The Business of Formula 1

JEDDAH, SAUDI ARABIA - MARCH 27: A general view over the grid preparations showing Pole position qualifier Sergio Perez of Mexico and Oracle Red Bull Racing preparing to start the race during the F1 Grand Prix of Saudi Arabia at the Jeddah Corniche Circuit on March 27, 2022 in Jeddah, Saudi Arabia. (Photo by Clive Mason/Getty Images)

As the world’s most-watched annual sport, Formula 1 has built a global reputation of glamour, prestige, sporting distinction, and big business.

Valued at $10 billion, this high-octane sport has been able to pull in sponsorships from the world’s top global brands and amass audience numbers of over 471 million per year.

Over the years, the sport has been a magnet for the world’s wealthiest stakeholders and individuals, a trend that’s not likely to diminish anytime soon, particularly since major media and production companies like Netflix are reportedly showing interest in purchasing a stake. In this article, we’ll be diving into the business of F1, revealing those top-earning drivers and team owners as well as taking a look at the sponsorships and revenue streams that make it all possible.

Who Owns Formula 1?  

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For decades, there was only one name associated with the leadership of F1: former Chief Executive, Bernie Ecclestone. After purchasing the Brabham team in 1971, Ecclestone famously gained a seat on the Formula One Constructers’ Association and began decades of reform that would transform the sporting promotion into the multibillion-dollar business it is today.

In 2021, the Formula One Group is now owned by Liberty Media Corporation and has its own Nasdaq listing (FWONK). In total, F1 has a market capitalisation of $5.6 billion, largely driven by its right to generate revenue from F1 races for the next 100 years.

How does Formula 1 make money?  

BUDAPEST, HUNGARY - AUGUST 01: Max Verstappen of Netherlands and Red Bull Racing fans show their support before the F1 Grand Prix of Hungary at Hungaroring on August 01, 2021 in Budapest, Hungary. (Photo by Peter Fox/Getty Images)

The amount of revenue now generated by F1 is staggering, but it’s absolutely critical to the success of the sport and its longevity. Revenues generated by the group fund core pillars like driver salaries, car development and maintenance, race logistics etc.

With so much riding on profitability, it’s perhaps no surprise that the F1 group has been able to generate several income streams throughout the decades.

Presently, F1 makes its money through a combination of hosting fees, broadcasting, sponsorship, and freight and corporate hospitality.

Formula 1 Sponsors 

F1 sponsorship

To date, over 300 brands have partnered with F1, each spending millions to advertise their logos on the sport’s fleet of high-performance vehicles.

In 2017, Raconteur calculated that it would cost an average of $15 million for a sponsorship deal with a top team, which includes logo placement on prime spots such as the sides of a car or its rear wing.

To date, the top-ranking big spenders are:

  • Marlboro – $2,023 million
  • Vodafone – $692 million
  • Petronas – $690 million

A recent inclusion to the stable of corporate sponsors is PokerStars, the global gaming brand known for its online poker solutions and live events such as the EPT Monaco – a favourite pitstop with several F1 drivers on the Monaco circuit. The brand has secured a multi-year deal that will run to 2023, with exclusivity throughout the European market broadcast per season.

Who are the Highest Earners in ths sport? 

Wolff: If you lose, it's not a success story

Let’s face it, a paycheck at any level from the F1 Group is never going to be disappointing, however, there are a few key individuals who have reached the upper echelons of the sport and are compensated accordingly.

Lewis Hamilton currently holds the title of the highest-paid driver in F1. With $65 million in 2022, the British racing star ranks 17th on Forbes’ list of the 22 highest-paid athletes. His income this year includes $55 million generated from on-track earnings, being the second highest paid on the grid, behind only Max Verstappen.

If the millions of dollars earned through sponsorship are taken into account, Hamilton’s total income has surpassed that of Michael Schumacher and has set a new record for F1 driver income.

On the grid, Ferrari and Mercedes are the highest-paid teams per year, but who is the richest team owner?

That honour goes to Dietrich Mateschitz, co-founder of Red Bull and owner of Red Bull Racing, with a net worth of $27 billion. In addition to owning 49% of the entire Red Bull company, the savvy businessman is also the owner of the A1-Ring racing circuit, which was the former home of the Austrian Grand Prix.

Formula 1 by Key Numbers 

  • 471 million – the total global TV audience per year
  • $28.7 million – the average fee per race in 2020
  • $762.8 million – the total F1 broadcasting revenue generated in 2020
  • $301.1 million – total advertising and sponsorship revenue, 2020
  • $90 million – annual corporate hospitality revenue