far too low. As mentioned earlier, Williams sold in 2020 for ~$200M, so it may be worth less than this analysis suggests. Everything is an estimate at this point. This chart below accounts for ranges where public data contradicts our analysis.
These numbers are just a start for our community to understand the ballpark figures we need to achieve our mission. If you have more accurate estimates, please hop into our Discord and let us know. We’ve run these figures by multiple people at different F1 teams and they believe we are quite close.
So, there you have it! We should be able to buy a 15% stake of Haas for $25M. Want to aim higher? How about buying a 51% stake of Aston Martin for $95M? These figures may be large, but for less than the cost of a single Beeple NFT, we have a shot at owning a material portion of a Formula 1 team!
What are our Options for Owning a Formula 1 Team?
After talking to several teams, we believe the most likely path is to acquire a minority stake in an existing team.
Possibility #1: Buy an entire F1 team
- Estimated cost = $150M-1.9B depending on the team
- Pros:
- We would have full control over the future of the team
- DAO members could advise on aspects of the operations, such as contract extensions, capital investments, driver selection, and more
- Note that the DAO cannot directly own a team. A separate corporate entity will need to own the team for this to work. It isn’t ideal - we know. But we want to be upfront about what is possible.
- Incredible perks: members can visit training facilities, meet drivers, etc. o
- Cons:
- Most teams probably do not want to sell. This has been confirmed in conversations with several experts in the space.
Possibility #2: Buy a minority stake in a F1 team
- Estimated cost: If we target 15% ownership, we need $23M+ for Alfa Romeo, $25M for Haas, $28M for Racing Point / Aston Martin
- Pros:
- We wouldn’t be responsible for day-to-day operations
- Perks from option 1 might carry over (and we’d fight to make sure they do)
- Cons:
- We would certainly lose some control in the process.
- Will need a majority partner who values our input and contributions (I’m looking at you Gene and Guenther)
Possibility #3: Start a team from scratch
- Estimated Cost: Prohibitively expensive
- Under new F1 rules, a new entrant must pay $200M to the existing teams for the opportunity to participate. Then, we need to build facilities, hire staff, recruit drivers, and wait some time before being eligible for payments from the F1 organization
- F1 engineers have advised against this route. Historically, new teams have performed very poorly and have a high failure rate. This might change with the cost cap, but it is currently the least likely outcome for F1 DAO.
Since we wrote the first roadmap, Mario Andretti has applied for a new spot for the 2024 season! We are working diligently to learn more and find ways to collaborate.
Realistically, we believe the path forward is to attempt acquiring a team like Alfa Romeo, Haas, or Aston Martin OR acquiring a minority stake in any team that would be a good partner (fingers crossed for McLaren).
How can you help?
- Join our discord! Earn a “Pit Crew” role by being active and helping out the community https://discord.gg/EaDYKCwN
- Follow us on Twitter! twitter.com/F1_DAO
- Spread the word. The larger our community grows, the easier it becomes to collaborate with F1 teams.
- Contribute ideas as we build the infrastructure to support fans across the world!
Who are we?
The core team writing this launch paper has over a decade of fintech experience. We’ve launched venture-backed startups, graduated from Duke, Berkeley, and Harvard, and really just love racing 🏎
We are also currently recruiting retired team principals, drivers, and other experts to the team. If this sounds like you, join us in Discord!
Is this legal or is there precedent for this?
Our initial goal was to pool funds through a DAO and try to buy a stake in a team. After doing our homework, the path forward is more complicated. Over the last month, we’ve spoken to several top flight securities lawyers and closely followed the operations of other sports and investment DAOs like Links and Krause House. We’re in uncharted territory and our priority is doing this the right way.
We will NOT solicit funding from anyone without an airtight legal structure in place. We aim to make investment in a F1 team possible for as many fans as possible, but regional restrictions such as accreditation in the United States may pose challenges.