Formula 1 CEO Stefano Domenicali believes the sport is well-placed to withstand the impact of a recession and Britain and Europe which economists have warned about.
The series’ commercial rights holder is based in the UK, along with most of its teams, the rest of which have their bases in other European countries. Nine of the 24 races of the 2023 F1 calendar will take place in Europe.The Bank of England last weekend warned the UK faces its longest recession since records began and fears of a downturn in the European Union are also growing.
Addressing investors in F1’s parent company Liberty Media last week, Domenicali said the series is keeping an eye on developments but believes it can weather the expected recession.
“First of all, being a world championship, we can spread around the world the risk of having this kind of situation to manage,” he said. “On the other hand, the fact that we have long-term agreements will reduce the exposure to this risk.
“What I can say and share with you is that we already see an incredible number of preregistration with regards to the ticketing of next year. So this is a good sign.”
Domenicali acknowledged that “in Europe, where I’m living, it is clear that this recession is taking place. But I think that the way that we are structured, the way that we have done the deals will protect us and will enable us to move forward in this direction.
“Therefore I would say this kind of situation lets us think that we should be optimistic in this context that, of course, we monitor. But this is what we see today.”
F1 has seen continued growth in audiences attending its races during 2022. Domenicali says F1 will increase its earnings in the future by exploiting its rising popularity.
“The attendance increase is just magnificent in terms of what Formula 1 is bringing mainly to new audiences,” he said. “And that is true that the business model we are having with certain promoters is more related to the fact that there is a fee that they have to pay, there is the high-end Paddock Club that is on our side.
“And there’s – not a challenge – but the big opportunity to move forward is how we can maximise the revenue and monetise the revenue that we can take from the fact that Formula 1 has become more and more attractive. That’s really what we’re going to do in the future.
“We have a different way to do it, and I’m sure that we’re going to capitalise this growth in the best way that we can in the next couple of years.”
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bukester (@bukester)
8th November 2022, 8:20
Everybody is cancelling Netflix.
superman
8th November 2022, 8:31
Have ‘warned about’!?… Hahaha!! the UK hasn’t been OUT of a recession since the last 2008 engineered world wide balls up!
Bradders (@bradders)
8th November 2022, 12:14
I don’t think you understand what a recession actually is.
superman
8th November 2022, 12:21
I don’t think you understand that 99% of the worlds financial issues are engineered by a few select parasites and its been going on for hundreds of years.
Keith Campbell (@keithedin)
8th November 2022, 14:00
Yes, but there is a technical definition of the word ‘recession’ and the UK hasn’t met it for every quarter since 2008. The UK was out of recession from the third quarter of 2009 up until the Covid pandemic which caused two further quarters of recession in the first half of 2020. It’s not a matter of opinion.
superman
8th November 2022, 21:35
With every respect to you Keith, government bean counters and spin doctors can and do juggle the books and headlines constantly. The situation they state they are in, is usually far, far away from reality. Even a ‘recession’ can be declared or ‘defeated’ at will, depending on how they want to spin it.
Sadly, ‘facts’ can be opinions if you believe the right/wrong people.
Alan Dove
8th November 2022, 9:47
I don’t know why economists are coming out now, it was clear when we made productivity illegal and went on a money printing binge in 2020 that we were going to see a huge recession/depression. In 2020 alone some estimates put the increase of Extreme Poverty to 100m, reversing a miraculous trend we’d seen over the last few decades. Rather horrifyingly this was all buried at the time because apparently it was unethical to bring it up. Now we must face the cost and all the horror that it will bring.
That aside, F1 is largely protected because it’s subsidised by governments. It’s hosting fees are paid for by taxpayers. it is a moral hazard, in essence, but that’s the way its constructed. These kind of investments will be protected by the ‘boost the local economy’ rhetoric.
