The World’s Costliest Circus

F1 our Formula1 is considered to be the pinnacle of motorsport. The Everest of it, if you may. F1 is one of the fastest, most demanding, and one of the costliest sports in the world, earning it the nickname of the ‘Costliest Travelling Circus’. Circus, because a typical F1 Calendar can span over 20+ Different Tracks across 20+ different cities across 20+ countries and covering almost 6 continents! And costliest because it takes around 2.6 Billion Dollars to keep this circuit running annually! Yes that’s $2,60,00,00,000 or 1,94,41,24,00,000 Rupees! (~20,000 crores/year)!! For reference, that amount of money can fetch you about 23,65,787 brand new iPhone 13 Pro Max’s, around 24,90,421 new PS5’s, about 23,279 Shiny new Tesla Model X’s and about 3,66,677 Top Spec’d Mac Pros!

The reason I’m stressing so much on the cost factor is that it confuses some people so as to why a bunch of 22 dudes drive around weird, one-seater, open-wheel cars around a specially built racing circuit for 2 hours and how – if – that is, that the constructors who participate make money or even break even for that sake. Well, the simple answer is mostly no. Throughout an F1 Season, it is rare that a constructor will make a profit or break even. Most of the time the companies make losses and huge amounts at that – mainly coming from their drivers crashing cars that cost millions (The engine itself is 60 million Dollars, in case you were wondering. You can imagine how much a hole it can burn in a constructor’s pocket if a driver decides to crash their car engine first) and not ranking high enough on the leader board to win any money for the next year’s season. So as you may have guessed – F1 is like a casino where you have to pump more money to make more money, if you do that is. So why are people throwing money into this circus? There are many reasons for this. The main one, however, is simply brand promotion for both the constructors and the sponsors. In a way, these races are a way of showing their customers what they, their company, their engineers, and their technology is made of ad why they should pick their luxury brands of cars.

Take Mercedes AMG Petronas F1 Team for example (Yes, that’s the complete name) Spent around 458 million Dollars for the 2020 Championship. Their Revenue the same year was 55 billion dollars. This is hardly 0.8 percent. Given the promotion they got, their Drivers, Lewis Hamilton and Valtteri Bottas got and the brands that sponsored them got, it was a huge win-win-win for everyone. This is also the same for most of the other constructors. Most of them are Luxury and Commercial car manufacturers like Mercedes, Ferrari, McLaren, Aston Martin, Alfa Romeo, and Alpine Renault. The exposure is so much that brands like Red Bull, an Energy Drink manufacturing company, Alpha Tauri a fashion brand, and individual Manufacturers like Williams Racing and Haas have also entered the market looking at the immense success. But like I said earlier, the casino forces you to keep pumping more and more and hence huge constructors like Mercedes and Red Bull can afford to spend a fortune ($458M, 2020 season) whilst smaller constructors like Haas and Williams racing didn’t spend that much collectively ($173M and $132M, 2020 season respectively). Hence imposing a budget cap was important and necessary to promote a fair competing field.

But how does an F1 calendar work? What is and what happens during a Grand Prix? Tune in for Part 2 where I talk about Behind an F1 Race.