Revenues from F1's commercial rights will reach $3.3bn in 2016, according to a report by Formula Money with sponsorship in 2011 returning fast.
“ Significant value deserves better recognition from UK Government” says the MIA
The revenue from F1's commercial rights, based in London, UK, will reach more than $3bn annually by 2016, according to new research from F1 industry monitor Formula Money.
The research, based on data contained in the new edition of the annual Formula Money report, predicts that revenues for the sport's commercial rights holder, the Formula One Group, will rise at a rate of 12.7 percent a year reaching $3,253m in five years' time.
“ This is fascinating” says CEO of the MIA, Chris Aylett, “ as we hear that NASCAR in the USA has already reached the $3 billion figure, and has merchandise sales exceeding $3 billion.. These two, one reaching out globally and one more locally to the Americas, clearly dominate the world motorsport and rely on supplies from the UK’s ‘Motorsport Valley’. The significant value to local and national economies, when compared to other sports programmes, shows why motorsport deserves better Government recognition and attention. We plan to raise this during our ‘Motorsport in Parliament’ day on July 13th”
Revenues are expected to hit $1,789m this year before passing the $2bn mark for the first time in 2012.
“One of the key areas of expansion is expected to be race hosting fees, which brought in an estimated $568m in 2010,” read the report. “Most race contracts include an annual escalator and upcoming races in new markets such as Russia and India are expected to pay above the average rate.”
Formula Money predicts that the highest race hosting fee, which currently stands at $50m, will be more than $100m by the end of the decade.
The revenue increase would be a boost not only for the Formula One Group but also for F1's teams, the majority of which are based in the UK, which receive 50 percent of the sport's underlying profits as prize money.
Formula Money predicts that in 2016 the total prize fund will come to $1,575m, with the winner of the constructors' championship taking home a $222m reward. This amount is bigger than the entire annual budget of seven of the current 12 teams and compares to the $87m that Red Bull Racing (Milton Keynes, UK) received for winning the championship in 2010. This could mean that prize money overtakes sponsorship as the biggest source of revenue for F1's teams.
Formula Money calculated that total team sponsorship and supplier deals came to $802m in 2010 as they fell for the fourth time in five years.
However, early indications are that the sponsorship market is improving in 2011 as F1 accelerates away from the recession. At the start of the season the teams' sponsorship total had already reached $887m, an increase of more than 10 percent on 2010.
