In 2021, Formula 1 (F1) grossed $2.14 billion, second only to the European Champions league soccer tournament. What is F1, and how does it make money?
What is F1?
F1 is a car race competition, with a number of races held around the world called Grand Prixes. The first competition was help in Turin, Italy, in 1946. Each competition is moderated by the FIA, the Fédération Internationale de l’Automobile. Today, 10 teams compete, and each are allowed two cars.
How does F1 Make Money?
Teams spend tens of millions of dollars per car, and this doesn't even include the price of the driver, maintenance, marketing, operations, and many other costs, however the bulk of these expenses are not paid to F1.
The most important revenue source for F1 is broadcasting rights and ticket sales. 1.5 billion fans is worth a lot to broadcasting companies, and no single company has secured the exclusive right to broadcast so far.
Another large category, common in sports, is sponsorship. Other large companies compete for the right to display their logos across the event, and pay hundreds of millions for multiyear contracts.
Second, is merchandise. With more than 1.5 billion fans worldwide, Statista estimates that Formula 1 hats are the most popular F1 product.