Electric racing has struggled to succeed. Many innovative series have encountered problems, with Formula E the exception rather than the rule. Combining sustainability with another niche – powerboat motorsport – could have been a recipe for disaster. But the electric E1 powerboat racing series has gone from strength to strength, attracting famous names from acting, sport, and music as team owner figureheads. What has been the secret of its success?
“We’re still here,” says Alejandro Agag, Founder of E1, as well as Formula E and Extreme E (recently mutated into Extreme H). “That’s already an achievement. It’s always difficult to create a championship, especially in an area like boat racing.” That’s not to say that E1 hasn’t faced problems along the way. “Every championship has difficulty breaking through the media barrier. It’s hard to get broadcasted and very hard to get to the big audiences. That’s still our challenge, but if you want to break that wall, first you need to have something that exists. The key to the championships that will survive is to have a business model that allows you to continue without revenue from the media, so when you get the revenue from media it’s on top.”
Desirable E1 Racing Destinations, Celebrity Power
The incredibly innovative Extreme E series struggled with this problem. Its generally remote race sites meant there was almost never a physical audience, and no potential for marketing these as destinations. “The main success of E1 is the locations,” says Agag. “With some exceptions, like Monaco, they all pay, and in Extreme E we were going to very remote locations where they didn’t pay, because there was effectively no location. With Greenland or the desert in Chile, there was no business model for the venue. Here, there is a business model based on the venues. We have new venues like Angola. We have Lagos that we’ve done twice. We have Jeddah. In all of them, we make a profit on the event itself, which is the key.”
Agag was speaking before the E1 race in Dubrovnik’s beautiful Pile Bay. “Here, we are sponsored by the Croatian Tourism Board,” he explains. “They have an interest in attracting tourism. The main sponsor is the chain of hotels where we host the hospitality. They’re interested in bringing people to the location.” However, a unique aspect of E1 is celebrity involvement. Some very famous people act as figurehead team principals and owners. These include actor Will Smith, legendary NFL quarterback Tom Brady, NBA superstar LeBron James, DJ and record producer Steve Aoki, tennis champion Rafa Nadal, Latin music favorite Marc Anthony, and multi-cup-winning footballer Didier Drogba. No other sport has such direct and diverse celebrity involvement.
“That’s a great first step for breaking through the media barrier,” says Agag. “The celebrities can really help us to get to a wider audience, but the celebrities themselves are not a source of revenue. Luckily, they’re not a source of cost either. We don’t have any financial commitment to the celebrities themselves. We get the revenue from the cities. The cities want to attract E1 because they expect some of the celebrities to show up at the races. That increases the impact of the event, it gets you media coverage. It’s a virtuous circle between having the celebrity owners and the financial sustainability of the championship.”
“The idea of having 10 celebrities as team principals is masterful,” says David Warren, Commercial Director, E1. “What you can do with them is quite limited, but they have huge social media followings. Companies will pay a million to be on a team with Tom Brady. If you get the right group together, that’s how business gets done. There really is something here to grow this franchise. Alejandro sees the way to build a sports franchise, because that is what’s growing most in the world. Big American funds see how the valuation of Formula One and the Formula One teams has gone up.”
E1’s Ocean Club Hospitality Advantage
While there were some people watching the racing from the beach in Dubrovnik, they weren’t paying to do so, and this mainstream audience is not the focus of E1. “We are limited by geography,” says Agag. Instead, the corporate hospitality spectators are the main consideration. “In Miami, we had over 1,000 corporate guests. General admission in some sports is getting so expensive that the barrier between a VIP ticket and a general admission one now blurs because people will pay $1,000 or $1,500 to go to a basketball match on a normal seat in the grandstand. With us, if they pay that amount, they are in the VIP lounge, drinking champagne, watching the action, and they are in the same area where celebrities are. That’s where we focus. It’s a smaller public, not necessarily corporate guests or VIP, but a public that is ready to pay a higher amount, because it’s a limited number, due to geography. We cannot build grandstands in the water for 20,000 people, that would be completely crazy.”
This is attracting owners with a track record of success in business. Alex and Sebastian Malavenda own Sport.com Predict Team Miami along with partners Brian Lee and singer Marc Anthony. The Malavenda family originally made their money in the fresh cut flower business in Florida, but after selling this company in 2019 they wanted to branch out to sports investments. “We heard the PIF [Saudi Arabia’s sovereign wealth fund] were founders of E1, and you have all these big celebrity names, but also businesspeople are behind teams,” says Sebastian Malavenda.
“What Alejandro Agag has done really well is curate a hospitality package attached to sport, environmental awareness, and gender equality,” says Alex Malavenda. Alongside electric boats, each E1 team has both a male and female pilot. The sexes compete against each other in a mixed environment. “The social reach of the celebrities and their ability to amplify the sport is next to none. Marc Anthony is one of the most talented, well-known singers in all the Latin music space. You have the best of the best.”
The Franchise E1 Team Model And Beyond
However, another key factor is how the E1 teams are set up as franchises, with a limited number available. “There is an agreement that the maximum number of teams that will exist will be 12, so once those slots are filled, that’s it,” says Alex Malavenda. “Right now, there’s 10, with the addition of Sierra Racing and Team Monaco this season. If anybody wants to participate, they’re going to have to invest in or buy one of the 12 franchises. Because it’s so limited in supply, you get this appreciation of the asset.”
E1 is seen as an increasingly valuable marketing opportunity, but specifically in the luxury space. “Being an E1 owner, you’re in amazing company, and that that is what’s going to drive valuations,” says Alex Malavenda. “There is the amplification that all the partners and owners are doing. The luxury brands are coming on board. We’ve had immense success. We have Azimut Yachts as a partner. It was important for them to have access to the people at the Ocean Club [E1’s name for its VIP hospitality experience], because any five to 10 more boats they sell is a big chunk of revenue for them. These are mini boat shows.” At a previous event, Azimut was taking Ocean Club guests over to three of its boats moored nearby to watch the race, like mobile sales centers. Another sponsor, Bulova, offers E1 special edition watches.
The rise of E1 looks set to continue. “It’s great to see how much demand we have from other cities around the world,” says Agag. “We need a second fleet of boats as soon as possible. Every team will have two boats, one in Middle East and Europe, one in the Americas, and then maybe we’ll have a third fleet of boats in Asia, because these things are big to fly and move around. The cost of these boats is not that high. We could have a race here, and next weekend we could have a race in Miami, because we have another fleet in Miami waiting. We want to grow to 12 to 15 races a year.”
“Second, we want to break the media world,” says Agag. The celebrities are already famous, but he wants this to rub off onto the rest of the team as well. “The pilots are the ones that we really should make celebrities on their own, like Formula One did with the Netflix show. Before Drive to Survive, people knew Lewis Hamilton, maybe Max. They didn’t know all the other guys. Netflix made people familiar with all the other drivers. This is what we need to do with E1 pilots.” Maybe in a few years pilots like Sport.com Predict Team Miami’s Timmy Hansen (an accomplished World Rallycross and Extreme E driver) and Rianna O’Meara-Hunt will be household names, like F1 stars. With the rapid growth of E1 in just three seasons, you wouldn’t bet against it.
