Is F1 Too Expensive?

Formula One is possibly one of the most expensive, if not the most expensive sports to participate in. This has led to many to complain about the cost crisis currently underway within the sport. Smaller teams including Caterham and Marussia have struggled with the later team folding at the end of the 2014 season.

This turmoil led to a situation this past fall where there were only eighteen cars on the track in Austin at the United Sates Grand Prix. Two teams, Caterham, and the now defunct Marussia could not afford to enter the race. This comes on the heels of the 2012 collapse of HRT.

It also raises questions of how level the playing field is in Formula One. The top team in terms of spending and performance, Red Bull Racing, spent £177m ($270m) or £8.8m ($13.5m) per race. This is in contrast to Marussia the eleventh ranked team, spent less than half of that total, leaving them at a large disadvantage. Such a disadvantage made it difficult to compete and helped to hasten their eventual collapse.

The collapse of some of the constructors had been predicted before though. Max Mosley warned on teams collapsing years ago and it looks like some of the teams in Formula One could be heading towards a dark conclusion.

Why is Formula One So Expensive?

To understand why teams are struggling it is important to know what makes F1 racing so expensive. To start car costs somewhere in the neighborhood of £1.7m ($2.6m), and each team needs two of them. Each driver is allowed and usually goes through eight engines. Usually engines amount to about 10% of an annual team budget. Then there are the costs of operating the team. This includes salaries for a couple hundred people from promotional staff, to drivers, to pit workers. It also includes the cost of transporting two cars, spare parts, engines, tires, and staff around the world to the various Formula One events.

Attendance Problems

In recent years Formula One has faced attendance problems at some of its marquee events. Events in Abu Dhabi and India have struggled in the 2014 season to draw in spectators. And five years ago the Montreal Grand Prix did not go ahead at all for a lack of an overall sponsor. These attendance issues compound the problems for many teams. It decreases the value to corporations realised from sponsoring the teams in races as lower attendance means a smaller audience views the sponsorship ads.

Does Management Care?

There is little doubt Formula One has become too expensive, not only for teams but also for patrons. The reality is F1 racing is a niche sport, and as a niche sport it is important to keep the competitive field as broad as possible in order to keep patrons in the seats. At this point many fans have rightly concluded management is unfazed by the prospect of a 2015 season where there are only 18 cars on the grid. Their actions seem to indicate a preference for fewer teams, while patrons reducing their attendance indicate a preference for a more competitive field.

  • DWaterford

    According to a recent report, Cristiano Ronaldo earned $52mil in salary/winnings in 2014 and Lionel Messi around $42mil.  That in respect to a football team made up of 11 players on the field and a few on the bench.  I am not sure how much the rest of the players in the team earn.  My guess is that they earn a decent wage too.  At the end of a year, after all these players have been paid, what does the world have remaining?  Do we have safer soccer balls?  Do we have grass which is technically improved and impacting the lives of millions?  Nope!  We have a spectacle for those that enjoy soccer.  If it costs $270mil to run Red Bull who according to this report is the most expensive, how does that spend compare to that of running a soccer team?  And, at the end of the year, what benefit does the world have from this sport – again, other than the spectacle.  How much technology in the cars we drive or are passengers in, comes from Formula 1?  The point is, the money is spent and it creates a spectacle and improves all road users lives.

    Yes, the sport is expensive.  So What!  If you can’t stand the heat then stay out of the kitchen I say.  To the FIA I say reduce the rules that govern the teams so much.  Let them develop the cars freely.  Over time, the most efficient, fastest, best cars and teams will reign.  These manufacturers will change over time.  That is what spectators pay to watch.  Technology developed by genius engineers in the hands of masters.  This budget cap bull needs to go out the window.  Let the teams spend what they want.  The highest spending teams will realise its not worth it and reduce their own budgets.  I want to aspire to driving a Ferrari which I really feel and see, has its roots on a formula 1 track.  Something is wrong when the sports car I buy for the road has a bigger engine and more fierce sounding exhaust tone than that of the formula 1 car it’s manufacturer races on week ends.

    Just my 2 cents worth …

    A loyal F1 Fan!