The Rise of Formula 1

The 2021 Formula One season was watched by more than 1.55 billion viewers around the world and attracted close to 445M unique viewers. That puts it into one of the most-watched sporting events in the world. Moreover, F1 said that it was the fastest growing major sports league on the planet in terms of follower growth. In 2021 it saw 49.1 million followers across Facebook, Twitter, Instagram, YouTube, Tiktok, Snapchat, Twitch and Chinese social platforms.

Formula 1 has been in existence for more than 70 years since the inaugural season happened in 1950. Obviously, the sport has undergone numerous changes in its long-standing past. But F1’s rise to popularity in the last 5 years has been a story deserving to be told.  

Before we dive into who and what changed F1, let’s meet the important stakeholders and the parts they play in the whole F1 saga. Usually, for any sporting league, there’s a governing body that makes all the rules on and off the field – like BCCI for the IPL or the International Olympic Committee (IOC) for the Olympic Games.

(We have also written about the business model of IPL and Olympic Games as well)

But F1 is a little different here. If you watch the sport, you must have definitely heard the three letters – F I A. FIA stands for Fédération Internationale de l’Automobile which simply means International Automobile Federation. FIA is responsible for all the regulations and rules that run the sport on the tracks. You might recall any team that has a problem with the rules, complains to (or about!) the FIA.

What the FIA does not control, is the commercial aspects of the sport. The Formula One Group is the one responsible for the promotion and exercise of the commercial rights of F1. Crudely put, FIA takes care of how the cars move on the track, The Formula One Group (FOG) takes care of how the money moves off the track.   

So for our discussion, we’ll focus on the Formula One Group.

The Formula One Group and Liberty Media

The Formula One Group as an institution also has a long-standing history. One that involves name changes, fights with other bodies and also ownership changes. For the most part and until 2017, Formula one Group was run and significantly owned by a man named Bernie Eccelstone – a figure often termed as ‘F1 Supremo’ by journalists. Other owners included PE firm CVC partners who are also the owners of the new IPL franchise Gujarat Titans.

In the Bernie era, F1 was run like an old man’s club. The reach of what goes on behind the scenes of racing was highly restricted. Fans and followers were limited to watching live broadcasts of the race weekends on TV and following news through international publications. 

“Most of these kids haven’t got any money. I’d rather get to the 70-year-old guy who’s got plenty of cash… I’m not interested in tweeting, facebook and whatever this nonsense is.” – Bernie Ecclestone, 2014

This was the philosophy that ran the F1 show back then. But all this was about to change, and for good.

In 2017, the Formula One Group was acquired by a US mass media house called Liberty Media for an estimated sum of $4.6B. The way F1 is being run since then is no less than how startups growth hack their way to market or how big tech nails newer market segments.

Relaunching the brand


Liberty decided to relaunch the F1 brand within just 1 year of the acquisition and before they did that, they did their homework. A professional marketing department was set up, yes, something which didn’t exist before. For the first 3 months, all they did was research – data-backed research into the fanbase. Analysis showed that leveraging social media potential would reap tremendous benefits in alluring the casual fans and that’s what they did.

F1 Logo Change in 2017

Social media and content marketing

Then began what was a plethora of splendid content flowing across all major social platforms from the F1 channels. The restrictions around teams and drivers’ usage of social media were relaxed. Raw drama was available out in the open. By 2020, F1 became the fastest-growing major sports league on social media for 3 consecutive years. 

F1’s Youtube channel has grown 3.5x in 3 years from under 2M subs at the start of 2019 to more than 7M in March’22. Interestingly more than half of these fans are believed to be aged under 35. A survey revealed that the average age of an F1 fan has reduced to 32 from 36 in 2017, a drop of 4 years in just the 4 years from 2017 to 2021.

Data and Insights

F1 did realize the value of the hardcore fans and wanted to do something for them as well. Thus came the redesigned and revamped F1 app that provided fans with that extra mile of stats and content. 

