New Formula 1 Rights Deal Works, If Apple Increases Sports Investment

After months of rumors, it’s official: Apple TV (no more “plus!”) will be the exclusive U.S. home of Formula 1 racing starting in 2026.

The five-year deal moves F1 from ESPN, with one foot in streaming and another in traditional cable, to Apple’s 100% streaming environment. And for the trouble, Apple is reportedly paying close to $150 million per year.

That figure is short of what Formula 1 was aiming for, in the realm of $180 million per year (per WSJ), but still a substantial jump from ESPN’s $90 million per year during the most recent deal. The increased value of F1’s media rights is reflective of the sustained success of the sport since Netflix’s Drive To Survive first appeared. Formula 1 may very well outdraw NASCAR on TV in the U.S. this year, according to current estimates.

What comes next is less about ratings, however, and more about what Formula 1 really means for Apple and its sports focus.

The importance of traditional TV ratings have diminished significantly in recent years as streaming has grown and doubts continue about how NIelsen has actually been counting audiences. With viewership significantly fragmented, Formula 1’s success on ESPN speaks to its abilities to attract attention. But how much does that truly matter within Apple’s sports-light streaming ecosystem?

Apple Senior Vice President of Services Eddy Cue noted this week that sports streaming needs to be fixed — something he primarily pins on the variety of services needed to tune in. Of course, Apple is part of that issue too, to an extent. The tech giant already has exclusivity around MLS matches, has been the home of Friday Night Baseball and now adds F1 to the mix.

But part of the issue for baseball and soccer games on the platform is that they haven’t necessarily gained critical mass as a point of demand for Apple TV subscriptions or MLS Season Pass sign-ups. MLS Season Pass expanded to other services beyond Apple this year, while teams also cut various deals with local broadcast networks to expand their in-market reach.

Apple’s scripted shows have seen critical success (this year’s Emmys wins were yet another feather in its cap there), but aren’t driving the service to profitability — if it’s even striving for that. A report from The Information earlier this year said that Apple TV (then Apple TV+) was losing over $1 billion per year and had around 45 million subscribers.

Formula 1 would seem unlikely to buck any of these trends significantly, which begs the question of what the value of the sport really is for Apple; especially if it’s going to wind up in a similar boat to MLS, generating reduced interest compared to its former linear footprint (almost assured) while leaving the casual sports consciousness as it plays directly to smaller collection of diehards.

Obviously Apple’s playing a different game than other sports rights competitors on a variety of levels. Along with Amazon, Netflix and Google/YouTube, the company has a seemingly endless collection of funds to try to acquire rights. And with less risk for leagues every year thanks to the underlying market shift to streaming environments.

Cue’s remarks also show a different game of “owning” an entire experience around a league from top to bottom. So they’ll pay a premium above market value to get into the game with MLS and Formula 1 because they can have full control of those experiences.

There are limited opportunities remaining like that, though. More established sports in the U.S. have long been in the game of segmenting packages to maximize rights and TV reach, and Apple doesn’t seem like it wants to get into bed with seemingly lesser sports.

If they’re holding to their stated principles, it gets tougher to determine where sports really nets out for Apple.

Its baseball presentations have not truly tread new ground, and the main selling points of the MLS deal are more money for the league, plus a central home for MLS when it previously didn’t have one, and a lack of local blackout issues.

Sports also typically benefit from being surrounded by other sports programming, to signal to consumers a network or service is an essential part of the fan viewing experience.

Amazon has gotten around this by hitching its wagon to Thursday Night Football, since it’s part of the much larger NFL machine. Its portion of the NBA deal (starting this season) is an expansion of that idea, and they’re doing so while also changing the way the game is watched and presented.

Without those sorts of adjustments, Apple seems boxed in as a lone island with two bigger, albeit niche, sports and a humble collection of original prestige TV. That hasn’t been enough to move the needle so far for Apple, MLS or MLB. F1 probably doesn’t change that fact unless it’s the first piece of a larger sports-specific puzzle.

That could be the case. We’ll have to wait and see it, though. In the meantime, it’ll be interesting to see if Formula 1 defies expectations and continues its impressive growth in the U.S.