Lights Out and Away We Go! Big Money in Formula One
Blog: The Tibco Blog
Reading Time: 3 minutes
As the popularity of Formula One continues to grow, many fans are curious about the dollars connected to this global sport.
The answers may surprise you.
What Is the Value of Formula One?
Formula 1 was acquired by Liberty Media in 2016 for $4.4 billion. It’s one of several sports-related assets the holding company owns. Liberty recently said that Formula One doubled its year-over-year revenues, to $380 million, with Q1 revenues reaching $180 million and a profit of $19 million.
Want to own a piece of Formula One? Shares of Liberty Formula One common stock, $FWONK, are traded on NASDAQ, where you can check its current valuation.
How Much Does It Cost to Start a Formula One Team?
The cost of starting an F1 team from scratch extends into the hundreds of millions of dollars. Constructing an F1 car, employing designers, engineers, and strategists—plus drivers—is not cheap. There is also a $200 million entry fee. That means anyone that wants to get a new F1 team on track has to pay the racing body $200 million simply for the opportunity to participate.
How Much Does It Cost to Operate a Formula One Team?
To help manage costs and create a more level playing field, F1 instituted a formal spending cap in 2021. The spending cap for each team was set at $145 million in 2021, reduced to $140 million for 2022, and is limited to just $135 million in 2023. The Mercedes team uses TIBCO’s Cost Visualizer Tool to maximize its spending.
What Is the Cost of a Formula One Grand Prix?
Ownership of tracks varies, as do the costs. Cities and track owners know that F1 is more than just trackside attendance. In the 24 hours after F1 announced the new Las Vegas Grand Prix, scheduled for November 2023, the high-end Wynn Las Vegas and Encore resorts stated they experienced the largest number of room requests in one day.
The recent inaugural Miami Grand Prix reportedly lost money. Despite selling out 85,000 race tickets, suites, plus merchandising, the organizers claimed costs exceeded expectations. Don’t feel bad for the organizers, however. Tourism officials expect the Miami Grand Prix to drive at least $50 million in revenue for the region—more than a Super Bowl. Hotels, restaurants, clubs, and more will all benefit.
2021 F1 Grand Prix attendance by race
Can I Buy an F1 Car?
Yes! But be prepared to pay up. Famed F1 champion Nigel Mansell recently auctioned off his 1991 Williams and 1989 Ferrari. The pair of F1 cars brought in $7.5 million.
What’s the Total F1 Prize Money?
The more points a team scores in a season, the bigger its share of total F1 prize money. The top team in Formula 1 garners 14 percent of the available prize money. Mercedes won its eighth Constructor’s title in 2021 and received this share, approximately $73 million. Red Bull, the second-place team, earned 12.9 percent of the prize money. Haas, which finished in tenth place, earned six percent of the prize money. The ten teams also earn varying amounts based on total F1 revenues, length of time they have been in F1, and other historical agreements.
Data To Dollars
The more victories, the more prize money. The Mercedes-AMG Petronas Formula One Team uses TIBCO solutions to improve its on-track performance. For example, the team uses streaming and visual analytics tools, including TIBCO Spotfire, to evaluate simulation results and craft optimal race strategies. Data fuels victories and has helped make Mercedes one of the most successful teams in F1 history. To learn more about how data analytics emerged as a competitive advantage for the Mercedes-AMG Petronas F1 Team, read this case study.
The post Lights Out and Away We Go! Big Money in Formula One first appeared on The TIBCO Blog.