- Sebastian Vettel

Vettel's Ferrari exit does damage to Formula 1

Erodes $90 million from its value.

41w ago

Back in late 2016, Formula 1 was sold to Liberty Media. After acquiring, Liberty Media decided to float the Formula 1 on the stock exchange. The disadvantage of which was imminent when Sebastian Vettel decided to part ways with Ferrari after the 2020 season ends.

Whenever a company gets itself listed on the stock exchange, it will have to deal with the fluctuations in the market. However, investors do not like instability or uncertainty. That’s exactly what happened with Vettel’s unexpected move.

The share prices had already taken a massive hit in the month of March after the season had failed to begin. It got worse in the month of April when many more races were put on hold and the season start got pushed further down to July. Formula 1 is officially listed on the stock market as ‘FWONK’ (Liberty Media Corporation Series C Liberty Formula One Common Stock). It is not just the racing calendar but also the driver changes that have a major impact on the FWONK’s share prices.

Ferrari on the 12th of May confirmed that Vettel was going to leave the team at the end of this season after both of them realized that they no longer had a “common desire” to work together. According to FormulaMoney, who specializes in covering the business side of F1, announced that F1’s share prices dropped by 4.5% as a result of that decision.

It seems like Ferrari’s decision was rushed. 48 hours after Vettel’s announcement, Ferrari announced that Carlos Sainz would replace Vettel at the end of the year. Carlos Sainz was offered a two-year contract to partner with Charles Leclerc.

Following that announcement, FWONK’s share rose by 3.1% that day. Still, a net loss of 1.4% meant Formula One’s value was still reduced by $90 million. It is pretty fascinating to think that a driver leaving or joining the team can affect the wealth of a racing organization. With many more changes to come until the end of the year, it will be interesting to see how much it affects Formula One economically.

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Comments (4)

  • It’s impossible to ascertain whether that had anything to do with Vettel or not. It’s most likely just the market doing its thing. Particularly in recent times the stock exchange has been highly volatile. Also, I can’t think of one good reason an investor would mind Vettel leaving Ferrari. Perhaps there could be an argument made for his potential retirement driving down viewership, but quite frankly even that would affect it the tiniest amount. Vettel doesn’t have nearly the fan base of other drivers, and it’s not like Schumi retiring tanked F1’s finances. As you said, the market fluctuates. So too does F1’s price.

      9 months ago
    • Agreed. Difficult to pinpoint a reason. It could very well be a coincidence.

        9 months ago
    • Seriously? You sure you know what you're talking about?

        9 months ago