Whether you live for the roar of an engine or can’t tell a pit stop from a coffee break, there’s something undeniably electric about the Grand Prix. It’s loud. It’s glamorous. It’s unapologetically fast.

But Formula 1 isn’t just burning rubber, it’s burning through billions. Behind every driver is a multibillion-dollar machine powering industries, sponsorships, tech and tourism. 

And when F1 rolls into town, it drives millions into local businesses too. Last year, the Grand Prix pumped roughly $300 million into Australia’s local economy.

Despite whispers of a delayed or a false start to the season, F1’s governing body has made it clear: Engines on. Game on. So now Melbourne is gearing up to do it all over again. 

With the Grand Prix just around the corner, here’s a rundown of the economics of Formula 1.

There are now eleven teams in Formula 1, with the introduction of Cadillac in 2026. Each of these teams earn an income from three main sources:

1. Formula 1 Management payments:

• Constructors championship prize money
  
  • This is a distribution of the over $1 billion prize pool based on team performance
• Column 1 payment
  
  • A weird name and a bit of a weird payment too. It’s ~$36 million basic income paid to any team that has competed for at least 2 years
• Heritage money
  
  • This is also known as the ‘Ferrari budget’, where ~$63.3 million is paid to the longest running team
• Success bonus
  
  • This is a bonus for the top five teams based on their performance over the past ten years. However, these amounts vary for each team every year.  

2. Sponsorship and partnerships: 

On average, each team has 15-25 sponsors and a range of brand partners who pay some serious money to be associated with the F1 team. 

In 2026, the biggest deals secured by F1 teams are:

• Oracle, world’s 3rd largest software company, sponsoring Red Bull for $110 million
• HP, world’s 2nd largest PC seller, sponsoring Ferrari for $100 million
• Mastercard, world’s largest payments tech company, sponsoring McClaren for $90 million

3. Merchandising and licensing: 

F1 teams make a large chunk of money from selling their branded apparel, accessories, and collectibles.

• Since Netflix dropped their docuseries ‘Drive to Survive’, the popularity of F1 sky-rocketed (enough to add a second race in the US)
• While Netflix isn’t paying individual teams a licensing fee, they pay F1 itself, who distributes the income amongst the teams according to popularity.
• As the teams become more popular through media exposure, they’re able to sell more of their own merchandise as a source of income! Win, win!

Ultimately, Formula 1 is far more than a weekend of high-speed entertainment. It is a global commercial machine - one that blends sport, media, technology and corporate investment into a multibillion-dollar ecosystem.

Keep a look out for part 2, where we reveal the top five Formula 1 teams based on their financial valuation and the top five highest paid drivers! 🏎️💨

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