Formula 1 Racing is a billion-dollar organization, and you need money to get in and stay in the game. Drivers pay pretty hefty fees including a basic registration fee that costs over $11,000, and an extra $2,230 per point from the previous season. F1 2022 champion, Max Verstappen, had to pay over $1 million just to enter the 2023 season. That money adds up.
Key Takeaways
- In 2022, Formula 1 brought in a total of $2.57 billion, driven by record attendance and expanded global viewership, according to an earnings report from F1’s owner, Liberty Media.
- Formula 1 teams generally make money through F1 prize money, sponsorships, and car manufacturers.
- F1 implemented 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 brought in a total of $2.57 billion in 2022, driven by record attendance and expanded global viewership, according to an earnings report from F1’s owner, Liberty Media (FWONK). In June 2022, F1 renewed their contract with ESPN through 2025, in a deal estimated to pay $75 to $90 million a year for U.S. media rights, according to the Sports Business Journal.
The sport could grow even more in popularity, with celebrity investors Ryan Reynolds, Rob McElhenney, and Michael B. Jordan putting their 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? Essentially, teams are funded based on how well they score per season. However, since teams with bigger budgets have tended to perform better and shut out teams that had smaller budgets, F1 implemented 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 for $135 million in 2023. Historically, the teams with the biggest budgets have been Ferrari, Mercedes, and Red Bull.The 2023 F1 teams competing are Alfa Romeo, Alpine, AlphaTauri, Aston Martin, Ferrari, Haas, McLaren, Mercedes, Red Bull, and Williams.
Investments and Sponsorships
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, hoping winning teams will make their cars more appealing to people.
However, sponsorships are 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. Driver pay is not part of the team budget cap. Drivers are paid a base salary, earn bonuses based on their performance on the track, and earn money from sponsorships and endorsem*nts. For 2023, the salaries for F1 drivers range from $1 million to a lofty $55 million.
Red Bull’s Max Verstappen, who won the F1 drivers’ championship in 2022, was the highest-paid F1 driver for the year. In 2022, Verstappen made a total of $60 million from F1, earning a salary of $40 million and $20 million in bonuses. Seven-time World Champion Lewis Hamilton came in second, earning $55 million in salary from Mercedes.
