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Volume 23 No. 17

Leagues and Governing Bodies

The ABB Formula E series is already worth around $1 billion despite debuting less than five years ago, according to founder and CEO Alejandro Agag.

The electric racing series is still in its infancy and far from joining the ranks of the most popular motorsports series in the U.S. But with several auto manufacturers joining it in recent years, Formula E has seen its value skyrocket, Agag said.

Retired Formula One champion Nico Rosberg invested in the 11-team, 13-race series late last year and said at the time that Formula E was worth 750 million euros, or roughly $870 million. But Agag said last month that the series is worth more than that now, though he would not provide revenue figures or detailed valuations.

“Based off recent transactions, we haven’t made it public, but you can think of the valuation as significantly higher than what Nico Rosberg said,” Agag said when asked if Formula E has had any recent valuations. “Without going into specifics, yeah, it’s very close [to $1 billion].”

Alejandro Agag, CEO of Formula E, says the series is following the “classic startup model,” with heavy spending on marketing.
Photo: getty images
Alejandro Agag, CEO of Formula E, says the series is following the “classic startup model,” with heavy spending on marketing.
Photo: getty images
Alejandro Agag, CEO of Formula E, says the series is following the “classic startup model,” with heavy spending on marketing.
Photo: getty images

Agag says reaching the 10-figure realm has happened quicker than expected. The series is owned by a consortium that includes Agag, Discovery Communications, Liberty Global, Julius Baer and NewWave.

The series continues to lose money, Agag admitted, because it is spending so much on marketing and even spinoff series such as Extreme E. Agag said he signed off on a 400% increase in his marketing department’s budget this year.

Agag said the series could turn a profit immediately if it limited its marketing but that it’s following the “classic startup model,” so he doesn’t expect to be profitable in the near future.

While Formula E has seen growth in value, it still has a ways to go in terms of popularity in the U.S. The series is returning to Brooklyn this summer for a doubleheader for the third straight year, but TV viewership through 10 races on FS1 and FS2 has dropped sharply. With three races left, Formula E viewership is down 59% from this point last season, with an average of 42,000 viewers.

Digitally, Fox has seen 1.2 million minutes worth of Formula E action streamed this season, up 164% from 454,000 minutes last season. The 1.2 million minutes is the equivalent of 2,000 viewers per race for a 60-minute window.

Agag also said that Formula E is considering a second U.S. race on the West Coast. He didn’t reveal the cities being scouted, but the electric car industry has a major presence in Silicon Valley near San Francisco.  

This season the series transitioned to its second-generation car, which for the first time allowed drivers to stay in their car the whole race rather than switch cars mid-race because the original batteries didn’t have enough power to last. Other highlights this season include the launch of a high-tech ghost racing app that allows viewers to run a virtual race that mimics the actual races in real time. 

Formula E is in the midst of hunting for a new CEO to replace Agag, who will move to the role of chairman of Formula E and CEO of Extreme E. Agag said the series is down to a short list of candidates, some of whom are American. The move is being made so Agag can focus on launching Extreme E, an electric SUV series that will race in remote destinations like the Arctic starting in 2021, while still having oversight of Formula E.

More than two weeks have passed since the U.S. Olympic Committee’s deadline for USA Diving to oust its chairwoman after a damning investigation. She was still in her roles on June 6.

In February, the USOC threatened to decertify the governing body, effectively the death penalty, if it did not make 10 changes by May 20. Those included adding three independent board seats and naming one of those new members to replace Chairwoman Michele Mitchell.

USA Diving has had trouble getting in sync with the USOC’s demands.
Photo: getty images
USA Diving has had trouble getting in sync with the USOC’s demands.
Photo: getty images
USA Diving has had trouble getting in sync with the USOC’s demands.
Photo: getty images

Also, the board was ordered to clarify its conflict-of-interest policies and investigate several major decisions that may have personally enriched some board members. Jack Perkins, a former board member who was appointed acting CEO last year, and Mitchell were both specifically cited by the USOC’s investigation. 

In a statement, Perkins said the Indianapolis-based nonprofit has been working “diligently” to fully implement all of the reforms, and leaders fully expect to satisfy the USOC’s concerns. 

USOC spokesman Mark Jones said USA Diving has made sufficient progress to delay decertification even though the deadline passed. “Considering the progress that has been made thus far, it is our current expectation that the reforms will be completed in an acceptable time-frame,” Jones said in a prepared statement.

The February letter, recently obtained by Sports Business Journal, lists 12 “NGB failures” it found after the law firm Arent Fox investigated. Among the problems not previously reported: Perkins’ appointment as acting CEO, USA Diving’s promotion of a Christmas album produced by a board member’s son; an unauthorized distribution of sensitive material by board member Sean McCarthy; and the involvement of Perkins’ own software company in USA Diving.

However, the investigation also found other problems, first reported by Sports Business Daily in March, including: Mitchell applied for the CEO job while serving as board chairwoman; the board steered April’s FINA Grand Prix international competition to Mission Viejo Diving Club, where Mitchell is head coach; the board authorized a $15,500 bonus to McCarthy despite staff objections; and changes to USA Diving’s membership structure that benefited clubs at the expense of national office finances.

The USOC has ordered big changes to the structures of at least four NGBs in the past two years under the threat of decertification: USA Gymnastics, USA Diving, USA Boxing and USA Badminton. All but badminton have agreed to reforms; on May 31, USA Badminton Chairman Ben Lee said his board would not comply, leading four other members to resign.

Some critics of the USOC’s crackdown think it lacks the political will to follow through with decertification. So far, the USOC has begun proceedings only with USA Gymnastics, but put that on hold after the NGB declared bankruptcy. USOC CEO Sarah Hirshland has said that delay is to facilitate prompt settlements to victims of sexual abuse by physician Larry Nassar.

Editor’s note: This story is revised from the print edition.