Formula 1 :Future , Revenue and profits

Revenue and profits

Estimated budget split of a Formula One team based on the 2006 season.

Formula One is profitable for most parties involved—TV channels make profits from broadcasting the races, and teams get a slice of the money from the sale of broadcasting rights and from the sponsor's logos on their cars.
The cost of building a brand new permanent circuit like that in Shanghai, China can be up to hundreds of millions of dollars, while the cost of converting a public road, such as Albert Park, into a temporary circuit is much less. Permanent circuits, however, can generate revenue all year round from leasing the track for private races and other races, such as MotoGP. The Shanghai circuit cost over $300 million. The owners are hoping to break-even by 2014. The Istanbul Park circuit cost $150 million to build.
Not all circuits make profits—Albert Park, for example, lost $32 million in 2007.
In March 2007, F1 Racing published its annual estimates of spending by Formula One teams. The total spending of all eleven teams in 2006 was estimated at $2.9 billion US. This was broken down as follows; Toyota $418.5 million, Ferrari $406.5 m, McLaren $402 m, Honda $380.5 m, BMW Sauber $355 m, Renault $324 m, Red Bull $252 m, Williams $195.5 m, Midland F1/Spyker-MF1 $120 m, Toro Rosso $75 m, and Super Aguri $57 million.
Costs vary greatly from team to team. Honda, Toyota, McLaren-Mercedes, and Ferrari are estimated to have spent approximately $200 million on engines in 2006, Renault spent approximately $125 million and Cosworth's 2006 V8 was developed for $15 million. In contrast to the 2006 season on which these figures are based, the 2007 sporting regulations ban all performance related engine development.

Future

Formula One went through a difficult period in the early 2000s. Viewing figures dropped, and fans expressed their loss of interest due to the dominance of Michael Schumacher and Scuderia Ferrari. Viewing figures are seeing some signs of recovery due to the varied seasons since 2005. Ferrari's and Schumacher's 5 year domination ended in 2005 as Renault became the top team in Formula One, with Fernando Alonso becoming the new (and youngest ever at the time) World Champion. There has since been a resurgence of interest in the sport, especially in Alonso's home country of Spain, and Lewis Hamilton and Jenson Button's home country of the United Kingdom. In 2006, twenty-two teams applied for the final twelfth team spot available for the 2008 season. The spot was eventually awarded to former B.A.R. and Benetton team principal David Richards' Prodrive organisation, but the team pulled out of the 2008 season in November 2007.

A sign announcing that the safety car (SC) is deployed. Safety is of paramount concern in modern F1.

The FIA is responsible for making rules to combat the spiralling costs of Formula One racing (which affects the smaller teams the most) and for ensuring the sport remains as safe as possible, especially in the wake of the deaths of Roland Ratzenberger and Ayrton Senna in 1994. To this end the FIA have instituted a number of rule changes, including new tyre restrictions, multi-race engines, and reductions on downforce. Safety and cost have traditionally been paramount in all rule-change discussions. More recently the FIA has added efficiency to its priorities. Currently the FIA and manufacturers are discussing adding bio-fuel engines and regenerative braking for the 2011 season or from the start of the 2013 season. Former FIA President Max Mosley believes F1 must focus on efficiency to stay technologically relevant in the automotive industry as well as keep the public excited about F1 technology.
In the interest of making the sport truer to its role as a World Championship, FOM president Bernie Ecclestone has initiated and organised a number of Grands Prix in new countries and continues to discuss new future races. Confirmation for the 2011 Indian Grand Prix is only subject to the homologation of the circuit. The United States Grand Prix will celebrate its return onto the F1 circuit in 2012. In October 2010, Russian prime minster Vladimir Putin signed an agreement with Ecclestone establishing the Russian Grand Prix in the Black Sea resort city of Sochi from 2014, with the circuit to be run in and around the site of the 2014 Winter Olympic Park. Formula 1 is also exploring the potential for a revival of the South African Grand Prix The sport's rapid expansion into new areas of the globe also leaves some question as to which races will be cut.

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