At the heart of the strategy was – data. F1 partnered with Amazon Web Services (AWS) to build state-of-the-art AI tools to run over millions of data points collected during each race. An F1 car has over 300 sensors on it. This means a treasure trove of insights for both the teams and the fans. 

F1 also introduced an Esports league to capture the growing market of gaming. When the tracks were closed due to COVID-19 outbreak, F1 drivers such as Lando Norris took to that very game and engaged the fans from home. The F1 Esports series in itself is now a global level competition entering its sixth season in 2022.

(Find the best insights on the business of gaming and how web3 and mobile phones are changing it.) 

This data-driven approach combined with an aggressive content strategy helps F1 put out impressive content every single day. Which brings in more fans every single day.

Drive to Survive

The final curtains that hid the behind-the-scenes drama and competitiveness of F1 fell when F1 decided to let Netflix bring in cameras to the pit lane. Drive to Survive is a Netflix-exclusive docu-series that captures the raw drama that unfold as the F1 season progresses. The first season of the 10 episode series came out on 8th March 2019 which showcased the 2018 F1 season. That was the day and then there was no looking back. In March 2021, Season 4 of Drive to Survive was out. 

Netflix’s contribution in bringing new fans to the sport is no less than extraordinary. Once you get hung to the show, you automatically find yourself following the sport.    

Business Model of Formula One Group 

Now that we have seen how the new owners at Formula One group are giving F1 a new life, let’s look at what this means in terms of business. Let’s run the numbers for the group that runs the show.


Liberty Media Group is a US-based holding company that owns multiple brands such Formula One, SiriusXM – a holding company that owns multiple radio and satellite channels in the US, and the Atlanta Braves Major League Baseball team. Its chairman and chief owner is billionaire John Malone.

Liberty Media Group’s 2017 acquisition of F1 group involved loans, debentures, subsidiaries, mergers and whatnot. That is, in short, it was quite a complicated transaction if financial documents are to be looked at. 

The crux is, today Liberty Media has a publicly listed entity that tracks the performance of the Formula One Group under it. Interestingly it also involved a SPAC (Special Purpose Acquisition Company) merger back in 2017 when SPACs were not as popular. 

(Find the complete guide to understanding Blank Check Companies or SPACs here .)

There are three classes of shares of F1 Group, out of which the tickers FWONK and FWONA are more liquidly traded on NASDAQ while the third (Class B) is traded over the counter in private markets.

This is a common practice in organizations where control is key. By making separate classes of shares that might represent the same ownership in equity but different voting rights, the promoters are able to raise funds through IPOs without giving up control.

As of March’22, the market cap of Formula One Group is $13B, which is 2.8x the amount Liberty paid in 2017 to acquire it. 

Business Model of Formula One


For the calendar year 2021, the F1 group brought in a revenue of $2.1B($2136M) across the 22 races in the season. Almost $100M per race weekend. 

Where does F1’s revenue come from?

Race Promotion Fees

This ambiguous nomenclature hides what probably will come as a shock to you. Race promotion fees comprise what can be called circuit fees. Yes, the F1 Group charges the various circuits (race tracks) a hefty sum of money to hold the race at the venue. The circuits pay to let F1 use their facility. Bizarre, isn’t it?

F1 brought in $660M as race promotion fees in 2021. Although the contracts between F1 and the circuits are kept confidential, that translates to a circuit paying $30M on average to F1 for hosting the race. It is then up to the circuit to recoup this amount via ticket sales, merch and more. Now you know why F1 tickets cost what they cost! 

Media Rights Fees

Like any other major sporting event, the revenue that comes from selling the broadcasting rights of the sporting action makes up a large chunk of the pie.

In 2021, F1 Group brought in $850M by selling media rights to various media houses. It is noteworthy that the sale of media rights is usually a multi-year deal. For example, Sky sports is rumored to be paying $1.3B for broadcasting rights in the UK from 2019 to 2024.  

