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The business ($) behind F1

The Economics of a Formula 1 Team

Formula 1 is one of the most expensive sports in the world, with teams carefully prioritizing spending to balance racing success and profitability. Introduced in 2021, the FIA's spending cap of $135 million (€121 million) in 2023 covers car-related spending, but excludes big-ticket items like engines, valued at $10 million (8. 9 million euros), and driver salaries, which vary considerably depending on the team. Red Bull Racing spent around $55 million (49.6 million euros) on driver salaries in 2023, while Williams Racing only spent $4 million (3.6 million euros). Logistics is also a significant expense, with teams spending around $100 million (€90.3 million) on travel. Despite the high costs, F1 teams remain motivated by the non-monetary rewards of brand equity and global recognition.

The Evolution of the Formula 1 Business Model

Formula 1 initially aimed at a wealthy audience through strategic broadcast rights, luxury brand advertising and race hosting fees. This model changed dramatically in 2016 when Liberty Media acquired F1, focusing on audience engagement through digital channels. The launch of F1 TV, social media presence and Netflix series "Drive to Survive" have contributed to a global fan base of around 500 million, a third of whom joined after digital expansion. This case highlights the importance of visionary leadership, omnichannel engagement, and strategic partnerships in business growth.

(Sources: ( BMinc / DBMsport )


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