The F1 spending cap made racing teams more attractive to investors.

• The budget cap in Formula 1 is credited by team heads for making their businesses more sustainable and increasing their valuations.
• Bringing new sponsors on board is easier with a more predictable balance sheet.
• According to Liberty Media CEO Greg Maffei, when the company got involved, the bottom teams were being traded for nothing. Currently, it is difficult to purchase a team for less than $750 million.

World-class racing experts in an elite field have been asked to spend less money to beat their rivals. As a result, they have identified a slate of new, investable assets.

Formula 1 racing team businesses are more sustainable and have higher valuations due to a league-wide budget cap, as seen by the heads of Formula 1 racing.

In the documentary "The Inside Track: The Business of Formula 1," Liberty Media CEO Greg Maffei stated that when the company got involved, the bottom teams were being traded for zero. Now, it is impossible to buy a team for less than $750 million, and the top teams are valued around $3 billion.

In 2023, the budget cap of $135 million per team restricts the amount teams can spend on developing and constructing their race cars. Prior to its implementation in 2021, top teams in the league were able to spend significantly more in a given year.

The F1 league, owned by Liberty Media since 2017, has a model similar to U.S. sports leagues that restrict team spending on player salaries, excluding F1 driver salaries.

Maffei stated that the NFL's efforts to increase revenue parity, such as implementing a cost cap, have resulted in a more competitive and compelling sport.

The 10 teams in F1 league receive a portion of the league's revenue from sponsorships and media deals, as well as individual revenue from team-specific partnerships, hospitality, and engineering efforts.

Earning money on the track becomes easier with better performance, but it requires substantial investment.

According to Guenther Steiner, team principal at Haas F1 Team, individuals investing in a race team were uncertain about the annual spending, whether it would be $200 million or $500 million, with no clear-cut answer in between.

Recently, Haas has experienced a series of investors who have been particularly aggressive, resulting from poor performance on the grid and some bad luck. In March 2021, the team announced a partnership with Russian fertilizer company Uralkali, only to drop the investment a year later after Russia invaded Ukraine.

Steiner stated that the budget cap has made it easier to bring new partners on board and has made the team's balance sheet more predictable, with MoneyGram and among its sponsors.

During the race season, F1 teams invest large sums of money to fix, enhance and optimize their cars. Mid-season changes can be expensive, but they are crucial for a team's success.

Zak Brown, CEO of McLaren Racing, stated in June during the Canadian Grand Prix weekend in Montreal that their focus is on research and development, as they are in the prototype business. They have new features on their car this weekend and will have more next weekend. The investment in new technology depends on the challenges faced with the car.

In 2018, when Brown joined McLaren as team principal, the team was incurring annual losses of up to "nine figures," he revealed to CNBC.

Our sports team is now profitable," he stated. "Much of this success can be attributed to performance-based factors, as well as Liberty's cost cap establishment when they joined.

Can you locate the replay times of "The Inside Track: The Business of Formula 1" on CNBC?

Disclosure: CNBC is a sponsor of McLaren Racing.