How F1 became a multi-billion dollar industry

A well-known cynical joke which has circulated in the paddock for decades goes: if you want to become a millionaire in Formula 1, you should start out as a billionaire. It perfectly captures the capital-intensive, money-draining nature of the series – at least, as it used to be.

Because in the past, that saying was certainly true. The hundreds of millions teams managed to bring in each year – from sponsors and investors to prize money and TV rights – were historically reinvested straight back into improving the car and keeping the team running. Words like 'profit', 'returns' and 'solvency' simply didn’t exist in the vocabulary, and staying financially afloat was a yearly challenge.

Popularity and scarcity create value

Three key factors have completely transformed the landscape since Liberty Media’s arrival a decade ago, driving team values to unprecedented levels.

First, the introduction of the cost cap in 2021. The idea was that limiting how much teams could spend annually would bring the field closer together and create a more level playing field. That hasn’t entirely happened, but an important side effect has been the creation of enormous surplus value.

While spending is now capped, revenues have surged thanks to F1's growing popularity - and now far exceed costs. For the first time in history, teams are actually ending the year with money left.

The second factor is F1's booming popularity. Where Bernie Ecclestone once resisted social media (let alone Netflix) and focused only on sponsors targeting the older generation – arguing that 'young people don’t have money to spend' - Liberty Media has taken the opposite approach by actively targeting new audiences.

Netflix released a documentary on Kimi Antonelli's journey to F1 last year

Photo by: Netflix

The Netflix series Drive to Survive played a major role in opening up the American market. At the same time, Liberty Media and Formula One Management worked to make the championship more appealing to a broader and more diverse audience – for example, by launching the all-female F1 Academy - causing a slight shift in the audience demographic.

The third factor is the realisation that F1, much like American sports, operates as a 'closed competition'. The number of team licenses is limited – currently eleven with the addition of Cadillac. This limited supply creates scarcity, which in turn drives up prices and team valuations for potential buyers such as China’s BYD or, in recent years, Andretti.

It’s no surprise, then, that team values have exploded in recent years. According to Forbes, even Williams is now worth $2.5bn - an astonishing figure considering that the Williams family sold the team in 2020, when it was on the brink of bankruptcy, to Dorilton Capital for a reported $180m.

In just six years, Williams has become 14 times more valuable. Other teams have also benefited from the fresh momentum sweeping through the paddock. Forbes calculated the value of all teams – and the numbers are staggering.

F1 team values

*Cadillac, which is making its debut this year, is not included in this overview

Ferrari a minor player in the global sporting world

Ferrari, despite its recent lack of success, remains the most valuable team in F1. This is largely due to the prestige of the Ferrari brand itself, the team’s rich history, and the arrival of Lewis Hamilton last year. The seven-time world champion remains the most followed and marketable driver worldwide – a fact reflected in sponsorship value, particularly on social media.

Even so, Ferrari is still a relatively small player in the global sports team market. Forbes also compiled a top-50 list of the most valuable sports teams worldwide.

Ferrari is the most valuable team in F1, but a minor player on a global scale.

Photo by: Mark Sutton / Motorsport Images

Unsurprisingly, the top 10 is entirely dominated by American franchises. The Dallas Cowboys (NFL) are the most valuable team in the world, worth approximately $13bn, followed by NBA team Golden State Warriors at $11bn.

The highest-ranked non-American team appears in 20th: Real Madrid, valued at $6.75bn. Ferrari sits in 26th, with Mercedes being the only other F1 team in the top 50, ranked 34th.