Mercedes Racing Boss Wolff on the F1 Netflix Show He Hated, Russia and Crypto

(Bloomberg) -- When Toto Wolff, the 50-year-old boss of Mercedes-AMG Petronas F1 Team, first watched the Netflix Inc. series about his sport, he thought it was terrible.

“I’m watching this — episode one, episode two — and I hate it,” Wolff said of the “Drive to Survive” show. “Now we are participants. We gradually grew into this. I never wanted to have the camera in my face. It comes with my job and I need to talk about cars and the business side of Formula One. But suddenly you realize that it has become so big everywhere in the world with new audiences, younger audiences.”

The Netflix series has attracted new fans of auto racing in the U.S., which is shaping up to be Formula One’s next big market. There will be two U.S. races this year, in Austin, Texas, and Miami, in an effort to win over more Americans with fast cars and backstage drama.

Wolff, a former racing driver and private-equity executive who now serves as the team’s chief executive officer, co-owner and principal, oversees one of the most successful racing teams ever, winning eight consecutive Constructors’ titles since his initial investment in 2013. Its superstar driver and seven-time champ Lewis Hamilton, who was recently knighted at Windsor Castle by the Prince of Wales, has won more races than anyone in the sport’s history.

The 2022 season doesn’t kick off until later this month, but it’s already full of tumult for Formula One and majority owner Liberty Media Corp. 

In the offseason, F1 race director Michael Masi was removed after an investigation into a controversial ending at last season’s finale in Abu Dhabi, and the sport overhauled its officiating system. The Russian Grand Prix, which was set to take place in September, was canceled permanently after Russia’s invasion of Ukraine. Following a week of deliberation, the Haas F1 Team decided to end its contract with Nikita Mazepin, the sport’s sole Russian driver, and cut ties with its title sponsor Uralkali, a Russian fertilizer company partly owned by his father Dmitry.

We sat down with Wolff in New York to discuss his outlook for F1:

Where do you see the momentum in the American market going?

It’s quite interesting because Formula One from our perspective always was a global sport — big in Europe, big in South America, big in Asia and in the Middle East. In a way, we never accessed or excited the American audiences. My theory, back in the day, was that it takes a long time for a sports league to establish itself in a country.

Formula One is a niche sport. It’s a high tech, high-income demographic, high-academic education. I thought it must be easier to tap the audiences in the big cities, like New York, but we really never got there. Then Liberty took over, didn’t move the needle really. And then Netflix came. Covid came. People started to binge watch and then suddenly we have this huge momentum now in the U.S. that nobody had expected.

Is it a pain to have those cameras in your face all season behind the scenes?

It’s scary how much we let them in. You hate to see yourself in there. They create a spin to the narrative. They put scenes together that didn’t happen. I guess you’d say as an insider, well, that’s different than how it was. But we’re creating entertainment, and that is a new dimension of entertainment.

Your fastest-growing audience is between the ages of 15 and 35. How often do you have internal conversations to ensure you’re reaching them?

All demographics are important. In the past [Formula One Chairman Emeritus] Bernie Ecclestone would say, “I’m not interested in the 15-35s because they are not buying Rolexes from my sponsor.” But obviously that has changed because with social media, this is the demographic that’s driving the audiences, that’s driving the reach, and they are the future decision-makers.

You were formerly in private equity. Do you think that private equity and venture capital are overcrowded and a thing of the past?

I think it’s overcrowded. I think the competition for things is too big, the valuations are not in the right spot. It reminds me of 1999. Obviously ’98, ’99, 2000 was a 2 ½-year window where things were crazy with no sustainable business models. But we are seeing valuations today — especially private transactions, not public markets — that just fundamentally make no sense.

Still, people make money, investors make money, and more and more asset allocation is going into private equity. That’s not my thing. I like to run the companies, I like to invest in the companies that I run or that I’m very closely associated with. This is why my office still does venture capital, private equity, and I get to see these businesses, but it is really more of a diversification of investments without my involvement.

Sponsorship dollars are flowing in from the cryptocurrency industry. Is all that new crypto money changing sports?

Crypto is growing so strong and generating a huge amount of profits. FTX, our partner, as a trading platform has a really functioning business model. It is not some kind of inflated unicorn start-up value, but it is an existing business. And therefore crypto has become one of the new sponsorship partners in all of sports because of the visibility we generate as live sports. 

What’s your view on canceling the Grand Prix in Russia while still allowing Russian and Belarusian drivers to compete on a neutral license?

I’m sad for the Russian public that enjoyed watching Formula One, and a population that maybe has no interest at all in geopolitics or any of that.  But we as a society, we just can’t look over that. Even a sports team. We are commercially driven, and it’s an attractive location to race, but at a certain stage you have to say, “Up to here and no more.”

This interview was edited and condensed for clarity.

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