The revenue streams
Formula 1 generates revenue from several major sources:
- Broadcasting rights: The largest revenue stream, worth over $2 billion per year. FOM sells broadcasting rights to networks in over 180 territories.
- Race hosting fees: Each Grand Prix pays a hosting fee to FOM, typically ranging from $20-50 million per race. Newer races like Las Vegas and Miami pay significantly more.
- Sponsorship and advertising: F1's global reach makes it an attractive platform for sponsors. Title sponsors, trackside advertising, and digital partnerships generate hundreds of millions annually.
- Hospitality and VIP experiences: Paddock Club and other premium experiences are a significant revenue source, with packages costing tens of thousands of dollars per weekend.
- Merchandising and licensing: Team and F1-branded merchandise, video games, and licensing deals contribute to the bottom line.
How money flows through the sport
FOM collects all revenue and distributes it according to the Concorde Agreement, the commercial contract between FOM and the teams. The distribution is based on several factors:
- Historical performance: Teams with a long history of success (Ferrari, Mercedes, Red Bull) receive larger shares.
- Championship position: Teams are rewarded based on their constructors' championship finishing position.
- Special bonuses: Ferrari receives an additional "long-standing team" bonus for its continuous participation since 1950.
Why some teams are richer than others
The revenue distribution is not equal. Ferrari receives the largest share — estimated at over $300 million per year — followed by Mercedes and Red Bull. Smaller teams like Haas and Williams receive significantly less, sometimes under $100 million.
This disparity has historically created a competitive imbalance, where richer teams could outspend poorer ones on development. The cost cap, introduced in 2021, was designed to address this by limiting how much teams can spend on performance-related activities.
The 2026 financial landscape
In 2026, F1's financial model is stronger than ever. The sport's growing popularity in the United States has attracted new sponsors and higher broadcasting rights fees. The addition of Cadillac as the 11th team brings a new American manufacturer with deep pockets.
But the cost cap remains the defining financial constraint. Teams that manage their resources efficiently have a competitive advantage over those that do not. The era of unlimited spending is over.