How Formula 1 Divides Revenue Amongst Teams and More

This week in the Business of Motorsport, I bring you an analysis by Racing News365 of how Formula 1 revenues get divided amongst the teams.

In addition to that, there are details on increased F1 viewership in the United States, a potential sale of the DTM, and whether MotoGP is reaching its limits.

I also have the latest sponsor and partnership deals, news from a number of global racing teams as they continue to prepare for 2023 and much more. All this in business news racers can use.

I will be taking a few days off but News Racers Can Use will return on November 29th with a double dose of driver development news as well as my regular column on the business of being a race driver.

Motorsport Industry News

F1 Grid
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In a special edition of the F1 podcast, Michael Butterworth and Dieter Rencken delve into the sport’s financials, and explain how F1’s revenues trickle down to the 10 teams. You can listen here.

How Formula 1 Divides Revenue Amongst Teams and More

Goodwood Road & Racing explains why F1 needs the Las Vegas Grand Prix to succeed. “It’s a once-in-a-lifetime project to have the opportunity to run an event of this magnitude, and it’s so indicative of the dedication and the commitment of Liberty Media. F1 is obviously one of the crown jewels in our portfolio. It is very near and dear to our hearts, particularly given the growth of the base in America, which was one of our goals when we bought the asset six years ago. This is really the next step in our minds of bringing F1 even deeper into the American culture.”

Forbes takes a deep dive into the salaries of the current crop of F1 drivers and Max Verstappen leads the pack. “In all, Formula 1’s ten highest-paid drivers are collecting an estimated $264 million, a 25% increase from 2021’s projections, which were generated during the season.”

ESPN is reporting that the 2022 Formula 1 season has “smashed” U.S. television viewership records. “The season averaged 1.21 million viewers per race across ESPN, ESPN2 and ABC, a 28 percent increase over the previous U.S. television record of 949,000 average viewers that was set in 2021. The 2022 season also became the first in U.S. television history to average 1 million or more viewers per race. In addition, more female and younger viewers watched F1 races on U.S. television than ever before.”

The MotoGP World Championship has seen its calendar grow in number of rounds and, next season, it doubles the number of races with the debut of the sprint race format: one per Grand Prix. But Herve Poncharal, president of the IRTA (team association), has sounded the alarm about the MotoGP calendar (and format): ‘We are reaching the limit

Will German Motorsport organization ADAC buy the DTM? That is the rumor according to Autosport. “There have been persistent rumours in recent weeks about a potential takeover of DTM by the ADAC organisation. While this may seem like an odd acquisition, given DTM and GT Masters are rival championships running on the same GT3 platform, both series have opposing problems and could benefit from an alliance. Since DTM adopted the GT3 formula in 2021, GT Masters has been struggling with a declining number of team entries, while the DTM witnessed a record grid this year. It is a trend that is expected to continue in 2023.”

The Skip Barber Racing School has announced that they will invest $8.9 million to relocate its headquarters from Lakeville, Connecticut, and establish a performance driving school at the VIRginia International Raceway (VIR) in Halifax County. VIR will construct a 25,000-square-foot facility within the Motorsport Technology Park to lease to Skip Barber Racing School for the operation. Virginia successfully competed with California and Texas for the project, which will create 24 new jobs.

Speedway Australia has re-joined the Motorsport Australia, and in turn will now be able to compete under the Motorsport Australia and FIA banner. The affiliation will see Speedway Australia join the likes of Karting Australia and the Australian National Drag Racing Authority (ANDRA) as authorised delegates of Motorsport Australia.

Motorsport Sponsorship & Partnership News

Business of Motorsport for November 25, 2022

The NHRA has doubled down on its partnership with Lucas Oil Products by announcing a long-term extension. The world leader and distributor of high-performance automotive additives and lubricants, will continue as the sponsor of the Lucas Oil Drag Racing Series and “Official Oil of NHRA” as part of a long-term extension. “All of us at Lucas Oil are excited to extend this Partnership with NHRA for another 3 years,” said Brandon Bernstein, Lucas Oil Director of Partnership Marketing. “We know how important the sportsman racers are to Lucas Oil and we want to keep that alive for many years to come. We see NHRA as an amazing property that has potential for massive growth and Lucas Oil is thrilled to be partnered in this journey.”

