At a time of great discussion about the future of F1, it would appear that the sport is its healthiest ever financial state with new research pointing to considerable incomes for the series and its bosses.
So healthy are F1’s finances that the sport has outstripped is primary rival, FIFA, who finds itself similarly at the centre of considerable media focus about the future of its ageing leader and allegations of mismanagement of funds away from the sport.
15 years of growth
The study conducted by Forbes, shows that F1’s revenue grew to a total of $16.2 billion between 1999- 2013 – for comparison FIFA has only accrued $14.5 billion between 1999-2014, despite the perceived greater popularity of football.
For further contrast, in 1999 the company records for Formula One Administration listed a total revenue of just $341.5 million.
So where has the money come from:
- Merchandise and product sales at race events: $33.9 million in 2013
- The sale of cars and parts to GP2 teams: $34.1 million
- Corporate hospitability (Paddock Club): $87.8 million
- Trackside advertising and event sponsorship: $259 million
- Event hosting and broadcasting rights: $1.3 billion
This has made F1’s owners a considerable amount of money, and will surely place increasingly scrutiny on them at a time when several teams have been on the brink of financial collapse – least we forget that the sport has already lost HRT and Caterham.
Where is the money going?
The ownership of F1 is a complex structure. While many cite CVC Capital Partners as the primary owners, it is in fact Delta Topco who is the ultimate parent company of the sport, with CVC owning a 35% stake. Other shareholder include American asset management firm Waddell & Reed (20.9%), the estate of bankrupt investment bank Lehman Brothers (12.3%), the Ecclestone family trust Bambino Holdings (8.5%), and finally Bernie Ecclestone (5.3%).
In total, Topco earned a total of $1.7 billion in 2013 from F1.
The study by Forbes also shows that Mr Ecclestone has been the recipient of a considerable sum over this period. In 1995 he took a salary of $90 million from Formula One Promotions and Administration – the company he set up to negotiate the business deals for the sport. Today Mr Ecclestone is estimated to have a personal fortune of some $4 billion.
Counting the pennies
Last year the British Express newspaper detailed that Mr Ecclestone has signed deals worth an estimated $23.4 billion since he took over the helm of the sport in 1974.
Perhaps most significant of these is the pay TV deal with German broadcaster RTL, which was signed in 1991 and has generated as much as $1.4 billion in revenue to date, leading the way for further pay-per-view deals worldwide.
Similarly, race deals have been a major contributor to the F1 coffers. The Australian Grand Prix and the British Grand Prix contracts alone are believed to be worth £1.3 trillion combined until both contracts expire in 2020 and 2026 respectively.
New races have also played their part in bolstering the sport’s finances, with the Russian Grand Prix estimated to be worth some $44 million per event.
Popularity or profitability
Despite drawing over 425 million television viewers in 2014, F1 is losing its audience in its heartland (a 5.6% year-on-year decline in viewers) and many leading commentators have voiced their concerns about the popularity of the sport
Many, myself included, have pointed to the impact of pay TV deals on dwindling viewing figures in countries like Germany and the UK – where the basic Sky Sports F1 package has increased in cost by 55% over the past three years.
When teams are facing increasing financial restrictions and fans are feeling the pinch to follow the sport they love, how long can those at the top continue to take without inciting the same backlash that FIFA has faced from football fans worldwide?