Formula One Funding; Merchandise, Sponsorship And Big Business

The funding of Formula 1 is a mystery for manyFormula One is the name of the business behind
fans and even those inside the sport's inner circlesthe sport of Formula 1; it is these businessmen
have trouble understanding the complexities. Whatand financiers that control how each race is
is generally known is that funding for Formula 1funded and which sponsors are given preferential
consists of huge sponsorship, television coveragetreatment. They also decide how much to 'top up'
and merchandise sales. The merchandise sales areF1 teams' merchandise and sponsorship profits;
somewhat of an afterthought for sponsors butalthough this is kept a secret and can sometimes
as the popularity of Formula 1 is growing thecause friction between teams.
merchandise market is also on the increase.The teams in recent years have not been making
Formula 1 is like many other sports in respect toenough money from merchandise and sponsorship
television coverage. Advertisers will pay for slotssales and are beginning to barter for more money
in the TV coverage and may even sponsor afrom Formula One. Their argument is that they
specific channel's coverage of an event. Thisare the entertainers in the sport and so should
lucrative method brings vast amounts of fundingget a bigger slice of the cake, whether this will be
to the organising body of Formula 1, the FIA assuccessful is doubtable.
well as its funding company, Formula One. This isThe drivers are not paid from Formula One funds
important as Formula One is in the driving seat ofbut are employees of the racing teams. The
presenting the Formula 1 package to the public,astronomical sums that many of them receive
hence it needs immense funding to carry outare incomprehensible to those on an average
these roles.wage, they are however the best drivers in the
The Formula 1 teams support themselves in aworld and have worked hard to get where they
number of ways; the bigger teams will be able toare. The popular drivers such as Lewis Hamilton
court sponsors from some of the biggest namesand Fernando Alonso can also sign separate
in business, whereas smaller teams must makemerchandising deals, usually for such luxury items
do with lower profiles patrons. Teams alsoas watches and jewellery.
produce their own merchandise ranges to caterThe Formula 1 gravy train is driven by the big
for the needs of the average fans; once againbusiness that is Formula One, while Bernie
the more popular teams obviously make moreEcclestone holds a small part of the power in
money.Formula 1; the big businesses that put up a lot of
Venues in the Formula 1 calendar are somewhatthe funding ultimately demand respect. The
limited with their advertising freedom. As Formulabankers of the Formula One Company balance
1 is ran by a small number of big business sharepayment and income to keep Formula 1 at the
holders the venue bosses are pushed out of thepinnacle of motor racing entertainment.
commercial decisions. Most venues do not haveSeemingly the biggest losers in the Formula 1
the rights to place their own signage and mustworld are the venues, as ticket sales are most
pay to host the race. The majority of moneyprobably the smallest income when compared
made by venues is in the ticket and merchandisewith the huge TV sponsorship and merchandise
sales once fans are inside the track.deals. In what is seen as an exclusive sport for
This explains why Formula 1 tickets can be verythe rich, the average fan can only afford his
expensive, mainly due to venue managers tryingteam's merchandise. With high ticket prices and
to recoup some of the 13 million dollars they forkthe worldwide nature of the sport it is hard for
out annually to host a race. Hosting a Formula 1anyone but the super rich to follow this sport
race however is more about the prestige of beingclosely from the trackside.
a premier world race track.