Formula 1: Driven by Racing Hosting Fees

Formula 1 (FWONK) is considering the elimination of Friday practice sessions, a fiscal decision that would enable teams to compete in more races without an increase in hard costs. The addition of races would increase the teams’ annual prize fund ($985.5 million in ’16) and line FWONK shareholder pockets; as race hosting fees make up 36% of the corporation’s total revenue ($1.8 billion). The 2018 calendar has a record-tying 21 races scheduled; though more could be added as F1’s governance contract allows the organization to hold up to 25 races/year.

Howie Long-Short: Racing hosting fees make up a higher percentage of F1’s revenue than any other source; with just 33% of FWONK revenue coming from the racing organizations broadcast rights. That is a drastically different model than we are used to seeing here in America. The NFL generated more than $13 billion in revenue in 2016, with 70-75% coming from media rights deals. Just 15% ($2 billion) of the league’s total revenue came from ticket sales. FWONK wants to increase the number of races on the circuit because doing so, will move the needle for them.

Fan Marino: If Friday sessions are eliminated, it’s the fans who lose the most. While tickets to a Sunday race can cost $200+, a ticket for Friday’s event can be had for less than half.

As Formula One Seeks To Cut Costs, It Could Cancel Friday Practice Sessions

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Author: John Wall Street

At the intersection of sports & finance.

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