The key to this revenue stream lies in the fact that F1 manages the broadcasting logistics all by itself. With over 120 cameras on the trackside, several of which are onboard the cars and even on a helicopter, F1 produces its own global feed which is sent to the various broadcasters to air with their own commentary and graphics. 

Apart from the multitude of cameras, F1 also uses over 100 high-quality mics to capture the raw sounds of the racing engines. F1 does the job of filming the fastest circuit cars in action the way it deserves to be done. This arrangement also lets F1 have full autonomy and copyright on any content related to F1, which is key to its content play discussed before.


Well well well, no business is complete without an angle of advertising. And if you watch F1, you are habitual of seeing plenty.  Rolex, Saudi Aramco, Emirates, DHL are some of the words that one sees probably more times than the face of Lewis Hamilton during the race. And these companies do pay the price for this very opportunity.

F1 brought in $340M or 16% of its total revenue in 2021 via such sponsorship deals. Two key observations to be made here are that no.1, this sum only represents the one corresponding to the advertising on tracks, official F1 merch and other ‘common’ things. The logos you see on cars and the on outfits of drivers are attributable to separate deals that sponsors and individual teams do. That money is directly received by the teams.

The other observation is the insights about the changing world economy that can be derived from F1 sponsorships. Marlboro had been one of the longest-running sponsors in F1 but Tobacco companies were banned from marketing in F1. Although they’ve found cheeky ways to still get the light of the racing saga but that is a different study in shadow marketing. 

The newest major sponsor, crypto.com was born as a company as recently as in 2016. Becoming a prime F1 sponsor in such a short period of time is in itself a testimony to the meteoric rise of crypto in the mainstream. 

Others (Freight, Hospitality and More)

When you are the hosting authority of an event that takes place in over twenty countries over the course of 10 months with the who’s who of the world involved, there are numerous small and not so small arrangements made. As F1’s own financial records read that other F1 revenue that primarily comprised of freight and hospitality revenue brought in an additional $286M for the group.


Formula One Group Revenue


Thanks to the circuit fees and broadcasting rights, the F1 group brought in over $2B in revenue. But there are some pretty hefty costs associated with this revenue. Wonder what they are? Let’s find out!

FOM Payments

The biggest expense for the formula one group has been the payment it makes to the teams.

In 2021, the group paid 50% of the total revenue – a sum of $1068M to the 10 teams. Each team receives different sums of money depending on their performance but not solely dependent on it.

Enter the Concorde Agreement:

You see, broadly we have the following stakeholders in the F1 saga: The FIA (sporting regulator), The Formula One Group (the commercial boss), and the Teams. The three of them sign an agreement called the Concorde agreement that lays down the rules around revenue sharing. There have been 8 Concorde Agreements till now and the latest one was signed in 2021 and will be valid till the 2025 season.

So, the payments made to the teams (also called FOM payments or the Formula One Management Payments) include a variety of buckets that you will see later. 

Other Costs – Broadcast, Content and More

Other Costs include the costs of setting up the broadcasting feed and the costs of producing various other digital content. The F1 Group also pays the FIA a licensing fee to run the show. The group spent a total of $421M on these items in 2021. 

The general corporate and accounting expenses such as SG&A and Depreciation and Amortization accounted for $169M and $386M in costs respectively. Eventually leading to a Net Operating Income of $92M or a little over $4M per race weekend.

Here’s how Formula One Group has performed since the ownership change:

Formula 1 Financial Standings


The economics of an F1 team could be even more complex and deserves a separate discussion of its own. Nevertheless, we will try to cover a few nuances about it. 

Operating an F1 team had been an expensive affair. Until the 2021 season, teams did not have any budget caps. That meant, the richer the team, the more they could spend on getting that extra mile per hour of speed. Some teams in some years are estimated to have spent as much as half a billion dollars in a given season. 

The regulators brought in effect a budget cap of $145M per season per team from the 2021 season. This would promote a more level playing field and make the game more competitive, something which is in line with the philosophy of the new owners at Liberty Media. 

And let’s address the most burning question at the start only: How much does an F1 car cost?

