F1 cost analysis suggests Australian Grand Prix organisers have landed a bargain

The Australian Grand Prix costs an estimated $37 million — but an analysis of race fees reveals organisers have landed a bargain for the next decade and beyond. SEE THE FIGURES

Carlos Sainz on track during the F1 Grand Prix of Australia at Albert Park Circuit. Picture: Getty Images

While a number of events are at risk of falling off the Formula 1 calendar, race promotion fees suggest organisers in Australia have landed a bargain.

F1 will remain in Australia until 2037 at an estimated cost of $37 million, with escalators, a bargain deal analysis reveals.

Speedcafe has compiled a list of estimated race hosting fees for all events that currently hold contracts with Formula 1.

It reveals a steep variance in price with an unsurprising upward trend over the coming decade.

F1 currently has 25 events under contract for its 24-race calendar, with Madrid set to take over from Barcelona in coming seasons in a deal estimated to be worth double what the current promoter pays.

That would transform the event from one paying below the average rate for a race, to slightly above – somewhere on par with Bahrain.

It also serves to highlight why a number of events, namely the Belgian, Italian, Emilia Romagna, and Monaco Grands Prix are under threat.

That quartet, in addition to the current (expiring) Spanish GP contract, are among the lowest paying on the current calendar. Monaco is believed to pay just $20 million.

F1 organisers in Australia have landed a bargain. Picture: Getty Images

Race promotion fees are a key revenue stream for the sport’s commercial rights holder, making up roughly a third of its annual income.

However, without the ability to expand the calendar further (without team consent), the only way to increase revenue is by raising fees.

With a number of events paying below the otherwise going rate, and their contracts expiring in the near future, it’s logical to renegotiate, relocate, or rotate those agreements.

The latter is a favoured option for Dutch GP organisers as, with infrastructure in place and little in the way of event-build costs, it would be comparatively easy to scale up and down between events.

That’s not always the case; a street circuit is vastly more expensive, effectively necessitating its place as an annual event to make it viable.

Organisers in Monaco will therefore likely be asked to step up their contribution.

Once the crown jewel of the calendar, there are now other, similar events such as Singapore or Las Vegas, that weaken that claim and its negotiating power.

The Emilia Romagna event, also out of contract after next year, can also be expected to contribute more than the $21 million it currently does if it wants to host the sport headed by local-lad Stefano Domenicali.

Belgium is in a similar position, a favourite among drivers and fans but one that has historically struggled financially and could well revert to a biennial event – perhaps paired with Zandvoort.

That offers F1 an opportunity for a marginal gain by offering a spot to a new event; it is known to be in discussions with Thailand and others have indicated some level of interest.

There is room to move, too. Of the 25 events under contract, just under half are locked away into the next decade, while eight expire in the coming year or so.

The longer-term deals are a mixed bag

Bahrain is thought to be paying $52 million a year for its race until 2036, while F1 will remain at Silverstone until 2034 for an estimated $30 million.

As it stands, F1 stands to bring in $770 million in race promotion fees next year, a figure that looks only set to rise.

The projected average for events in 10 years in around $42 million, up from around $31 million next year.

Miami and Las Vegas are exceptions, with F1 itself involved in the promotion (either wholly or partially).

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Originally published as F1 cost analysis suggests Australian Grand Prix organisers have landed a bargain