Jeff Moorad has exited his race to be on top of the most popular sport in the world.
His MSP Sports Capital sold its equity interest in McLaren Racing, which includes its famous Formula 1 team.
While transaction details weren’t disclosed, the Axios website said the transaction valued McLaren Racing at “more than $5 billion,” which sets a record valuation for a racing team. Moorad led an investment in 2020 when it was then valued at $500 million.
“When we invested in McLaren Racing, our goal was to bring that same experience, capital, and commitment to help restore one of motorsport’s most legendary brands,” Moorad said in a statement. “We are proud to have played a role along with our partners in strengthening McLaren’s foundations — its leadership, infrastructure, and competitive edge—and to see the team once again fighting for championships.”
The transaction highlights a remarkable finish for Moorad, whose career has run from being a superstar agent of MLB players to co-owner and chief executive of the Arizona Diamondbacks and San Diego Padres.
Moorad’s venture into F1 began in 2020 with an unusual turn when his firm took a stake in McLaren Racing, which was on the verge of bankruptcy. Since then, McLaren Racing has ridden to higher fame as part of “Drive to Survive,” one of the most successful shows ever on Netflix. Last December, McLaren driver Lando Norris secured the team’s first F1 Constructors’ Championship in 26 years with victory in the season-ending Abu Dhabi Grand Prix.
“It’s the only global league in the world,” Moorad previously told the Business Journal.
“Formula 1 is a global league that literally conducts its affairs all over all the world.
“More than 1 billion fans watch it annually. 95 million people watch every one of Formula 1’s 24 races every year.”
The Start
In 2013, he created Moorad Sports with the idea of disciplined investments in sports; the co-founder was Peter Ueberroth, who became famous for organizing the 1984 Los Angeles Olympics.
He initially became interested in a F1 team called Force India, which was available for purchase because it was on the verge of bankruptcy. When he found out that Jahm Najafi, a friend from his days in Arizona where he is a minority owner of the Phoenix Suns, was also considering purchasing the team, the pair joined forces.
Moorad renamed his firm MSP Sports Capital, where he is the CEO and Najafi chairman.
In their interest to acquire a F1 team, the pair got to know the key investors at Mumtalakat Holding Co., the sovereign wealth fund of Bahrain and the majority shareholder of McLaren Automotive, which owned the racing team.
Around April of 2020, at the height of the pandemic, Moorad and Najafi received a call from Paul Walsh, who had just become executive chairman of the McLaren Group and who was previously CEO of Diageo, the world’s largest spirits company, saying the racing team was looking for capital.
MSP’s investment of $250 million in the racing team was essentially debt tied to warrants and an annual coupon; MSP’s ownership was an initial 15% that rose to 33%.
In the five years since the investment, Moorad and his team helped McLaren build its brand; sponsorships rose sevenfold to more than 50, including Google and Irvine-based Alteryx.
Last April, Mumtalakat completed the sale of McLaren Automotive to the sovereign wealth fund of Abu Dhabi. The latter fund then became owner of a stake in McLaren Racing.
The buyout of the MSP stake will enable Mumtalakat and CYVN Holdings, an advanced mobility operator and investment vehicle based in Abu Dhabi, to increase their share and assume full ownership of the iconic British motor racing business. Mumtalakat will continue as the majority shareholder with CYVN owning a non-controlling stake.
Moorad and Najafi, who was the vice chairman, both gave up their seats on the board of directors of McLaren Racing.
“Formula 1 has transformed into a global media and entertainment platform thanks in no small part to the vision of savvy team owners like McLaren Group Limited, who have demonstrated time and again, year after year, the ability to drive innovation, performance, and results in a sport we believe has no equal in terms of its long-term economic potential,” Najafi said in a statement.
“We are honored to have been able to work with Mumtalakat and the McLaren team, and we look forward to staying involved in this incredible sport as active supporters.”
$5B+ Value?
If the $5 billion plus valuation is true, then MSP’s stake is worth an estimated $1.65 billion, making it a reported 10-fold return. The Business Journal’s article in April estimated the investment was a six-fold return at that time. The previous highest valuation for a racing team was $4.8 billion, which Ferrari’s F1 team obtained last year.
MSP’s investors included four family offices, including Rob Walton of Walmart lineage and whose family owns the Denver Broncos, as well as private equity firm Ares Management and UBS O’Connor, a hedge fund subsidiary of Swiss bank UBS.
MSP, which is based in New York, is a private investment firm that makes equity and credit investments on five continents. Current investments include a controlling interest in the X Games and the forthcoming X Games League and holdings in European football clubs including Estoril Praia of Portugal, AD Alcorcón of Spain, SK Beveren of Belgium, FC Augsburg of Germany and Brøndby IF of Denmark.
The firm also made a 2023 investment in the Premier League’s Everton F.C. that it said it successfully exited a year ago.
Moorad, whose love of racing has grown to the point where he puts an actual F1 car in the yard of his Balboa Island home during Christmas, said he’s “opportunistic” in his investments.
“It’s really about a chance to align with a high-level management team and with a business that has a chance to grow and prosper,” Moorad said. “We’ll only invest if we can be a value add to that equation and be able to help the business progress.
“At the end of the day, it’s turned out to be a fabulous investment.”
