Ecclestone toasts F1's $4.3bn turnover

Click to follow

Bernie Ecclestone, the billionaire boss of Formula One motor racing, has good reason to celebrate as this year's season draws to a close. Today's penultimate race in China could crown the British superstar Lewis Hamilton as the youngest World Champion, and annual turnover has reached a new high of $4.3bn (£2.1bn).

This is according to Formula Money, the first annual review of F1's financial health. An independent report backed by the consultancy firm CNC, it analyses the massive funds flowing through F1.

The biggest component of the sport's total turnover is the $1.5bn spent by the owners of its 11 teams. Six of the world's major car manufacturers, BMW, Ferrari, Honda, Mercedes, Renault and Toyota, alone pump a total of $1.3bn into their teams, providing around half of their revenues. The lion's share of the remainder is made up of on-car sponsorship, which this year totals around $835m.

Companies controlled by Mr Ecclestone also receive revenues from TV rights, race hosting fees, trackside advertising and corporate hospitality.

The TV rights are the main breadwinner for Mr Ecclestone's F1 Group, which is majority-owned by the private equity firm CVC. They pull in around $380m annually, with the UK's ITV network alone believed to be paying $45m. To date, the teams' only share of the F1 Group's spoils has been 47 per cent of the revenues from TV rights but, under a new deal, this year they expect to get 50 per cent of underlying profits from all commercial rights revenues, bringing their prize money to around $480m.

The value of these rights has exploded over the past two decades as the car manufacturers have put their marketing muscle behind the sport. Just 20 years ago, F1's turnover came to, at most, one-tenth of its current total. However, the F1 juggernaut is now growing at a slower pace, with this year's turnover just a couple of per cent improved on last year's $4.2bn.

Race hosting payments have been the powerhouse behind the sport's rapid rise in fortunes. The average fee has increased by 70 per cent over the past five years, from $11.3m to $19.3m. The highest fee this year came from Malaysia, which is paying $38m.

Countries are increasingly keen to get on F1's calendar because the sport attracts nearly 600 million viewers worldwide. Their governments bankroll the huge hosting fees, and over the next three years India, Singapore, Abu Dhabi and South Korea are set to become part of the World Championship for the first time.

F1's geographic landscape is changing as it seeks to maximise revenues and pay back the F1 Group's $2.3bn net debt left by CVC's leveraged buyout. Only 10 years ago around 70 per cent of F1's calendar was in Europe, with 5 per cent in Asia. Since then, the gap has narrowed, with five of this year's 17 races taking place in Asia and eight in Europe. So although the sport's financial future is secure, it may only be a matter of time before it races out of its European homeland.