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?
00:55:58 · Toto Wolff
[00:55:58] S0: There's some shows that I personally found quite okay. The cycling was was okay. But why? I didn't believe it would work. Back in the day when Formula one pitched it to us, Netflix didn't really pay any money Mhmm. Very little. And I... You know, we were fighting a world championship against Ferrari. So I sat down with my colleague of Ferrari and say, are we doing this? And he said, we're here to win a Formula One championship and not play Sierra Le des Soleil. Mhmm. So Ferrari and Mercedes decided not to participate participate in series one. Yeah. Famously. Famously. And that was maybe important for the success of the series because it allowed Drive to Survive to look at smaller teams. Yeah. And less... It's kind of underdog. Underdog. Exactly. And then, you know, COVID came. People stayed at home. Generations watched Drive to Survive from the, you know, granddaughter to the Yes. Grandparent, grandchild to the grandparent. And then we started to race as the only sport because we were able to contain our traveling circus very closely. So we were live also. And I think this is where we made a big step forward in terms of growing our audiences and demographic. But why the sport is so strong today? I think it's not only because of the Netflix factor. It's also because we entertain. We have great characters that are very active on social media, young drivers. We provide great narrative Yes. Controversial situations, the politics outside of the sport. You know, that is a basically a twelve months live reality show. But...
00:57:42 · John Collison, Toto Wolff
[00:57:42] S1: So if one already is a soap opera, and that's why it works well [00:57:45] S0: in TV format. It is. But with a fundamental difference to other soap operas. We are credible sports. Mhmm. We have rules. We race based on those rules. And if you win, best car, best machine wins. So this is the fund... Fundamental base of the sport. Yes. And this is why the reality show around fits well. This, without that, wouldn't work. Yes. Entertainment follows sport, not the other way around for Formula One. Yes. And we've stayed true to to this DNA, and that's why we've attracted audience that... In sheer size that we didn't expect before. Our strongest growing demographic is young woman, 15 to... I don't know what the bracket is, but fifteen to twenty five years. And we have 42% female fans, which is which is enormous. And unthinkable for... Yeah. And then, obviously, my wife Susie runs the female series for Mon Academy, which is going very strong with young women driving those cars. And what she sees is that her demographic very much obviously buys in into Formula One's demographic, and they became an aspirational series for young women not only that want to be racing drivers, but also engineers or marketing people in a in a racing environment or share an inspiration to... That a woman can actually succeed in a male dominated environment. So all of this kind of universe Mhmm. Kind of buys into the credibility of Formula One.