Formula 1 is one of the most watched sport in the world and in 2014 round about 550 million TV viewers tune in to watch F1 race at some point of the season. Which means alot of countries are hoping to tie up deals with F1 to host grand prixs. Formula 1 which is owned by parent company CVC and bernie ecclestone dont own or operate any of the circuits where Formula 1 race is hosted year after year. So how does all the Formula 1 grand prix hosting stuff works ? Well I will try explain in detail in the following article.
How Formula 1 Race is Funded ?
15 of the 19 races last season were funded by respective governments of the countries where the race was hosted, around $600.5m was invested by the governments in hosting F1 races in their countries. In most cases local government is the race promoter who pay a certain fee to host F1 in their countries track. The race fees paid by promoters is single biggest source of revenue for F1’s parent company Delta Topco. But Delta Topca (parent F1 company) gets all the tv broadcast, track side advertising and hospitality revenue, having said that some of the tracks are allowed to have their own advertising banners etc but they have to pay extra fee to f1.
So in most cases local governments assist race promoters to host a Grand Prix, Promoters pay a certain fee (which is described below) to host a formula 1 race, all the race fees from different circuits makes the biggest portion of formula 1 revenue every year. But hosting a f1 grand prix does not come cheap for promoters and here is why.
Race Fee & Other Costs of Hosting Formula 1 Grand Prix:
Circuit promoter fees account for 33.6% of F1′s annual revenue and on average it costs around $40 million a year for a promoter to host a Grand Prix weekend. Some of the old tracks like, Italy, Germany, Britain, Spain pays below average race fee. But the contract to host a grand prix is always around 7 to 10 year long and race fee accelerate every year during the duration of contract.
For example if a new circuit signs a 10 year contract with F1 to host grand prix starting with 17million a year, the race fee will accelrate every year for next 10 years, where race fee will rise from 17m to 40m year. Since most of new f1 race contracts are of 10 years it takes race fee to 40m a year towards the end of contract and for the duration of 10 years a promotors has to spend £272 million just on race fess while another £360 million on maintenance and other cost to host F1 race that takes the total of 10 years to £600million.
what are the other cost of hosting a grand prix ? well lets just a take deeper look into the types of tracks and the argument between old and new circuits maintenance cost.
1) Dedicated F1 circuits
2) street Circuits
Many famous and old tracks such as Silverstone in England, Spa-Francorchamps in Belgium, Hockenheim in Germany and other tracks in Italy etc has dedicted Formula 1 race tracks. While some of the new tracks specially the one Albert Park in Australia is a street circuit which is converted to host F1 race every year.
All New Circuit of the Americas in Austin, Texas (Dedicated F1 Track)
Circuit of americas hosted its first grand prix in 2013 and it was built specially for F1 and circuit promoters has a 10 year contract with F1 from (2013-2022) and it will cost £560 million to the promoters over the next 10 years to host f1 races.
The big advantage it has over street circuit is the fact that it was built with f1 in mind and its track is modeled on many other famous tracks making it exciting.
Albert Park Australia (Street Circuit)
Albert Part is hosting F1 race since 1996 and in 2007 they signed another 10 year contract which will see them get the first f1 race every season till 2016. they pay the accelerated race fee every year but the maintenance or running cost is alot higher than the dedicated permanent F1 tracks. because its a street circuit the promoters has to build temporary grandstands, roads need to be upgraded to f1 standards, construction of safety barriers and fencing and the most expensive cost is staffing. So the total expensive of hosting F1 in albert park for 10 years is way over £600 million.
Counting the cost building a circuit and hosting Formula 1 Race:
So if you were to build a new track from scratch and host a F1 grand prix for next 10 years, how much would it cost you ? lets take a look at some of the following points.
|Track (using f1 standard technology)||£48m|
|Pit Building & Paddok Club||£34m|
|Earthwork & Infrastructure around the track tarmac||£32m|
Track (Race Circuit & Pits etc)
Cost: around £50million
The biggest expense is definitely on building a formula 1 standard track, its not your usual track for normal cars it should be built using highly advance technology keeping in mind the environment of the city country the circuit is being built. It is essential that high class meterial and certain technology is used to build track which can keep hold of itself and f1 sliding cars it rapid pace. It needs to be as flat and smooth as a snooker table. So to make sure you get the F1 standard track you need to splash close to £50 million.
Pit lane/garages & Paddokclub:
Cost: £32 million
Pit includes the garage for 10 to 11 teams for the race weekend plus it is also used during the race for pit stops, just like grandstant pit building also have several stories and on top of the pit building usually sits paddok club which are very high priced vip suits. It can cost around £30 to £35 million depending on the country and place.
Formula 1 Standard Electronics:
Cost: £20 million
We all love Formula 1 because of the high speed cars and aderline it comes with but the promoters of the race has to provide a special softward and electric system to track the speed of all cars during the race. The circuit usualy covers the area of around 1,000 acres so the entire complex needs to be secured using a certain surveillance systems.
Granstand & Hospitality Boxes:
Cost: £18 million
In most of the circuits in F1 calendar there is always that one main grandstand. it can have anywhere from 3-5 floors and be able to hold atleast 8000 fans + f1 teams personals. It also has offices spaces and 20 odd private boxes sometimes its close to the pit lane. The grandstant can cost around £20 million to be built.
The medical facility on a formula 1 circuit is very important and it works as a mini hospital to cope with any emergency in case of accidents etc. It needs to be state of the art and be able to specificly equipped with tackling emergency injuries. It can cost a promoter from £3 to £5 million.
Media & Press Boxes:
Its a big enough building which has a few rooms and a big hall where media and press from all around the world has access to live race timings and footage to give live updates etc. The drivers post race press conference also held here. It can cost around £5 to £10 million.