Financial organisation is central to the quality and sustainability of Formula 1. Technical freedom and sporting rules can create the conditions for close racing, but substantial differences in resources can limit how many teams are realistically able to compete.
My proposal addresses this through a broader distribution of championship income, a different relationship with circuit promoters and financial rules based on the ability of each team to support its expenditure.
The World Title and Continental Championships would provide complementary levels of competition. Regional teams and drivers could establish themselves within a geographically focused championship, develop their capabilities and potentially progress to the World Title. A defined flow of funding between these levels would support that pathway.
A Formula One Organization accountable to its participants
As outlined in Part 1, the Formula One Organization (FOO) would be governed collectively by its participating constructors and suppliers, without an external commercial owner receiving distributions from the series. Each Continental championship would have its own Continental FOO, operating on the same principles.
FOO would require a professional administration, but its staffing and expenditure would be accountable to the participants. The objective would be to operate efficiently and retain more of the championship’s income within the sport.
This structure would create scope to reduce the financial barriers facing teams and venues. The extent of those reductions would depend on actual income and operating costs, rather than being assumed in advance.
More accessible entry conditions could encourage additional participants and venues, strengthening the championship’s sporting and commercial appeal. That growth would need to remain financially sustainable for teams, promoters and FOO alike.
Revenue distribution and regional development
The World Title FOO would collect income from broadcasting rights, championship sponsorship, constructor entry fees and its agreed share of event profits.
After approved FOO operating costs, 90% of the remaining funds would be distributed among World Title constructors according to their championship position. The distribution would reward results while limiting the difference between the highest and lowest payments, so that participation remains viable throughout the field.
The remaining 10% would support the Continental Championships. The method for allocating that funding between regions would be defined separately.
Each Continental FOO would follow the same principle of covering its approved operating costs before distributing the remaining income. Of that balance, 75% would go to participating teams and 25% would support regional development.
The development allocation would fund driver training, support developing teams and help build, maintain or improve circuits where there is a justified need. Support for selected developing teams would be separate from the regular championship payments made to participants.
Funding decisions would follow published criteria, with recipients accountable for how the money is used. The aim is to make regional representation more achievable by developing the facilities and opportunities on which participation depends.
A different relationship with circuits
Circuits would pay no fixed hosting fee. Instead, the circuit or event promoter would contribute 40% of the profit generated by the event to the relevant FOO.
This contribution would be calculated after deducting eligible event costs from event revenue, and before deducting the contribution to FOO itself. The promoter would retain the remaining 60% of that profit.
For example, an event generating £10 million in revenue and incurring £8 million in eligible costs would produce a £2 million profit. Of this, £800,000 would go to FOO and £1.2 million would remain with the promoter.
An event that breaks even or makes a loss would owe no profit-based contribution. This would not require FOO to cover the loss, but it would avoid imposing an additional hosting charge on an event that had not generated a surplus.
The arrangement would link FOO’s return to the financial success of the event while allowing promoters to cover their eligible costs before sharing the proceeds. Both parties would therefore have an interest in attracting spectators, developing event income and controlling expenditure.
A common accounting framework would define the revenues and costs attributable to the event. It would also specify how shared overheads, infrastructure expenditure and transactions with related businesses are treated, so that the profit calculation is consistent and cannot be reduced through unrelated or inflated charges. The final contribution would be determined from verified post-event accounts.
Financial discipline based on affordability
The proposed financial rules would assess whether each team can sustain its expenditure from recognised income.
This serves a different purpose from an expenditure cap. A cap limits spending within defined categories; a break-even requirement limits the financial deficit a team can incur. Teams with higher income could still spend more, so the break-even rule would work alongside FOO revenue distribution rather than replace its role in supporting competitive balance.
The objective is to encourage financially sustainable participation while leaving teams room to choose how they invest in engineering, personnel and development.
For the system to work, all teams would need to follow common accounting rules. These would define recognised income and expenditure, the treatment of owner funding and related-party sponsorship, and the allocation of costs shared with other businesses. Independent auditing would be necessary to prevent expenditure being concealed or income being artificially inflated.
