F1: costs of sport are accelerating as focus changes

By LJ Hutchins

CalendarTuesday, June 17th, 2008

 
 

The costs of hosting a F1 grand prix race have grown from $11.3 million to $19.3 million in the last five years, according to an annual data report which checks out the health of the sport’s finances.

The authors of Formula Money also argue that race promoters are no longer looking to make a profit – rather they regard hosting a grand prix as a marketing exercise and an opportunity to put their region on the sporting map.

This in turn is encouraging the sport’s focus to switch from traditional venues such as Indianapolis in the US and Magny Cours in France (and possibly Silverstone in the UK if no contract is agreed) towards middle eastern and Asian nations such as India, Abu Dhabi and South Korea.

Caroline Reid, co-author of Formula Money, said: “With a ready supply of emerging markets looking to put themselves on the global map in front of F1’s 597 million unique television viewers, the sport is likely to grow further east in future.

“However, at the same time it must make sure it doesn’t lose track of its historic heartland.”

These conclusions appear to lend strength to the argument put forward by British Racing Drivers Club chairman Damon Hill and others that the British Grand Prix may be in serious danger of disappearing unless it receives government support.

The report also found that F1 races generate more revenue than any other sporting event. However the sport is not the top earner because its near rivals, America’s National Football League and Major League Baseball hold a substantially higher number of events.

But the revenue each race generates, which takes account of team sponsorship cash and money put into the enterprise by owners, is slated to fall in future as they rein in costs and try to run on a smaller budget.

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