Pay-TV broadcaster Fox Sports México has signed a three-year extension to retain its Formula One broadcast partnership until 2025. “First signed in 2018, the network’s current five-year deal was set to expire at the end of this season. The new deal means Fox Sports México will continue to show races across its Fox Sports One and Fox Sports Two channels, with advertising. However, advertising-free coverage will be available via the Fox Sports Premium service, and nine Grands Prix will be exclusive to that platform next season.”

NASCAR will be seeking a 10% to 15% increase in rights fees for its next long-term media deal, sources tell Front Office Sports. “We work really closely together, both from a scheduling perspective, but also just in terms of how they monetize the sport. Whether that’s pushing more brands and advertisers to spend on Fox and NBC,” Herbst said. “Fox had their third consecutive year of ad revenue increases in 2022. NBC had their second consecutive year of ad revenue increases in 2022. So it’s working for them — both from a viewership and an ad revenue perspective.”

The Haas F1 Team has announced a new partnership with Palm Angels, the iconic Italian brand founded by the Creative Director Francesco Ragazzi. “Ahead of the 2023 FIA Formula 1 World Championship, Palm Angels will become the official EntArtainment Curator of Haas F1 Team, with visibility on the VF-23, driver overalls and garage and hospitality branding, as well as across owned channels.”

Formula 1 team Oracle Red Bull Racing and its principal team partner Chiru Labs – the creator of cryptocurrency exchange Bybit – have collaborated to launch a Non-fungible token (NFT). This move saw the Milton Keynes-headquartered team present a Tezos-based NFT on its team cars for the season finale in Abu Dhabi, the first time a blue-chip NFT has ever adorned a Formula 1 race car or taken part in a race.

Business of Motorsport for November 25, 2022
BCW Global

The Ferrari Formula One team have announced a multi-year partnership with HCL Software, a provider of enterprise software solutions. “In a world that is becoming ever more digital, in sport as in daily life, it is important to be able to count on a first-rate team partner such as HCL Software, for whom precision high performance technology is one of its strong points.”

The Aston Martin Formula One team have signed a one-year deal with Brazilian insurance brand Porto Seguro. The contract, which commenced at last weekend’s Abu Dhabi Grand Prix, will run until the end of the 2023 season.

Chinese technology company Lenovo has said the first year of its Formula One partnership is showing “good initial metrics”. Emily Ketchen, chief marketing officer and vice president for the Intelligent Devices Group at Lenovo, told Sports Business Journal (SBJ) that the company’s deal focuses on consumer advertising, like the out-of-home digital and static signage it brought to the Spanish Grand Prix, and having Formula One use its range of products.

X44 Racing, Lewis Hamilton’s Extreme E team, have partnered with clean tech developer and low-carbon fuels brand, Alder Fuels. “The deal will be used to promote the next generation of sustainable fuels at Extreme E’s season two finale in Uruguay, the Energy X Prix. The company’s logo will be displayed on the team’s car for the event on 26th and 27th November.”

The FIA has extended its contract with McLaren Applied for supply of its Standard Electronic Control Unit (SECU) in Formula 1 until 2030. In a statement on the FIA website, motorsport’s governing body said that McLaren Applied has been “selected for the sole supply of the Standard Electronic Control Unit (SECU) in the 2026, 2027, 2028, 2029 and 2030 seasons of the FIA Formula 1 World Championship.”

Business of Motorsport for November 25, 2022

Bonhams, the international auction house, has signed a partnership agreement with Formula 1 as the Official Auction Partner of the Formula 1 Paddock Club, with immediate effect. The partnership will see Bonhams stage dedicated sales at key Formula 1 races. The partnership will launch in 2023 and include a spectacular season- ending sale of cars and associated luxury lots under the lights at the FORMULA 1 ETIHAD AIRWAYS ABU DHABI GRAND PRIX 2023, 24-26 November, the finale to next year’s Formula 1 season, which will also be the first Middle Eastern sale for Bonhams Collector Cars.

British Superbike Championship (BSB) series promotor MotorSport Vision Racing (MSVR) has announced a multi-year extension to its partnership with UK insurance broker Bennetts. The three-year extension will see Bennets’ title sponsorship continue from 2023 to 2025, taking the collaboration between the two organisations into a 12th year.

Formula One has collaborated with American clothing retailer PacSun as part of a merchandising deal set to commence in December. “The deal will see a six-piece collection will be released on 12th December, before the official launch of the collaboration with a full collection set for release in early 2023.”