An F1 car costs anywhere in the range of $12-20M to make. 

As far as the teams’ income is considered, there are a few key sources.

FOM Payments

The first one is the FOM Payments discussed earlier. The actual payout is dependent on the clauses of the Concorde agreement.

Here’s a snapshot of FOM Payments received by teams for the 2019 season. 

The C1 payments shown above are attributable to participation for at least two consecutive seasons. The C2 payments are based on their performance in the overall championship. Pretty basic till now, right?

Now here comes the tricky parts. Ferrari receives a long-standing bonus (LST) for being the team that has appeared in every season since the inception of F1. The top four teams in the constructors’ championship receive an additional $35M. Finally, there are some other payments made to teams for different clauses such as the one to Ferrari. Williams receives a heritage bonus for long participation and red bull received an additional $35M for being the first one to sign the Concorde Agreement. 

You get the idea, it’s a complicated system. 


As discussed earlier, teams are free to auction the multitude of advertising spots on cars and merch to help them fund the mission. 

Investment from Parent Entity

Each team receives some investment every season from their parent entity. Such as the Mercedes F1 team receives from the carmaker, so is the case with Ferrari, Aston Martin and others. Why so? We’ll see later.

Driver Linked Income   

This is primarily attributable to teams standing low down the grid. These teams have paid-drivers, paid in the reverse order. The drivers pay the teams for the opportunity to race their cars because let’s be honest, it’s a competitive world out there for the drivers as well. Only 20 individuals get to call themselves active F1 drivers at any point in the whole world.

Is it profitable to run an F1 team?

Well, it might come as a surprise to you but no, it is not. Or it hasn’t been till there was no budget cap.

As far as the teams backed by car manufacturers are concerned, it makes obvious sense for them to have an F1 team. It’s a straight-out signal that they produce cars that are worthy of the highest stage. 

Then what’s Red Bull doing in the competition? You may ask.

Well Red Bull in F1 is doing what it does best – Marketing. You see, the business model of Red Bull in itself is not to produce the best energy drink. In fact, Red Bull doesn’t even manufacture its own beverage. They have a third-party manufacturer. Red Bull is a marketing machine. Its sole aim is to have an image around the brand. An image of power, novelty, fearlessness and any other good trait you’d want to associate.

The moral of the story is, F1 teams haven’t been in the competition to make money from the competition directly. Breaking even is also a win given the marketing benefits the parent company receives. 

Although, it’ll be interesting to see how this income statement will change now that there’s a cap on spending by the teams.

Formula 1 in India

F1 was held in India for 3 years in 2011 to 2013 and then never again. Held on the Buddh International Circuit, all of them were won by then Red Bull driver Sebastian Vettel. Although the track was much appreciated by the F1 community but caused the stalling of the Indian GP is a dispute between the UP government and the F1 group over taxation. One says it’s a sport, other says it’s entertainment.

Future of F1

Formula One is under the radar of constant change. The regulations on and off the track keep changing. The current state of change can be seen toward making the sport more competitive. The budget cap on teams will surely add to the competitiveness. Also, given that now there’s a budget cap, owning an F1 team in itself could be a profitable business and will start attracting more bidders.

That being said, how can we talk about motor cars in the 2020s without even once mentioning EVs. Electric vehicles are all the range in the automobile world. And the world of racing is also trying to catch up. 

Formula E is a competition started in 2014 and tries to bring the thrill of motor racing just like F1 but with electric cars. Although currently, Formula E doesn’t enjoy that kind of popularity and light, it is surely climbing its way up. An interesting trend would be to see how Formula E develops itself and will it amalgamate in or takeover F1 as the epitome of racing?  

What does the future hold for F1? Well, we already saw the vision and efforts of Liberty Media for the sport. That can be summed up in just one philosophy – to turn F1 from just a motorsport company to an entertainment brand. 

What that means for the fans is more content, more competitiveness, more ways to engage, and in simple plain language, all the more fun as it’s ‘Lights out and away we go!’

A piece by Abhigyan Joshi

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