Formula 1 is expected to hit new heights in 2023, with more fans than ever excitedly looking forward to attending races in person. However, longtime loyalists and neophytes alike are encountering large sticker prices. ATRL’s Trina Sriram analyzes the financial motives of Formula 1 and posits the question: how far is too far?
May 2, 2023
As the 2022 Formula 1 season concluded, anxious fans were already looking forward to 2023. With the sport’s popularity reaching global heights, Formula 1 has reported a 7% increase in profit compared to Q3 2021, yielding almost approximately £638M in revenue. Company profits are sourced from various sources, including race hosting fees, sponsorship and media rights. However, the most lucrative is the Paddock Club hospitality offering. There is a clear message to all that this is no longer the debt-ridden Formula 1 of the COVID era that had questions of survival.
With high revenue, many would assume investing in fan experience is a top priority. Yet, the opposite has occurred. There are multiple reasons for this discontent, including overselling tickets and hospitality packages, implementing new pricing models with technological failures and poor logistical planning for record attendance at many circuits around the globe. Reflecting on the 2022 season, it’s easy to recollect scenes of the oversold crowd at Monza, harassment at Spielberg, and mobs in Mexico City. It’s practically unrecognizable for a sport that was accessible to most fans a couple of years ago, as easy as purchasing tickets directly outside the circuit. The behemoth that exists now is not only at the cost of fan’s wallets but also the overall race experience.
The focus of Formula 1 has shifted to a new demographic. At the Miami Grand Prix in 2022, much of the weekend discussion centered on the exorbitantly priced poor fan experience. Many ticket packages released for the 2023 Las Vegas Grand Prix showed record prices. From a corporate perspective, increased prices are a logical step to capitalize on Formula 1’s growing popularity. With Formula 1 now a publicly traded company owned by Liberty Media, it is beholden to shareholders, who would like increased profits more than ever. Riding the recent wave of success, Liberty Media is throwing its hat in the ring by promoting the Las Vegas Grand Prix. Launching the Grand Prix itself with a glitzy event in November, fans were treated to the release of $1 million dollar hospitality packages from the various hotels on the Strip. Formula 1 Experiences, as the official travel package provider for Formula 1, has recently unveiled a new hospitality option outmatched by any before with 3-day VIP passes to the paddock, podium celebration access and Michelin Star cuisine. The catch is the starting price of $30,000 per ticket, rendering this exclusive experience financially inaccessible to most devoted fans. Formula 1 has always been considered a sport for the wealthy, but Liberty Media is actively choosing to bet on moneyed neophytes to be the future of the sport.
Pricing woes aren’t only for hospitality options. For the first time, Silverstone implemented demand-based pricing for the British Grand Prix to disastrous consequences, as many fans flooded the website, causing prices to increase unexpectedly in checkout over a few minutes. For the United States Grand Prix in 2023, general admission tickets are $475, compared to $169 in 2013. However, this proposes the following questions: At which point do the majority of fans cease attempts to attend? Will this ultimately influence fans to begin spending their money on more accessible alternatives? The tipping point is inevitably approaching and Formula 1 should seriously consider whether their corporate strategy to capitalize on the mercurial wealthy by pricing out and abandoning the truly faithful is the sustainable path forward for the sport.
ABOUT THE AUTHOR
Trina is a recent convert to the world of Formula 1 but is no stranger to the world of sports. She graduated with degrees in Electrical Engineering and Spanish and currently, she works for a large multinational consulting firm in technology strategy. She enjoys Formula 1 at the forefront of innovation in technology and is interested in its developments in sustainability. She spends her free time traveling, exploring tapas bars with friends and working out.
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