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F1 to lose $2.2bn through rival series

NEWS STORY
19/06/2009

The eight teams which have announced their plan to set up an F1 breakaway series will take with them more than US$2.2 billion of annual investment into the sport, according to research from industry monitor Formula Money.

The rebel teams – Ferrari, McLaren Mercedes, Toyota, Renault, BMW, Red Bull Racing, Toro Rosso and Brawn GP – have revealed that they will begin preparations for a breakaway series after negotiations broke down with F1's governing body the FIA over cost-cutting regulations for 2010.

F1 is set to lose much more than just famous names. The eight teams bring US$2.2 billion annually to the sport in sponsorship, supplier deals and team owner contributions, representing 47% of F1’s total revenue generation in 2008. It comprises US$1.5 billion in team owner contributions, US$667 million in sponsorship revenues and US$54 million in supplier deals.

F1 is likely to suffer immediately from this development because fans will be less likely to book tickets in advance for F1 events next year. This could make it more difficult for race promoters to pay F1’s hosting fees which average US$23.7 million per race.

TV stations with F1 contracts are also likely to want to renegotiate contracts in light of the sport losing its eight top names. These teams also spend huge amounts on F1’s corporate hospitality and on trackside advertising so their departure will further impact F1’s revenue stream. F1 requires around US$550 million in annual revenues to meet its costs and liabilities so it needs to bring in at least this sum to remain solvent.

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