Formula 1 — the marketing platform.
A balance sheet of zeros.
Formula 1 was always the rich white man’s sport being dominated by Lewis Hamilton (the one black guy holding up the baton for enthusiasts everywhere). It’s fast, it’s rich, it’s dangerous — what’s not to love?
F1 initially seemed like a robotic sport from the outside, overtime however, I’ve come to appreciate it as a true team sport, the ‘moonshot’ for the automotive industry and once you dive into the logistics and market aspects of it all you see it for what it really is — a very generous marketing platform.
Enter Netflix’s Drive to Survive, catering to a new generation of Formula 1 viewers, to novice hype watchers like me. For those new to this series — it’s a documentary style show following the teams and races across an F1 season. It does a fantastic job taking you behind-the scenes— to the paddock, the politics and the inner workings of the teams.
What one sees is a beautiful symphony — one managed and executed with precision and might. The more I watched and read, the more I was enthralled by the numbers of it all. I’m still unravelling the layers, and clearly there’s so much more…the money, the manpower, the human side of it all.
By many measures it is the most international sports competition — Every team packs and unpacks every week at 21 locations spread across 5 continents for 9 months in the year.
From a technical standpoint, an F1 team has one job — build the chassis (their IP). Becoming a successful team in F1 requires you to be able to integrate the chassis and engine seamlessly to get the best aerodynamic results.
Their real job is to find loopholes within the mountain of constantly changing regulations in order to get an advantage over the others.
So I ask the question — where’s the money in this all?
Let’s look at the F1 teams themselves.
Simple enough right? Now see the numbers from 2019 below.
Almost every team uses its money to the maximum — give or take a few thousands.
Operating Income/Net Profit = ZERO.
Here’s what is I think is really going on —
Let’s go one level up, at the Formula 1 Group level. Here’s what the operating structure looks like:
Looking at the actual numbers —
You see that red box? They’re still pretty much losing money as a business. 2017, 2016 were loss years too.
Operating Income/Net Profit = LOSS.
So I ask the question again — where’s the money?
At the team level, the only people who end up making money at this level are the fat paycheck employees (Hamilton is at $40M yearly contract, Vettel at $30M).
At the group level, if you’re an owner you make some money.
It all comes down to those stickers at the end — apart from the automobile manufacturers that get to showcase their name on the epitome of engineering in the industry, people see Red Bull winning, they hold mind space for Red Bull as a daring brand!
Netflix’s Drive to Survive single handedly doubled the audience for F1. Social media engagement across all teams, drivers, brands and the FIA itself went up by 100%.
So here you go — the list of winners for the 2021 season!
Fin.
