5 ways Formula 1 makes money

F1 Grand Prix of Mexico

Formula 1 is one of the best and the most thrilling sports out there. It is also known as the most expensive sport. Each year teams spend millions to make a new car that must be successful. Today with online sportsbooks similar to the ones in the following list, which help UK players to find sports websites where they can place bets, we are going to discuss some interesting topics about F1. There are countless rules as well, which make these cars special and extremely hard to develop. Add the facts drivers are extremely well-paid and you can deduce that each team must make a massive profit. How do they do this? Here are 5 ways. 

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TV Franchise

One of the best-known ways Formula 1 makes money is via TV channels. Basically, this is a popular sport and it is present all over the world across many different channels. If you like, each of these channels or TV networks must pay massive fees to broadcast the races, and all the rest are linked to Formula 1.

Now, if you imagine how many channels there are and that each will pay an impressive fee, you can deduce that this sport will get a massive part of the income in this way. There are a lot of additional, linked ways how they make money. These can include ads, partnerships and so much more. We will take a look at the additional ways below. 

Investments

Investments are common in Formula 1. For example, Mercedes will want the team to perform better. As such, they will give millions of dollars to the team for development, hiring better drivers, and research. A team will use that money in order to become more successful. This happens every year, and many teams get the moment this way. Well, they get a part of the money for this. For instance, research may cost $250 million per season. A team will get via investments from one brand $20-80 million.

Keep in mind that not only companies can invest in teams. Shareholders can do the same thing. Today investments in sports, iGaming and other types of entertainment are common. The goal is to collect more money and develop a better car that will be more successful. The next year the same team will get even more money simply because it is successful.

We mentioned the Mercedes brand. They invested $80 million in the team in F1. Aston Martin team got $25 million. In general, each team will get a different amount; an amount investors can afford and believe is suitable. 

Driver-Linked Income

This is an interesting method and far from a common one. What this means is that a person can pay the team to race and drive the car. The best example here is Lance Stroll. He paid $30 million back in 2017 to Williams to drive the car. Yes, he did it, drove the car, and participated in the races.

There is no need to add that this will be visible only in teams that are less successful. Only smaller teams that need funding to stay in the game will use this method. Teams like Ferrari, Mercedes, and many others will not do this. They prefer to hire the drivers they want (the best ones), so they can stay on top.  

FOM (Formula One Management)

Formula One Management is a hit more complicated method here. It is considered the main method F1 makes money; hence, you can imagine its importance. In a nutshell, there are 5 divisions and 5 things we will have to mention and explain the process.

  1. Each team that is qualified for 2 seasons will get $36 dollars. It is basically a division-one payment.
  2. In the second division, a team that won most times the last season will get the most money. For instance, Mercedes gets $61 million. Williams got $13 only. The team who wins more gets more money.
  3. LST is the third division. Here we can see that Ferrari gets all the money. They get $68 million per year.
  4. The fourth division is CCD or constructors championship bonus, which is $35 million. Only teams that win many titles can get this amount of money. 
  5. The last thing here is a different system that gives money to teams according to the things they achieve or contracts they sign. For instance, Red Bull got $35 million for getting a contract with Concord. Many teams get this money, but each one gets a different amount. 

Sponsors

This is one of the oldest and still the most profitable ways F1 teams make money. The process is rather simple. A brand will want a team to display their name on the car. They will have to pay for that. We can see that there are millions at stake. For example, a brand may have to pay $70 million to get the name on the car. Obviously, it is not so profitable for sponsors, but it increases the brand name, which is extremely important today. Now, you need to know that one team will have 15-20 sponsors. Not all sponsors pay the same amount. Basically, if you want a bigger name on the car, you will have to pay more.

Another thing we must add here is that teams that are more successful will charge more to their sponsors. Less-successful teams have lower fees. But, as the team advances and becomes more successful, they will start to charge more. See, more successful teams have a better media presence; hence they can provide much better ads for the sponsors. 

Conclusion

The lack of a better word, Formula 1 makes money in many ways. These are very complicated ways in some way and they are extremely profitable. It makes it extremely popular and thousands of fans place bets on it and follow for many years. But this is an expensive sport, so the teams will still need all the moments they can get to stay in the race and win some races.




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