Formula 1 is in Austria, home of Red Bull Racing, this weekend for the Austrian Grand Prix. Practice started on Friday and sprints take place on Saturday. The lights go green at 9 a.m. EDT Sunday.

Formula 1 Racing is a billion dollar organization and you need money to get in the game and stay in the game. Red Bull’s Max Verstappen will be in the spotlight after he scored his third consecutive win in his last race to go 70 points ahead of team-mate Sergio PĂ©rez. But to even enter the season, drivers will pay some pretty hefty fees totaling more than $1 million. That money adds up.

Key things

  • The Austrian Grand Prix, part of the Formula 1 season, begins on Sunday, July 2, 2023 at 9:00 a.m. EDT.
  • In 2022, Formula 1 brought in a total of $2.57 billion, driven by record attendances and expanded global viewership, according to an earnings report from F1 owner Liberty Media.
  • Formula 1 teams generally earn money through F1 rewards, sponsorships and car manufacturers.
  • F1 introduced team budget caps in 2021 to level the playing field and limit team spending – the limit is $135 million per team in 2023.

How Formula 1 makes money

Formula 1 will bring in a total of $2.57 billion in 2022 thanks to record attendances and expanded global viewership, according to an earnings report from F1 owner Liberty Media (FWONK). In June 2022, F1 renewed its contract with ESPN until 2025, in a deal estimated to pay between $75 million and $90 million per year for US media rights. Sports Business Journal.

The sport could grow even more popular with celebrity investors Ryan Reynolds, Rob McElhenneyand Michael B. Jordan put his money into F1 team Alpine in a $218 million deal announced in June 2023.

Performance dictates team compensation

So how do F1 teams make money? Basically, teams are funded based on how well they score in a season. However, as teams with larger budgets tended to perform better and eliminate teams that had smaller budgets, F1 introduced budget caps in 2021 to level the playing field and limit team spending.

The spending cap was $145 million when the rule was first announced in 2021 and is set at $135 million in 2023. Historically, they have the teams with the biggest budgets were Ferrari, Mercedes and Red Bull. The F1 teams for the 2023 competition are Alfa Romeo, Alpine, AlphaTauri, Aston Martin, Ferrari, Haas, McLaren, Mercedes, Red Bull and Williams.

Investment and sponsorship

F1 teams also make money through sponsorships and investments from car manufacturers. For example, in 2019, Mercedes’ parent company, Daimler, put $80 million into the team to help them in the Constructors’ Championship. Car manufacturers look at F1 as a marketing tool and hope that winning teams will make their cars more attractive to people.

However, sponsorship is the biggest way F1 teams make money. From 2010 to 2018, F1 sponsors paid $17.8 billion, of which Ferrari’s cut was 11.8%..

Drivers

Each F1 team has two drivers who are paid by their teams. The drivers’ salary is not part of the team’s budget limit. Drivers receive a base salary, earn bonuses based on track performance, and earn money from sponsorships and endorsements. For 2023, F1 driver salaries range from $1 million to a high of $55 million.

Red Bull’s Max Verstappen, who won the 2022 F1 Drivers’ Championship, was the highest paid F1 driver that year. In 2022, Verstappen earned a total of $60 million from F1, $40 million earned and $20 million in bonuses.. WITHIn second place was tied world champion Lewis Hamilton, who earned $55 million from Mercedes.

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