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Author Topic: What does the future hold?  (Read 1714 times)

Offline Wizzo

What does the future hold?
« on: May 17, 2006, 03:34:51 PM »

If the current commercial deal on the table for Formula 1 teams goes ahead, it will mean a significant increase in revenues for the teams.

At the moment the top 10 teams share 47% of the money that is generated from the TV coverage and a smaller percentage from the fees paid by the race promoters. This currently amounts to something in the region of $200m which split between the teams on the basis of their results with the World Champions earning up to $30m and the small fry at the back getting around $10m.

If the new deal goes ahead things will be substantially different with teams getting 50% of the total revenues of commercial activities in F1. At the moment these are estimated to be around $800m, if one includes race fees and the activities of Allsport Management which looks after trackside signage, VIP hospitality and official supplier deals. This means that teams will effectively double their incomes and that figure could increase if the Formula One group develops new streams of revenue, which should be the case as the sport has barely scratched the surface in terms of licensing deals, merchandising and so on.

As a percentage of the budget for a small team, the increase will be even more impressive with the current 10-15% figure going up to 30% or more thus making the smaller teams less reliant on sponsorship deals and more able to survive with backing from the commercial deal and from drivers.

With the potential for reduced costs as well, a team may well be able to survive without any commercial sponsorship at all. Having said that, such a team will not be competitive - and never will be.

If you're thinking about starting an F1 team, do it now! Look at Dave Richards at Prodrive - he took my advice  ::)

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