A single deficit year would be permitted within a rolling three-year period, subject to a graduated financial levy. A second deficit year within that period would result in exclusion from the following season. This would provide limited flexibility for an exceptional shortfall while preventing repeated losses from becoming a normal operating model.
The system could make participation more sustainable and give new entrants a clearer financial framework. It would not, by itself, guarantee new teams or equal competitive performance.
The main financial rules
- Annual financial assessment. Each team must submit audited annual accounts demonstrating compliance with the championship’s break-even requirement. Admission to the following season would depend on compliance, including the limited exception below.
- One permitted deficit year. A team may record a deficit in no more than one season within any rolling three-year period. A deficit means recognised expenditure exceeding recognised income, rather than spending above a universal budget ceiling.
- Graduated deficit levy. A team recording a deficit must pay a financial levy determined by the size of that deficit. The rates, calculation method and payment deadlines would be specified in the financial regulations. Paying the levy would not erase the breach.
- Repeated deficits. A second deficit year within a rolling three-year period would result in exclusion from the following season. Conditions for subsequent readmission would be defined in advance.
- World Title FOO income and distribution. FOO would collect broadcasting, sponsorship and constructor entry income, together with its share of event profits. After approved FOO operating costs, 90% of the remaining funds would be distributed among constructors according to championship position, and 10% would support the Continental Championships.
- Circuit contribution. Circuits would pay no fixed hosting fee. The circuit or event promoter would instead contribute 40% of its event profit to the relevant FOO, retaining the remaining 60%. Profit would be calculated from verified event revenue minus eligible event costs, before the FOO contribution. No contribution would be payable for an event that breaks even or makes a loss.
- Continental finances and development. The same break-even requirements and sanctions would apply to Continental teams. After approved operating costs, each Continental FOO would distribute 75% of its remaining income to participating teams and allocate 25% to regional driver development, team support and circuit infrastructure.
The detailed distribution schedules and worked examples will show how these principles translate into payments to teams, contributions between championships and investment in regional development.
Illustrative financial model
The following example estimates the annual finances of an established World Title and eight Continental Championships. It illustrates how the proposed funding system could operate once audiences, commercial partnerships and participating teams are established.
All amounts are in US dollars, expressed at approximately current purchasing power. These are modelling assumptions, not verified commercial valuations or guaranteed returns. The example excludes launch costs, acquisition financing and constructor entry fees.
World Title ecosystem
The model assumes 40 races, 15 constructors and two cars per constructor.
| Item | Annual estimate | Main assumption |
|---|---|---|
| Media rights and subscriptions | $2,400M | A mature global broadcasting and streaming product with substantial audience demand. |
| Championship sponsorship | $1,100M | Commercial agreements held by the World Title Formula One Organization (FOO), excluding team and promoter sponsorship. |
| Event profit contributions | $400M | Average eligible event profit of $25M before the FOO contribution, with 40% paid to FOO. |
| Hospitality, licensing and other services | $650M | Income earned directly by FOO, excluding receipts already counted under media or promoter accounts. |
| Total World Title FOO revenue | $4,550M | Combined annual income. |
| FOO operating budget | −$1,500M | Production, logistics, commercial delivery, administration, regulatory services and operating contingency. |
| Distributable balance | $3,050M | Revenue remaining after the operating budget. |
| World Title team pool: 90% | $2,745M | Distributed according to the agreed constructors’ payment schedule. |
| Continental support fund: 10% | $305M | Transferred to the eight Continental FOOs. |
| Average payment per World Title constructor | $183M | Team pool divided by 15 constructors; individual payments would vary with championship position. |
The event contribution is calculated from profit, not revenue. Promoters retain 60% of eligible event profit and pay no contribution when an event breaks even or makes a loss. Under the assumptions above, promoters would collectively retain $600M in event profit, outside the FOO accounts.
