F1: The incredible cost of racing

Since its inception in 1946, many have considered Formula 1 to be the pinnacle of motorsport. With the fastest cars and the highest level of racing, the best of the best participate in the sport, and it is growing rapidly. With a cumulative TV audience of 1.55 billion in 2021 and F1 expecting to sell tickets for all of its record twenty-two races, it’s not hard to see that F1 is one of the biggest and most popular sports in the world. However, with billions of dollars fueling the sport, F1 is also perhaps the most expensive sport in the world.

From powerful hybrid engines to efficient energy recovery systems and lightweight carbon fiber chassis, F1 teams spend hundreds of millions of dollars every year to develop the fastest car possible. Prior to 2021, top teams such as Mercedes have spent over $450 million in a single season to develop a championship-winning car. In 2021, a budget cap rule was put in place to create a more competitive field. This year’s budget gives each team $140 million. The cap covers car performance expenses such as car design and manufacture, but excludes marketing costs, driver salaries and repair costs.

The cost cap figure for 2022 is not final, however. With inflation soaring around the world, transportation and logistics costs are now eating into the budgets of many teams, and it’s not hard to see why.

F1 is one of the most logistically challenging sports in the world. Twenty-two races, twenty countries and five continents in less than nine months. 1,540 tons of material and 532 vehicles are transported more than 74,500 miles by land, air or sea. DHL, F1’s official logistics partner, uses between five and seven Boeing 777 freighters for a flyaway event (a race outside Europe). This is what it costs to organize F1 races.

Red Bull team principal Christian Horner said: “Seven of the teams would probably have to miss the last four races to hit the cap this year… Energy bills, cost of living, costs are increasing dramatically. exponential, and F1 is not exempt. Freight has quadrupled and it’s not something we can control.

Fortunately for Red Bull and the rest of the grid, the F1 Commission recently agreed to a 3.1% increase in this year’s budget to account for inflation. While these rising costs are factored into the budget cap, another major cost is not: driver salaries. With salaries of up to $40 million and half of the roster earning over $10 million, teams still need to make money and profit if they hope to compete. F1 is a business, after all.

F1 teams can make money in many ways, from manufacturers to payments from F1 itself, but the most lucrative way is through sponsorship. Each team has a main or technical sponsor and smaller additional sponsors. Perhaps the most recognizable is Oracle Red Bull Racing, with title sponsors like, you guessed it, Red Bull and Oracle. The energy drink giant paid nearly $2.3 billion from 2004 to 2018, and the American tech company recently signed a five-year, $695 million sponsorship deal with the F1 team. Another notable sponsorship is between Dell Technologies and McLaren, which recently signed a multi-year extension to continue its four-year partnership.

F1 finances are complex, with billions and billions of dollars flowing through the sport each season. For example, hosting an F1 race could cost up to $1 billion alone, with annual hosting costs up to $55 million, running costs averaging $57.5 million per year and construction costs of approximately $270 million per circuit.

Much like F1 cars, the sport of Formula 1 has thousands of moving parts, all backed by finance. From logistics to development to race organisation, Formula 1 is perhaps the most financially influential sport in the world.

Sohum Pavaskar is a writer for the Bear Bytes blog. Contact him at [email protected].

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