How Liberty Media became one of the world's most valuable sports empires

When Liberty Media Chairman John Malone finalized the $4.4 billion acquisition of Formula One in 2017, he knew he was onto something.

"There's an opportunity to take F1 to another level," he told reporters in 2016. "There's an untapped digital market [that] F1 has only scratched the surface on." 

What no-one could have foreseen was how soon F1's opportunity would present itself. As global lockdowns began in 2020, sports fans surged online and Liberty Media had a chance to realize Malone's vision. 

For it to work however, Liberty first had to get a handle on the sport's finances.

"If you have a look before Covid in 2019 it was a tough situation, close to bankruptcy," said Fred Vasseur, team principal of Scuderia Ferrari HP, one of three teams spending more than $400 million a season to remain in contention for the Constructors' Championship.

This not only priced out participants such as Honda, but created a huge disparity on the grid. While the top three teams — Ferrari, Red Bull, and Mercedes AMG — were outspending everyone else, they were also receiving disproportionate TV rights and prize-money, leaving the rest to scrap it out for funding.

With some teams on the brink of financial collapse, Liberty took an ax to F1's structure.

"Heritage bonuses" for the oldest teams were curbed, and a more equitable broadcast split devised. With funding under control, they outlined plans to limit spending.

"Now [we] have a cost cap in place," Zak Brown, CEO of McLaren Racing, told CNBC's "Inside Track."

"It's a much smaller spend than it was previously, which has allowed all 10 teams to really kind of play with the same size bat."

Evening out the field created more exciting story lines, which Netflix seized on. The timing was perfect. As the