This article is posted in collaboration with an outside sponsorship client. The opinions and information contained within do not necessarily represent Frontstretch and its staff.
With 10 teams, 20 cars, hundreds of millions of dollars spent, and thousands of jobs created annually by each team, there’s no doubt that Formula 1 boasts an incredible business performance.
Of course, there’s no ignoring the global appeal that comes from the cars’ exotic nature or the drivers’ superstar status.
NASCAR remains on top of its game; IndyCar maintains its open-wheel popularity, and F1 has become the hotbed churning increased profits year-on-year.
Among many other things, it generates record global viewership and attendance and attracts investments, sponsorships, and partnerships from other world sectors. For instance, many online casino gaming platforms have partnered with F1 brands and stars for advertisement and endorsement. These endorsements have been pivotal in guiding players who want to choose online real money casino in making the right calls.
Let’s see some numbers and strategies that explain the business side of the biggest motorsport competition.
In 2022, Formula 1 generated a total revenue of $2.573 billion, a notable increase from the $2.136 billion earned in 2021. Moreover, the business experienced a substantial boost in profits.
Although it reported corporate losses of $66 million, its operating income, which is a type of profit, surged to $173 million. This marked an impressive 333% rise from its $40 million active revenue in 2021.
Analysts say the drastic rise in profits was mainly because the coronavirus pandemic affected attendance over the last two years. Other proposed causative factors included growth in hospitality and sponsorships.
Meanwhile, freight necessary to move teams around the globe, driver salaries, and general administrative costs for planning and promoting events increased the business’ expenses.
The 2022 United States Grand Prix brought a record attendance of 444,000 – and analysts predicted that this year would usurp that feat.
Two events – the 2023 British Grand Prix and the 2023 Australian Grand Prix – recorded 480,000 and 444,631 weekend attendance.
Of course, we couldn’t tell what’s to come before the year runs out. Total attendance for 2022 was 5.7 million, up 36% compared to 2019, the year before the pandemic.
Growing Television Viewership
F1 reached new agreements with ESPN for extensions in the US, Latin America, Mexico, and the Caribbean. Formula 1 will also air on ESPN Extra and digitally on ESPN Play in the Caribbean. It will air on ESPN and the Fox Sports networks in Argentina and Chile.
ESPN.com and other social media will also host a dedicated F1 coverage throughout the season. The extension with ESPN for the US that runs through the end of the 2025 season is between $75 million and $90 million yearly.
In a display of increasing popularity in the US, ESPN set records for viewership last year, as it posted an average of 1.21 million viewers per race across ESPN, ESPN 2, and ABC, a 28% increase over the 2021 TV coverage record of 949,000 average viewers.
The 2022 season also became the first in US TV history, where the average viewership per race reached 1 million. Meanwhile, the race reported an annual global TV audience of 1.55 billion.
Sponsors troop to Formula 1 as race schedules are increasingly global. Brands looking to tap global or regional audiences have their names on car liveries for a season or specific races.
As the race becomes more prevalent in America, more brands attach themselves to the competition, with Heineken and Mercedes investing heavily in 2023.
Heineken, the presenting sponsor of the Las Vegas Grand Prix, is recording spiralling interest as a November night race. Alongside Mercedes, the presenting sponsor, Heineken is now a sponsor of all F1 races on the Walt Disney Co. of networks of ESPN and ABC.
Other major brands that are part of the F1 racing series sponsorships include SalesForce, Rolex, AWS, Qatar Airways, MSC Cruises, Amaco, Liqui Moly, and more.
Key Strategies That Made F1 a Global Sports Business Leader
Next, we consider leading business strategies other companies and SMEs can learn from F1 and its teams and apply to their enterprises.
Networking with External Partners
Formula 1 is a highly complex and sophisticated sport, not just because of how deathly speeding at breakneck rates appears on TV but because of the complex network of partners involved.
To begin with, most teams don’t even build their engines, save teams like Mercedes, Ferrari, and Renault.
Red Bull has ultimately partnered with Honda to create their machines since 2019.
One can only imagine the complex network of global partners team members have to depend on the path to their success.
Leveraging Data in Decision-Making
As important as a driver’s insight is, large amounts of data account for many decisions during car development. A Formula 1 car has hundreds of sensors measuring the performance of every tiny aspect of the vehicle.
The teams obtain and analyse these data through practice and qualifying to make the right decisions for the race.
Investing in the Right Talent
Red Bull claims the world record for the quickest pit stop, establishing themselves as pit stop champions, thanks to their highly coordinated team of 20 members. Charles Leclerc, Ferrari’s star driver, previously with Alfa Romeo, has delivered impressive results for his team despite a less competitive car.
Formula 1 is a people-driven business, being a highly tech-oriented sport. The same mantra should hold for every business enterprise in all industries, regardless of their size.
Formula 1 has constantly been evolving in all aspects – viewership, social inclusion, and profits. Its recent sterling business performances and record-breaking viewership have undoubtedly placed it among the highest class of international motorsports racing globally.
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