Continental ecosystems
The Continental model covers 183 races across eight championships. Commercial income varies by region to reflect different assumed broadcasting markets, sponsorship opportunities and event profitability.
For this example, the World Title support fund is divided equally between the eight Continental FOOs, providing $38.125M each. This is an illustrative allocation rather than a proposed permanent distribution rule.
All financial figures in the following table are US$ millions per year.
| Continental FOO | Races | Media income | Sponsorship and other income | Event profit contributions | World Title support | FOO operating budget | Team pool: 75% of balance | Development: 25% of balance |
|---|---|---|---|---|---|---|---|---|
| Europe | 36 | 450 | 180 | 86.4 | 38.1 | 140 | 460.9 | 153.6 |
| North America | 20 | 350 | 150 | 56.0 | 38.1 | 110 | 363.1 | 121.0 |
| Asia | 27 | 350 | 140 | 54.0 | 38.1 | 120 | 346.6 | 115.5 |
| Middle East | 17 | 180 | 110 | 54.4 | 38.1 | 90 | 219.4 | 73.1 |
| South America | 21 | 150 | 70 | 25.2 | 38.1 | 80 | 152.5 | 50.8 |
| Africa | 32 | 70 | 35 | 19.2 | 38.1 | 80 | 61.7 | 20.6 |
| Oceania | 17 | 60 | 35 | 13.6 | 38.1 | 65 | 61.3 | 20.4 |
| Caribbean | 13 | 30 | 15 | 4.2 | 38.1 | 40 | 35.5 | 11.8 |
| Total | 183 | 1,640 | 735 | 313.0 | 305.0 | 725 | 1,701.0 | 567.0 |
Figures are rounded; totals use unrounded calculations.
Event contributions assume average eligible profits before the FOO share of $6M in Europe, $7M in North America, $5M in Asia, $8M in the Middle East, $3M in South America, $1.5M in Africa, $2M in Oceania and $0.8M in the Caribbean. Each Continental FOO receives 40% of those profits.
Operating budgets assume shared administrative and technical systems, regional logistics and less expensive broadcast production than the World Title. After these costs, 75% of the remaining funds goes to participating teams and 25% supports driver development, local teams and circuit infrastructure.
The $305M received from the World Title is an internal transfer. It is included in Continental funding but must not be counted again as new external income when assessing the complete ecosystem.
Individual Continental team budgets are not estimated here. Their requirements would vary substantially with calendar length, transport distances, component sourcing and local operating costs.
Illustrative average World Title constructor budget
FOO distributions would be supplemented by each constructor’s own commercial income. The following represents an average two-car constructor competing in all 40 races, rather than a spending limit or guaranteed budget.
| Item | Annual estimate | Main assumption |
|---|---|---|
| FOO championship distribution | $183M | Average share of the World Title team pool. |
| Team sponsorship | $100M | Agreements held directly by the constructor, separate from FOO sponsorship. |
| Licensing, merchandise and other commercial income | $15M | Income attributable to the team’s own commercial activities. |
| Component sales to Continental teams | $20M | Customer contracts for permitted components and support services. |
| Total team revenue | $318M | Combined annual income. |
| Component supply business costs | −$15M | Manufacturing, development allocation and customer support associated with those sales. |
| Available for the World Title programme and remaining team costs | $303M | Must cover car development, production, personnel, drivers, racing operations and other obligations. |
The component business contributes an assumed $5M after its associated costs. Its full sales revenue is therefore not treated as money available for the constructor’s own racing programme.
What the example demonstrates
Under these assumptions, the FOO system would generate approximately $7.24B in annual external income, supporting $2.23B in FOO operating budgets, $4.45B in team distributions and $567M in regional development funding. These totals exclude teams’ independent commercial income and profits retained by event promoters.
The example indicates the potential for substantial reinvestment within the sport. It does not establish that every championship, team or venue would be financially sustainable. That would require validated commercial demand, detailed participation costs, sufficient working capital and testing against lower-revenue scenarios, particularly during the launch period and in smaller markets.