What IS important is looking at the wider impacts on motorsport. We are seeing potentially enormous increases in tyre costs and stuff like that. Naturally, F1, despite taking 99% of the income motorsport generates, will probably do absolutely nothing to help the circuits and championships that provide the infrastructure they draw upon.
Hard times ahead.
SadF1fan
8th November 2022, 11:44
The world has been on a money printing binge since the dotcom bubble of 1999.
Public debt of a lot of nations has doubled.
The easiest way to get rid of public debt is to inflate it.
MichaelN
8th November 2022, 13:39
The “money printing” started long before but was largely, though not entirely, kept among banks and, in the case of the Euro, states like France, Italy, Greece, Spain, and the other usual big deficit spenders.
SadF1fan
8th November 2022, 11:42
Since a recession doesn’t hit the rich, and F1’s most important investments (Miami and Las Vegas) are based on expenditure of rich people, there is indeed very little to worry about.
F1TV is also the cheapest streaming service available to watch F1, so they won’t have competition in that area, only that possible expected growth is going to be smaller.
Leroy (@g-funk)
8th November 2022, 13:13
Being global doesn’t help in and of itself but being associated with authoritarian regimes who don’t care about the costs associated with sportswashing will help insulate F1’s bottom line. But is that healthy for the sport in the long term? Venues that rely on ticket sales to continue are going to struggle in the next few years as attendance will inevitably drop unless prices drop as well. Either way, the tracks will not make as much money which means less chance to pay the hosting fee, etc.
MichaelN
8th November 2022, 13:43
Most of the tracks that struggle to pay F1’s fees have plenty other racing. But whether F1 can do well without those classics remains to be seen. It probably can.
Crawliin-from-the-wreckage (@davedai)
8th November 2022, 14:38
@g-funk and MichaelIN agree circuits will struggle. Sure F1 is a major source of income but also huge cost burden to maintain their eligibility to host F1 events.,which could seriously hamper their ability to hold regular motorsport weekends.
Can motorsport exist without F1? Yes.
Can F1 exist without motorsports? No
F1 should be aware of and care for their “grass roots” drivers,engineers/mechanics, fans and circuit owners.
THAT is where F1’s future by evolves from.
I,m not saying throw out the balance sheet budget, just see beyond numbers.
spoutnik (@spoutnik)
8th November 2022, 13:21
In other words, they are going to ask more money from promoters.
Alan Dove
8th November 2022, 14:44
*and local governments i.e tax payers
Crawliin-from-the-wreckage (@davedai)
8th November 2022, 14:22
No risk of a rigorously enforced F1 cost cap on amounts fans, circuits promoters etc need to spend then I guess. Sigh. Well on the bright side there’s free to air……..no that’s already done.
Well at least they have the entertainment covered.
I In 2023 F1 gives all fans an interactive experience with a re-run of Upstairs Downstairs. And we are all in it together.
There will be no casting, the die is already cast. You know your role.
Fer no.65 (@fer-no65)
8th November 2022, 19:54
Oh, god… whenever someone says “we’ve got the this covered” in economics, run for your life. Long term agreements can always turn on its heads when things go wrong globally, which also involves the first point of his argument about a world championship…
With F1’s current boom, it can always be a bubble that’s getting bigger and bigger and can pop at any time. Remember how 2008 left F1 in dire straits…
DB-C90 (@dbradock)
8th November 2022, 21:56
I’m not so sure about that.
Sure there might be long term agreements in place, but when there’s a massive downturn, sponsors contributions dry up, new sponsorship gets way harder and even governments cut back funding for events like F1. Certainly manufacturers look very closely at their balance sheets and we’ve seen the likes of Renault, BMW, Toyota etc abandon racing before.
Add to that team workforce’s that will probably need to be reduced, and a couple of teams (at least) whose finances aren’t all that strong, and things may not be all that rosy at all.
Agreements are relatively meaningless when there’s not the funds around.
CarlD
9th November 2022, 1:23
Now that Domenically is raising the point, it would still be not okay for me to voice an opinion?