FEBRUARY 14, 2008
Where should F1 races be held?
Formula 1 is a very profitable business with TV companies, in particular, pouring money into the coffers of the Formula One group of companies, which is controlled by the venture capital company CVC Capital Partners. There are additional streams of revenue coming from race fees, trackside advertising, corporate hospital and official licensing.
These numbers, however, seem to be rather small when compared to those of soccer's Premier League, which is reckoned to be pulling in at least $4.6bn for the media rights for the current season.
There are 20 clubs in the Premier League and each play one another twice during a season, one match being at home, the other being away. This means that each team plays 38 games and there are a total of 180 games, each of which is worth around $25m in terms of TV income. Outside the UK the sport is shown in 208 countries with TV rights sold in 81 separate units, netting a cool $1.2bn. The rest of the money comes from the vast domestic rights deal.
When one considers that Formula 1 has only 18 events, the sale of TV rights is rather more impressive and F1 is definitely generating many times more income per event. This is not really surprising as although Premier League soccer is popular around the world, it is still only played by English teams and at English venues.
The F1 world is therefore slightly perturbed by the news that the Premier League has voted in favour of a proposal to add one new fixture each year, to be played at foreign venues. The additional 10 games are designed to spread the popularity of the league and thus increase its international significance - and earnings. This will undoubtedly have an effect on the sport sponsorship market.
The sale of the overseas rights for the Premier League doubled in value at the last round of dealing, underlining the league's ever-growing international popularity. There is a reason that Bernie Ecclestone and Flavio Briatore have invested in soccer.
The big question in F1 circles is how to meet the challenge and to remain a more attractive commercial option than soccer. The best way to do this is by increasing the TV viewing figures. This is what the F1 group has been doing by moving races into new markets across the world, hoping to grow the sport in the places where there is most potential for new viewers. Thus China and India have been priorities in recent years as they have vast numbers of people who might one day be convinced that F1 is the sport that they would like to watch on a Sunday afternoon.
Be that as it may, F1 is currently present in only three of the top 10 most populous countries in the world. With an Indian GP being planned and the possibility of a return to the United States in 2009 that will improve to five and there is talk (as always) of Russia but Indonesia, Pakistan, Bangladesh and Nigeria are almost never mentioned as possible venues for F1, if only because they do not suit the profile that the sport likes to think it has.
In the top 20 most populous countries things are little better with only three additional F1 races (Germany, Turkey and France). One hears occasional stories of plans for races in Mexico (11th), but never a word about the Philippines, Vietnam, Ethiopia. Egypt, Iran or Thailand.
Where Formula 1 is much more successful is its presence in weathly countries. Races take place in nine of the top 10 richest countries in the world, the outcast being the United States - the world's biggest consumer market. In the next 10 countries on the list there are only three with F1 events, although once again this may increase if Russia, South Korea, India or Mexico join the F1 calendar.
Balancing population and wealth is the secret and thus it is safe to say that F1 should be looking at India, Russia and Mexico as the primary locations where it can gain the most.
Significantly, two of the weakest F1 races are held in Britain and France, which are amongst the wealthiest nations: France being ranked fifth and Britain sixth. These are considerably more significant than the UAE (38th), Malaysia (39th), Singapore (44th), Hungary (50th) and Bahrain (96th), although the value of these races is that the governments involved are willing to pay whatever is asked of them.
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