F1 Turnover to double within the next 5 year

[Boga]

Formula Money has published its yearly guestimate of F1's turnover in 2010:

Turnover for 2010 1 587 million dollar, for 2016 this is expected to be 3 253 million dollar.
Circuits have paid 568 million dollar for having an F1 race.
Total prize money for 2016 is expected to be 1 575 million with the WCC alone being worth 150 million dollar versus 60 million in 2010

Serious money.

Boga

who remembered that adding the link might be fun: http://en.espnf1.com/f1/motorsport/story/36348.html

 

[johnnoble1990]

Serious money indeed. Sport over the past 2 decades have forgone traditional inflation. I think it has something to do with sport in general being seriously undervalued as a profitable investment in the past. I just hope the bubble doesn't burst.

 

[jez101]

Where is the extra income coming from? I can't see those forecasts in the ESPN link? More from TV means PPV, which I think would be a dead end because it would kill sponsorship revenue. More from sponsorship...? Can you imagine Vodafone throwing £250m (twice what they do already) into the sport for the same exposure?

I think that sort of multiple is only possible with some very significant and brand new sources of income. I know the internet has been massively under-exploited by FOM, to the point where they say that it is Bernie achillies heel, but there aren't too many businesses that doubled revenue by taking an existing product online. What would we do to double revenues if we were Bernie's advisors...?

 

[Boga]

This might answer a part of your point:

"The Formula Money report predicted annual revenues for the Formula One Group would rise at a rate of 12.7 percent to reach $3.253 billion by 2016 compared to an estimated $1.587 billion in 2010."

"One of the key areas of expansion is expected to be race hosting fees, which brought in an estimated $568m in 2010," said the report, whose publishing partners CNC communications have worked with teams, sponsors and car manufacturers.

"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."

 

[Mryzyz]

Silverstone has a 7% year on year escalator on its hosting fees.
That is a 40% increase on what they pay now for 2016

It would be likely that similar escalators are in place for most other races. Probably higher for the oil money GPs.

And with circuits like Turkey that pay $13M likely to be replaced with circuits paying beyond twice that, plus the likely expansion of the calender to over 20 races...

There's an easy half billion gain to be made on track hosting fees by 2016 alone.

 

[jez101]

There's an easy half billion gain to be made on track hosting fees by 2016 alone.

Makes sense, but that still leaves $1bn or more to find... I think that TV contracts cannot go much higher and stay free-to-air and sponsors might find some more, but I think to hit those numbers they need a big new source of revenue don't they?

Personally, I might look at all the data that is generated by the sport because there are people (like us perhaps!) that might pay a few quid for eg live telemetry or an in car stream of your favourite driver on your mobile while you watch the live coverage on TV. Not sure how big a niche we are, but imagine all the apps that you could build if you had access to all that information...

I find it really odd that such a high tech business can be so poor online...

 

[sportsman]

FOM might take a leaf out of Indycars online live stream.You can register for free and get live race coverage, swap between the cameras including the helicam and go onboard with your favourite or any driver of your choice.

If FOM offered a similair package or access to their world feed online for an annual fee I for one would happily pay a €100 for a season.

http://indycar.com/

 

[Mryzyz]

The TV contracts in thd Asian markets I would think will increase severalfold in the next five years.

Plus there are merchandising opportunities that F1 is yet to fully exploit, such as branded perfume and air freshners.

 

[Theo_55]

These figures for the growth of F1 revenues are excessive in the extreme, circuits like Australia, Turkey, perhaps China are making noises about the cost of staging a race, a doubleing of fees would kill the golden goose.

The economic crisis that started in 2007 is still very much with us, nations are still going bust and requires bailout monies, I really can't see F1 revenues bucking the trend of world economic activities.