| The funding of Formula 1 is a mystery for many | | | | Formula One is the name of the business behind |
| fans and even those inside the sport's inner circles | | | | the sport of Formula 1; it is these businessmen |
| have trouble understanding the complexities. What | | | | and financiers that control how each race is |
| is generally known is that funding for Formula 1 | | | | funded and which sponsors are given preferential |
| consists of huge sponsorship, television coverage | | | | treatment. They also decide how much to 'top up' |
| and merchandise sales. The merchandise sales are | | | | F1 teams' merchandise and sponsorship profits; |
| somewhat of an afterthought for sponsors but | | | | although this is kept a secret and can sometimes |
| as the popularity of Formula 1 is growing the | | | | cause 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 to | | | | enough money from merchandise and sponsorship |
| television coverage. Advertisers will pay for slots | | | | sales and are beginning to barter for more money |
| in the TV coverage and may even sponsor a | | | | from Formula One. Their argument is that they |
| specific channel's coverage of an event. This | | | | are the entertainers in the sport and so should |
| lucrative method brings vast amounts of funding | | | | get a bigger slice of the cake, whether this will be |
| to the organising body of Formula 1, the FIA as | | | | successful is doubtable. |
| well as its funding company, Formula One. This is | | | | The drivers are not paid from Formula One funds |
| important as Formula One is in the driving seat of | | | | but 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 out | | | | are incomprehensible to those on an average |
| these roles. | | | | wage, they are however the best drivers in the |
| The Formula 1 teams support themselves in a | | | | world and have worked hard to get where they |
| number of ways; the bigger teams will be able to | | | | are. The popular drivers such as Lewis Hamilton |
| court sponsors from some of the biggest names | | | | and Fernando Alonso can also sign separate |
| in business, whereas smaller teams must make | | | | merchandising deals, usually for such luxury items |
| do with lower profiles patrons. Teams also | | | | as watches and jewellery. |
| produce their own merchandise ranges to cater | | | | The Formula 1 gravy train is driven by the big |
| for the needs of the average fans; once again | | | | business that is Formula One, while Bernie |
| the more popular teams obviously make more | | | | Ecclestone 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 somewhat | | | | the funding ultimately demand respect. The |
| limited with their advertising freedom. As Formula | | | | bankers of the Formula One Company balance |
| 1 is ran by a small number of big business share | | | | payment and income to keep Formula 1 at the |
| holders the venue bosses are pushed out of the | | | | pinnacle of motor racing entertainment. |
| commercial decisions. Most venues do not have | | | | Seemingly the biggest losers in the Formula 1 |
| the rights to place their own signage and must | | | | world are the venues, as ticket sales are most |
| pay to host the race. The majority of money | | | | probably the smallest income when compared |
| made by venues is in the ticket and merchandise | | | | with 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 very | | | | the rich, the average fan can only afford his |
| expensive, mainly due to venue managers trying | | | | team's merchandise. With high ticket prices and |
| to recoup some of the 13 million dollars they fork | | | | the worldwide nature of the sport it is hard for |
| out annually to host a race. Hosting a Formula 1 | | | | anyone but the super rich to follow this sport |
| race however is more about the prestige of being | | | | closely from the trackside. |
| a premier world race track. | | | | |