Formula One could collapse

[fritticaldi]

We are all going through uncertain times. This global pandemic hasnt spared anyone. The top level of motorsports , Formula One is no exception. Without revenue ( the races have no fans) How much longer can the sport survive? Any thoughts?

[Jolle]

We are all going through uncertain times. This global pandemic hasnt spared anyone. The top level of motorsports , Formula One is no exception. Without revenue ( the races have no fans) How much longer can the sport survive? Any thoughts?

I think it’s time for you to look a bit deeper into the economics of teams, races and maybe in general.

So, as a first step, find out where F1, the FIA and Liberty take the majority of their income. Small spoiler, it’s not the spectators in the stands.

[Big Tea]

The teams probably will not lose much from lack of spectators at the track, maybe some merchandise, but the tracks themselves will be slammed. It takes a full crowd and sponsorship just for them to pay F1 let alone the track workers and upkeep.

[fritticaldi]

We are all going through uncertain times. This global pandemic hasnt spared anyone. The top level of motorsports , Formula One is no exception. Without revenue ( the races have no fans) How much longer can the sport survive? Any thoughts?

I think it’s time for you to look a bit deeper into the economics of teams, races and maybe in general.

So, as a first step, find out where F1, the FIA and Liberty take the majority of their income. Small spoiler, it’s not the spectators in the stands.

They make their money from television and the sponsors around the track ( Rolex, Heineken etc) . Still , zero attendance has to hurt the promoters of the race and to some the degree merchandise vendors . Just to give you an example, ticket holders of last years Canadian GP have not been reimbursed from the cancellation of the 2020 race.

[cooken]

Just to give you an example, ticket holders of last years Canadian GP have not been reimbursed from the cancellation of the 2020 race.

Where did you get that from? My tickets got refunded...

[fritticaldi]

Some people were complaining that they were not reimbursed. This was about 7 to 10 days ago. It was on the facebook page of fanabox ( a store selling F1 merchandise in Montreal)

[Jolle]

There are more then enough races where the promotor isn’t dependent of income of crowds, mostly in authoritarian countries or directly owned by a sponsor. As we’ve seen last year, Liberty has enough income to financially support the promotors of tracks that are. It’s just a slight bump and a shift in income. All the support workers, like food, hospitality and on track merchandise, well... they have hit rock bottom but that has no influence on F1 itself.

In other words, Formula one is financially very healthy. Even more then before due to the cost cap (a big cut in expenses while income stays stable of goes up)

[notsofast]

Perhaps a more realistic scenario is Mercedes and Renault withdrawing from the sport. Not this year obviously, but over time. Ferrari would hang on for as long as possible, becoming the sole supplier of engines, until eventually F1 loses relevance and becomes something akin to horse racing. And even then it could be financially viable.

[Chuckjr]

Perhaps a more realistic scenario is Mercedes and Renault withdrawing from the sport. Not this year obviously, but over time. Ferrari would hang on for as long as possible, becoming the sole supplier of engines, until eventually F1 loses relevance and becomes something akin to horse racing. And even then it could be financially viable.

That is a very insightful post. Never thought of F1 juxtaposed next to horse racing, but that makes complete sense. Thank you.

[Stu]

Perhaps a more realistic scenario is Mercedes and Renault withdrawing from the sport. Not this year obviously, but over time. Ferrari would hang on for as long as possible, becoming the sole supplier of engines, until eventually F1 loses relevance and becomes something akin to horse racing. And even then it could be financially viable.

That is a very insightful post. Never thought of F1 juxtaposed next to horse racing, but that makes complete sense. Thank you.

In the UK (at least?), horse racing is NOT considered to be a sport (taking particular note of the rules surrounding drinking alcohol en-route to sporting events), it exists purely for the sake of gambling and the book-makers are the ones making serious money from it (a bit like Bernie used to with F1!!). Football (soccer) is heading the same way - look at how the ‘pundits’ now express largely pointless statistics; thus paving the way for book-makers to extract from it.

[NL_Fer]

At the moment F1 is really expensive, even with the budget cap. But it could lower the cost and still be interesting for the fans.

Maybe at a certain point, it could look like LMDh/DPi class. Where all the parts we cannot see become standard designs and teams only design the outside bodywork.

[Jolle]

At the moment F1 is really expensive, even with the budget cap. But it could lower the cost and still be interesting for the fans.

Maybe at a certain point, it could look like LMDh/DPi class. Where all the parts we cannot see become standard designs and teams only design the outside bodywork.

Other racing series tried and failed that approach. Yes F1 is expensive but it is making a lot of money as well. At the moment it’s very healthy. The budget cap is making it even more profitable. The whole idea behind F1 is the battle of different brands/constructors.

Just look at Indycar. They are going into the 9th season with the same chassis. If that would happen to F1, we could stop this forum

[Stu]

The question of collapse really comes to the fore regarding race-tracks and promoters, they pay big money to host and get that back from ticket sales. Most of the ‘classic’ part of the calendar struggles to balance the books. If all of the ‘classic’ tracks disappeared would hosting an event hold the same cachet for the ones that are government/regime sponsored. If not they would soon disappear leaving nothing.

[the EDGE]

I believe F1 venues have to pay to host a race, I think it’s somewhere in the region of 20 million, it is then up to host to make their money back. Some venues such as Bahrain are backed by Government funds, others such as Silverstone have to recoup money from ticket sales or vendor charges etc.

I have no idea what the arrangements were for last year however

[Scorpaguy]

Remembering back to the 70's, Indycar, then known as "CART", NASCAR, and CanAm were the major motorsport series in the USA. F1 was a bit of an after thought, maybe Monaco, but had next to zero exposure. The CART/IRL debacle evolved into the spec series we have today, and the fans simply lost interest. Today, it offers good racing, but does not seem to instill zealous fan support for either the drivers or the teams.

NASCAR, ditto, before the "Car of Tomorrow", the drivers, machinery, and races created a mega-sports empire. The spec machinery and changing of the guard (drivers) have left it a shadow of its former self.

Thus, I tend to think that spec cars/BOP/neutered driver issues will have a deleterious effect upon F1. While such may not be immediate, I fear that the "slowly heated water for the frog in the pot" paradigm has the possibility of killing/mortally wounding F1 prior to its Managers realizing so. My 2 cents.

CanAm is bit of a different story which I do not understand. CanAm flirted with/maybe even eclipsed some F1 lap times. It may have not been the tech powerhouse of F1...but it may have been very (VERY) close. Costs spiraled out of control and hard economics hit...but F1 has weathered this. For some reason, CanAm's fan interest just waned...unsure as to why.