Breaking Down the Costs of Racing in Formula 1: Is Spending Out of Control?

The 2013 Formula One season was filled with reports of teams in financial trouble. It is no secret that many of the smaller teams (and even the race-winning Lotus team) are struggling. At the same time, F1 is bringing in record levels of revenue. So, how can we reconcile these two, apparently conflicting, realities? To do so, there are two areas that must be considered: the teams' spending and the goals of the sport's commercial rights holders. The first reason for F1's financial health problems is the amount currently spent by the teams to go racing. By any reasonable measure, the costs to compete in modern F1 are ridiculous—but then, F1 has always been about excess. For reference, here are the estimated 2013 budgets for each t...

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