Challenges and Opportunities in the Business Model of Formula 1

Abstract

This paper provides an overview of the business model of Formula 1 (F1), a premier motorsport racing competition. The main sources of revenue for F1 include TV broadcasting rights, race hosting fees, sponsorship and naming rights, and merchandise sales. In analyzing F1's business model, this paper examines the various revenue streams and the challenges they face. F1 is facing challenges in the area of TV broadcasting rights due to the rise of streaming services and the changing media landscape. Additionally, scheduling conflicts due to the limited time available to hold races are creating tensions between stakeholders. The paper also looks at the impact of sponsorship on F1, including the extension of sponsorship beyond traditional marketing tactics by brands like Rolex and IWC. However, some sponsorship deals have encountered issues, such as Marlboro's association with tobacco and Alfa Romeo's partnership with Stake violating certain countries' laws. It also draws upon a combination of literature review and personal experience to identify key issues and propose potential solutions. By analyzing existing research and drawing upon observations, the paper aims to provide a comprehensive understanding of the business model of Formula 1 and the challenges and opportunities it faces in the current market. Finally, the paper concludes with recommendations for addressing these issues, including exploring alternative revenue streams, implementing more flexible scheduling, and ensuring that sponsor partnerships align with F1's values and do not violate local laws.