Why Hosting an F1 Race is so Pricey | Inspire
Why Hosting an F1 Race is so Pricey
Good to Know
Good to Know

Why Hosting an F1 Race is so Pricey

While various government ministers wave their cheque books in attempts to land the right to host an F1 race, others are more circumspect. That's because the capital outlay required is truly astonishing.

F1's youngest full-time track, the Circuit of the Americas in Texas, cost R4.5 billion to complete in 2012. The seemingly cheaper alternative is a temporary street circuit, such as in Singapore, Baku, Monaco – or that eternal Cape Town pipe dream. Street circuits don't require any infrastructure construction and can be tailored around tourist-inviting landmarks to maximise exposure. 

But even a pop-up street track is exhorbitantly expensive – and here's why. The host country pays:

1. R210 million for marketing and organisational staff. The estimated crew count is around 600, which excludes the 120 firefighters and 550 volunteer marshals.

2. R185 million to rent a temporary 80 000-capacity grandstand. 

3. R105 million to erect barriers and safety fencing for a 5km street race.

4. R79 million for vehicles, offices and utilities.
5. R59 million for "miscellaneous" costs, which include cranes, ambulances and trackside fire extinguishers every 15 metres.

6. R13 million for insuring the entire event. 

7. R395 million for hosting fees that contractually escalate by 7-10% per year over the compulsory 10-year tenure. (Hosting fees vary from country to country – Monaco pays nothing because of its long-standing relationship with F1 since 1955.) 

8. R102 million for building the pit complex, media and medical centres. (These are often part of the existing infrastructure, in compliance with the organiser's requirements.)

The total damage? R1.15 billion.

Bear in mind that promoters are entitled to proceeds from ticket sales only, not trackside advertising or rental from corporate hospitality suites. So it's easy to see why many licence holders don't renew their 10-year contracts. Of course, hosting an F1 race affords a country entry into the high-octane, high-visibiity world of global sporting glamour – but is it more about image and ego than economic sense? 

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By Braam Peens

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