Racer - Fall 2013

F1’s huge television audience, which was estimated at slightly more than 500m viewers last year. The first key revenue source is sponsorship and in this field money certainly talks. The greater the potential exposure, the higher the cost.

Generally speaking, the rear wing, engine cover and sidepods are the prime logo positions, and a sponsorship deal with a top team involving any one of these locations is likely to cost around

$25m. At the lower end of the spectrum,
small logos placed on the cockpit sides or
These are F1’s aptly-named pay drivers
and, even if they fall well short of a Vettel
or Fernando Alonso in terms of pure talent,
the money they bring to a team can often
make up for it, since it can be used to push
forward development of the car itself.
Some sponsors don’t even get presence
on the cars and are instead known as
suppliers. This is a cheaper alternative, and
often doesn’t involve a cash cost. Instead, a
company provides equipment or services
and, although they don’t get TV exposure,
usually receives many of the perks which
come with on-car sponsorships – passes
into F1’s exclusive paddock, use of the team
logo in advertising and sometimes even
driver appearances at company functions.
Formula Money’s data shows that
around 42 percent of team revenue comes
from team-sourced sponsorship, with
another major source being investment
from team-owning companies at

24 percent, but the marketing benefit from AVE compensates for this investment.

POINTS MEAN PRIZES

The other major source of revenue comes from the teams’ profit share with F1.

Here’s what it costs to put your logo on some prime Formula 1 real estate – the bodywork of a front-running team such as

McLaren for a season (estimates are for both cars). Source: Formula Money

REAR WING/ENGINE COVER/SIDEPODS (LARGE LOGO) $25M FOR EACH

REAR WING ENDPLATES (MEDIUM LOGO)

$5M

LOWER SIDEPOD (SMALL LOGO) $1M

Ferrari’s Fernando Alonso is said to be on an annual retainer of $40m, a figure comparable with the highest-earning NFL quarterbacks.

Based on accounts submitted, Red Bull
Racing team principal Christian Horner
is believed to have earned $2m in 2011.
SUPPLY AND DEMAND 1 SUPPLY AND DEMAND 2
nose of the car can generally be purchased
for less than $3m with a front-running
team. Bearing in mind that these are annual
figures, the total cost of the deal can be
much greater as partnerships last for
around three years on average.

In the vast majority of cases, a team’s marketing department secures the sponsorship, but occasionally it is brought onboard by a driver. Lower ranking teams sometimes take drivers purely on the understanding that companies they have connections with will provide sponsorship.