The recent collapse of the FTX exchange, which counts some significant rights holders among more than one million individual creditors, will permanently alter the cryptocurrency sector’s relationship with the sports industry according to SportsPro. “Now a senior executive at a major sports marketing firm has told SportsPro, on the condition of anonymity, that cryptocurrency brands are not going anywhere, but there will now be a lack of confidence from the sports industry in doing deals with them. Going forward there looks set to be heightened scrutiny even on the firms that have shown good business practices up to this point. The executive said that it is likely that companies known for good governance will be preferred, even if other brands are writing bigger cheques.”

Here are some more articles with advice for sports brands and athletes who are involved in the space or are potentially looking at it.

SponsorUnited has secured $35 Million from Spectrum Equity. “With the rapid expansion, diversification and increasing complexity of marketing partnerships, the need for a centralized platform that organizes all of the world’s sponsorship and media partnerships is in high demand,” said Bob Lynch, Founder and CEO of SponsorUnited. “Moreover, as the industry is challenged with budget, talent and resource constraints, we’re uniquely positioned to fill a critical need to drive better decisions and more successful partnerships.”

Andrew Petcash explains how “Fan Engagement” is the most misused word in sports. “In a way, fan engagement is just a catchy buzzword for sales or customer loyalty.”

Sportico argues that Generative AI could become sports‘ next big sponsorship vertical. “A resurgence in traditional categories, like airlines, auto and financial services, is expected to help offset some of the lost crypto and sports betting spend. But Adam Grossman (VP business insights & analytics, Excel Sports Management) said rights owners looking to keep partner revenues rising would be wise to set their sights on the generative artificial intelligence sector. The nascent industry has received “a lot of VC and PE attention” and could become the “next big sponsorship vertical,” Grossman said, particularly as AI increasingly plays a role in teams’ and leagues’ businesses.”

The Business of Running a Race Team

Business of Motorsport for November 25, 2022

DKR Engineering will enter an Oreca 07 Gibson in the 2023 Asian Le Mans Series alongside an already committed LMP3 class Duqueine. The Luxembourg-based squad will use their ex Graff Racing car in their first full-season in the current LMP2 class.

After a guest appearance at Red Bull Ring in 2022, JP Motorsport will field its McLaren 7203 GT3 for the full ADAC GT Masters season in 2023. Christian Klien: “JP Motorsport and I are thrilled to start in the ADAC GT Masters next year. We recognised the high standard of the series when we made our guest appearance at the Red Bull Ring. Given that high standard, we want to prepare well over the winter, in order to ensure that we have a competitive package together with McLaren. On a personal note, I am really pleased to be lining up in a German championship again, after starting out in ADAC Formula BMW when I was younger.”

Ron Capps gives his advice to anyone thinking of forming their own NHRA team. “Probably the best advice, if I was giving myself advice a year ago when I was getting ready to become an NHRA team owner/driver, would be to make sure not to forget that you’re only as good as the race car and the people around you.”

WRT has no plans to be on the 2023 DTM grid despite rumors linking the Belgian squad with a potential return to the championship, according to team principal Vincent Vosse. “I don’t have this flexibility of being able to say: let’s just do DTM with two cars. It doesn’t work like this. It takes more than that to decide to do DTM.”

Richard Mille Racing Team has announced that it will cease operations after three years of competing in the LMP2 category. The French squad, which was run by the Signatech team and funded by Swiss watchmaker Richard Mille, was founded in late 2019 as a platform for providing opportunities to female racing drivers.

Motorsport Movers & Shakers

How Formula 1 Divides Revenue Amongst Teams and More

In episode 10 of the Formula Access Podcast, Alexandra Schieren explains how she got into motorsport, her time in communications for Toyota Rally during their cheating scandal and why its so important to be transparent with the FIA. They also get into her time with the FIA managing the tire crisis during the 2007 US Grand Prix debacle…at her 3rd race! Alexandra discusses her time with Pirelli and how to create positive stories for the brand in the sport! You can listen here. You can also find out more about Alexandra’s services by consulting her listing in the Motorsport Prospects Directory.

Mark Boudreau
Author: Mark Boudreau

Mark is the publisher of Motorsport Prospects. As a former lawyer, he applies his legal background and research skills to assist race drivers by showcasing the resources they need to make their motorsport careers happen.