00:47:56 · John Collison, Toto Wolff
[00:47:56] S1: Yes. [00:47:58] S0: All of this. So that is gonna be a longish answer. Sports team are scarce as of today. You know, in f one, there's just 11 of us. Mhmm. And you could potentially have another 12 front that's within the regs, but nobody's really keen. And it's the biggest global sport in the world today. The Olympics and the football world championship are bigger, but they're only for every four years. [00:48:19] S1: Yes. [00:48:19] S0: So this is the biggest global sports in the world. Then you look at the NFL, very scarce as a two. And for you, US American, it doesn't doesn't go any bigger than the NFL. And I think how much? 32 teams or something around that. So the scarcity of the asset can be a rational decision to own it and hope for a value increase because of that factor. Okay? Then there is the trophy asset angle. There's many very wealthy people that love the sport and say, well, you really... I always dreamt owning an NBA or NFL team or Formula one team. [00:48:57] S1: Yes. [00:48:57] S0: And I enjoy going to the races Yes. Giving my input, and and I can afford it now. Very well. Very valuable. It's a win win. But then there is the people that have so much money and feel in a way maybe not recognized enough. Mhmm. Because you could have earned 10,000,000,000 with a business that is... Doesn't have as much as, you know, visibility. And you're saying, you know, actually, I'd spend a large chunk of money just for the courtside seat. [00:49:31] S1: Yes. Yes. Yes.
00:49:31 · John Collison, Toto Wolff
[00:49:31] S1: Yes. Yes. Yes. [00:49:31] S0: And and be more prominent. Mhmm. It's also a decision that you can understand, maybe. So that is that aspect of investing. The other part is fundamentals. You look at the landscape, and you can say, do I believe that this sport Mhmm. Is gonna continue to grow? What's the demographics of the sport? [00:49:54] S1: Yeah. [00:49:54] S0: How much income potential has the league? How much does the team earn? And and that today have have... These fundamentals have become reality. In Formula one, before we were all loss making. It was a marketing exercise. But today, few of us are generating very healthy profits. You know, in our business, more than 30% EBIT margin. We are distributing dividends. So it's not like The US American teams that Yes. Or the tax structure where you basically live in a debt Yes. Debt environment. And we don't have a lot of CapEx because we don't own the stadium. Obviously, also miss some of the revenues. Right. But so when you invest in a Formula One team today, you can attribute multiples to your investment decisions. [00:50:36] S1: Mhmm. [00:50:36] S0: And, you know, when I sold part of the team last year, those multiples justified Mhmm. The valuation you just stated. Today, I'll probably be able to generate 30% more. Mhmm. But I got the right partner, so that's okay. And and those multiples are also valid for most of the valid for most of The US American teams. [00:50:54] S1: What are the last publicly released financial figures from Mercedes?
00:50:54 · John Collison, Toto Wolff
[00:50:54] S1: What are the last publicly released financial figures from Mercedes? [00:50:57] S0: Well, we're generating around a billion dollar in revenue and 30% profit margin. [00:51:02] S1: Okay. [00:51:02] S0: So it's a very healthy margin. We [00:51:05] S1: Wait. So sorry. 300,000,000 of EBIT. Yeah. And so the $4,600,000,000 valuation is a 15 times EBIT multiple. So, I mean, yeah, it's very... Warren Buffett could could underwrite this business. [00:51:16] S0: Exactly. It was back in the day. It wasn't a billion, and it wasn't 300,000,000. Mhmm. It was considerably less because we're growing very strong, and the the spot is still growing strong. But, you know, we are Europeans. We don't talk so much about valuations and money. But as a matter of fact, like you say, these multiples are actually Yes. On the conservative side. [00:51:36] S1: And, actually, that's very different from, say, an NBA or an NFL team where I think every time one transacts, it's wackadoodle valuations that can only be justified by tax structuring or courtside seats.
00:51:36 · John Collison, Toto Wolff
[00:51:36] S1: And, actually, that's very different from, say, an NBA or an NFL team where I think every time one transacts, it's wackadoodle valuations that can only be justified by tax structuring or courtside seats. [00:51:48] S0: Yeah. But, also, you know, when when you look at the valuations of the of The US teams, you have fundamentals for some of the teams, but then there are some which are kind of being dragged along that are having valuations that are not real anymore. And if you look at Mercedes, we are probably generating, other than the Dallas Cowboys, the most profit of any sports team in the world. So we have kind of a USP Yes. In this in this world. When we compare our multiples to the NFL or the NBA Yes. In its latest crazy, you know, uplift of valuation in... I don't know what the multiples. The revenue multiples. Yes. Yes. Which is crazy. Who... You know, I'm a fundamental guy, fundamental figure. So I would never value a business on revenues. Yes. I would value it on return on investment, fundamental cash flow and profits. So that would value us at $1,012,000,000,000 if you look at the the Lakers sale, for for example, whatever else happened in this frenzy. But that's not the point. You know, my horizon is so long term that I'm a long term bullish investor with all the ebb and flow that can happen in this spot that it becomes irrelevant to actually, you know, starve for high evaluation because it's just on paper. But we could value the business today much more than it was a year ago.
00:53:15 · John Collison, Toto Wolff
[00:53:15] S1: Yeah. It's it's interesting. You know, there can be an effect in tech where, say, if you look at the AI space, some of the most most enduring businesses in, in AI, like a TSMC or an NVIDIA that have these, very long term advantages, actually trade at quite reasonable multiples despite the fact that they're growing very, very quickly. And similarly, the the the best team in the biggest sport trades actually as one of the most sensible multiples. [00:53:40] S0: Yeah. And that's okay. You know, I wanna... We wanna be perceived as the serious people in there because we are not particularly interested in the in the trophy investor where we could max... Maximize our valuation. And and then the most important point, none of us is actually interested in selling any shares here because we believe in the long term development Yes. Of the company and the sport, you know, particularly in this environment of AI. Humans watch humans. And the the driver in the car is irreplaceable, not because a robot couldn't go any quicker. By the way, that's a different discussion. I don't believe in that. But because we wanna go through the drama and the glory of the individual. Yes. So I believe that the sports... Live sports generally are very resilient to whatever technological developments we see at the moment, in the market. Will we see any of the f one teams [00:54:32] S1: as public companies? Isn't that the next logical step? Because there are lots of people who would like to be a part of them.
00:54:32 · John Collison, Toto Wolff
[00:54:32] S1: as public companies? Isn't that the next logical step? Because there are lots of people who would like to be a part of them. [00:54:37] S0: I don't think I I... We went public with Williams, and that was not a success. Because in a way, you know, you're reporting 20 times a year with each of the races. And in this sport, it goes from mania to depression within a week. [00:54:51] S1: But that was a very different era. F one was much smaller. [00:54:53] S0: It would [00:54:54] S1: have been a different shareholder base. Could it work now? [00:54:56] S0: I don't know. If somebody wanted to monetize or raise capital by just being public, maybe. But I don't think being public as a sports team is the right long term structure. You wanna be in control so much. Yeah. Yeah. Exactly. Yeah. And you want... I would also want to be in control of that business, not because I think in, you know, legacy terms that has no interest for me. But it's about creating the best sports team in the world in the time I I run it. [00:55:29] S1: Drive to Survive has been a smashing success for Netflix and a big success for f one where it's brought lots of new people into the sport. And then, you know, people talk about women especially. You you don't associate f one with women, but the the show is very popular with them. And then Netflix has tried a very close copy of drive to survive with cycling and tennis and all these sports, and it hasn't really worked. And you don't hear anyone talking about those shows. Why does the format work particularly well for f one?